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Boeing and Eli Lilly, two of the stocks owned by the Charitable Trust, have been on the move recently. Here, we break down the moves and how the trust will try to capitalize on them.
It's been a good week for Boeing (BA), and those are words we have not said a whole lot this year in our discussion of the jet manufacturer. It all started last weekend, after Reuters reported that China's aviation regulators told airlines it was satisfied with the changes Boeing made to the 737 MAX, paving the way for recertification before year-end.
Then, over the past two days, not one but two analysts who previously (and correctly) were cautious about Boeing's prospects upgraded their rating on the stock. The reasons for the upgrade were no different from what we explained back in our October 15th post as to why we planned to stick with Boeing despite its struggles. Boeing is a play on the recovery in international travel, the need for airlines to upgrade their fleets to more fuel-efficient jets, and the biggest and most near-term catalyst of them is the China recertification.
An upgrade of any stock will always get our attention, but when we see two analysts go bullish from bearish in back-to-back days, that must mean some good news afoot. We say stick with Boeing here, as the recent passage of time has only gotten the company closer to some of its important catalysts hitting.
One stock that we are actively looking to add to our position is Eli Lilly (LLY). Lilly has been on a great run ever since we bought it for the Charitable Trust at around $232 per share on October 8th, but the near straight-up run has forced us into something we call a high-quality problem. The thing is, we did not buy enough Eli Lilly and put on a full position yet out of our discipline of not wanting to violate our average cost basis. Our hesitancy to violate our cost basis is a discipline we constantly battle.
But we may be finally getting closer to our break. Eli Lilly topped out on November 4th, one day before Pfizer announced its COVID-19 antiviral treatment was highly effective. Shares of Eli Lilly fell on the news because it suggested that the company will supply fewer doses of its COVID-19 antibody cocktail next year than previously expected. But we are not in Eli Lilly as a COVID-19 play. With the stock stalled out for reasons unrelated to our thesis in the company's durable growth outlook and the impressive pipeline which features donanemab for Alzheimer's and tirzepatide in type 2 diabetes, we think the recent pullback is an opportunity.
Eli Lilly is the stock you want to be in if you are looking to invest in an Alzheimer's treatment because U.S. health insurers are already turning their back on Biogen's Aduhelm ,and a smaller outfit is being investigated by the SEC.
The CNBC Investing Club is now the official home to my Charitable Trust. It's the place where you can see every move we make for the portfolio and get my market insight before anyone else. The Charitable Trust and my writings are no longer affiliated with Action Alerts Plus in any way.
As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Typically, Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If the trade alert is sent pre-market, Jim waits 5 minutes after the market opens before executing the trade. If the trade alert is issued with less than 45 minutes in the trading day, Jim executes the trade 5 minutes before the market closes. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. See here for the investing disclaimer.
(Jim Cramer's Charitable Trust is long BA, LLY.)
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