Invest1 publisher2 min readPublished
Three of Cramer's six "buy now" names trade at lower earnings multiples
The CNBC Investing Club says it is getting more selective about AI. Its September buy list still runs Intel, Micron at six times fiscal 2027 earnings and Meta at about 19, next to Kimberly Clark and BNY.
The Investor · Invest desk
What happened
- Jim Cramer and portfolio director Jeff Marks held the CNBC Investing Club's September monthly meeting on Thursday, going through every position in the 33-stock portfolio.
- Cramer singled out six names to buy right now, Kimberly Clark, Bank of New York, Intel, Micron, Meta and FedEx, as the club becomes more selective about its AI exposure.
- Bank of New York, which the club holds as a lower-risk counterbalance to Capital One, has posted 14 consecutive quarters of year-over-year sales growth and record sales in each of the past two under CEO Robin Vince.
- The Kimberly Clark case is the pending Kenvue acquisition, which the club says should add scale, lower costs and let management reinvigorate under-managed consumer health brands.
- Cramer opened the meeting with lessons learned from the club's recent exit of Corning.
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Why it matters
- contradiction The label on the September list is selectivity about AI, but two semiconductor names and a Magnificent 7 holding make up half of what the club wants to buy. What changed is the entry price; the exposure holds.
- constraint Buying Micron at six times fiscal 2027 earnings ties the position to memory contract pricing: if prices flatten, the same multiple is being paid on peak earnings.
- exposure The Intel thesis leaves the club dependent on a U.S. government decision about its own stake. That decision belongs to the government.
Three of the six names came with a number attached: Micron at six times fiscal 2027 earnings [8], FedEx at roughly 16 times [10], Meta at about 19 [9]. Meta's is the highest multiple of the three [2]. Nvidia, which is not on the buy list, is held at roughly 14 times fiscal 2028 estimates, and the club called it an "own-it, don't-trade stock" [11]. Intel came without a multiple, after a pullback the club ties in part to concern about the government lockup expiring [7]. Selectivity in September shows up in the price paid: two consumer and financial names, two semiconductor names, one of the Magnificent 7, and a freight company [1].
The AI-linked part of the portfolio is larger than the buy list. Nine of the 33 positions the pair went through are tied to AI demand, by the club's own descriptions of them: Nvidia, GE Vernova, Eaton, Qnity, Amazon, Alphabet, Microsoft, CrowdStrike and Palo Alto [5]. Turbine cancellations at GE Vernova have not materialized, and the club says order growth has accelerated in some states that are considering data center moratoriums [12]. The club argues that Eaton's aerospace and traditional electrical operations make it less risky than a pure-play data center supplier [13]. Qnity, the DuPont spin-off, has fallen sharply, and the club's argument is that the market prices it as a chemicals company and will pay more once technology analysts cover it [14].
About 30% of Bank of New York's revenue is not fee-based, and that share still moves with the credit cycle and with rates [3]. Fourteen consecutive quarters is three and a half years of year-over-year sales growth [4].
Micron at six times fiscal 2027 earnings is cheap only if the fiscal 2027 number holds, and the club's case rests on memory pricing continuing to rise, on advanced HBM shipments from the new factory starting in January, and on a large buyback once government restrictions expire in December [8]. Intel's case rests on President Trump's recent posts touting gains in U.S. government holdings, which the club takes as a sign that a near-term sale is unlikely [7]. Kimberly Clark is the one where the price has already moved against the thesis: management lowered its near-term earnings outlook on Wednesday, the stock was hit hard, and the club had not decided whether to use the pullback to add to a small position [4]. The recap included no price targets for any of the six [6].
What to watch
- Whether the club adds to its small Kimberly Clark position after management's lowered near-term outlook, and at what price.
- Micron's January start for advanced HBM shipments, and whether a large buyback follows the December expiry of government restrictions.
- Any sale of the U.S. government's Intel holding once the lockup expires.