Here’s an update on our energy, industrials and materials names in Jim Cramer’s Charitable Trust, the portfolio we use at the CNBC Investing Club. Jim ran through all 35 of the holdings during the Club’s inaugural Annual Meeting last Saturday, an in-person event held in New York City. A video replay of the meeting is available here . Caterpillar (CAT): Caterpillar may be the biggest winner of a prolonged U.S. infrastructure upgrade cycle because it makes the equipment that’s needed for these large-scale enhancements. Caterpillar’s operations will benefit from the U.S. government’s Inflation Reduction Act and CHIPS and Science Act spending bills, both passed last year. As funding is distributed, new projects will flow into the company’s pipeline. Caterpillar also has a strong track record of returning cash to shareholders, which is why we expect it to raise its dividend every year. It’s a dividend aristocrat. The company’s China business stands to benefit as the world’s second-biggest economy rebounds after Beijing rolled back its zero-covid policy late last year. Coterra Energy (CTRA): The exploration and production (E & P) company recently announced a switch to its capital return program. Coterra raised its base dividend, but with the rest of its excess free cash flow, the priority in 2023 is going to be stock buybacks. In 2022, by contrast, the priority was its variable dividend, which changed quarter by quarter depending on its financial results. We think this strategy makes sense because Coterra shares are down well over 20% from their 52-week high of $36.55 back in June. Buybacks allow us to own a larger percentage of the company’s earnings without any additional capital outlay, which we support. Of our three E & P firms, Coterra is the one most levered to natural gas. Devon Energy (DVN): Shares of the oil-and-gas producer took a nosedive in mid-February after it released fourth-quarter earnings, along with disappointing guidance. Investors didn’t like the fact the company guided for higher-than-expected capital expenditures but less-than-projected production. Additionally, its declared fixed-plus-variable dividend payout, based on Q4 numbers, is lower than we’re accustomed to. While that wasn’t a shock, given lower oil prices in the period weighed on free cash flow, it seemed to catch many investors off guard. Emerson Electric (EMR): Emerson is reshaping its portfolio to be an automation pureplay and focus more on industrial software. We don’t agree with the approach CEO Lal Karsanbhai took in launching a hostile takeover of National Instruments (NATI), a software solutions company, back in January. The move kicked EMR’s stock down. “He better get back on his game,” Jim said of Karsanbhai. Last quarter, the company missed on earnings due to non-operating items but maintained its full-year guide. The industrial company is one of our more recently added holdings. It has not been performing well lately. We initiated a position in the…
Read More: Club Annual Meeting update on 8 energy, industrials, materials stocks