Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market update: Stocks are strongly higher to kick off the new week. The S & P 500 is looking to mark back-to-back sessions of 1% gains. However, a weak response to a $58 billion auction of 3-year Treasury notes caused interest rates to rise, which took a little bite out of the rally. The auction was the first of three key auctions over the next few days. Materials: The materials sector has been awful over the past 3 months, falling 11% on concerns about a slowdown in China, continued softness in Europe, higher interest rates, and potential trade disruption from tariffs. There’s been few winners in the group, with only 4 of the S & P 50 constituents up over this time period and three of them were paper packaging companies. But could there be other good houses in what has been a horrible neighborhood? Analysts at Mizuho shuffled up its top picks in a note Monday. They said investors should position their portfolios defensively right now, preferring downstream, asset light specialty chemical companies and electronic materials companies instead of asset heavy, upstream chemical companies. Two companies they highlighted on their top pick list were club names DuPont and Linde . Mizuho said DuPont is worth $110 on a sum-of-the-parts basis and the discount will narrow as the company progresses through the spin-off process. As for the Linde, they like how it’s the global leader in industrial gases, which they call “an unregulated utility-like industry with only 1 similarly positioned competitor.” They also like how Linde’s valuation has significantly declined due to the rotation into Air Products and Chemicals on an activist campaign. Although the Materials sector is off to a sluggish start to the new year, Mizuho’s commentary reaffirmed that we are invested in the right areas of this tough group. We’re a little more conservative with our Dupont SOTP math – we think the stock is worth $100 – but we agree with the thesis that it will trend closer to these levels as we get past this spin purgatory period. DuPont has been a major disappointment over the past few months but there is a catalyst to get the stock higher. And when we most recently added to our Linde position at a slightly higher price in mid-December , we pointed out how we are patiently waiting for the money flow to reverse from Air Products and Chemicals into Linde and for volumes to pick up again through clean energy and electronics growth. Up next: There are no major earnings Monday after the closing bell. The big event this evening is Nvidia CEO Jensen Huang’s keynote at the Consumer Electronic Show. It starts at 6:30 p.m. PT and we expect the presentation will focus on robotics. The key economic data points Tuesday are JOLTS Job Openings and ISM Services Index. We’ll also be watching another big Treasury auction, $39 billion of 10-year notes at 1p.m. ET. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A liquid hydrogen tanker truck taking a fuel delivery at the Linde hydrogen plant in Leuna, Germany, on Tuesday, July 14, 2020.
Rolf Schulten | Bloomberg | Getty Images
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
