Momentum Stocks Moving Higher 2/6/25

Summary

Halftime Report: Momentum Stocks Moving Higher – February 6, 2025

Introduction

In this episode of CNBC's Halftime Report, host Scott Wapner delves deep into the dynamics of momentum stocks that are currently surging in the market. Joined by industry experts Josh Brown, Joe Terranova, Stephanie Link, and Surat Sethi, the panel dissects the factors driving these stocks to new heights, explores sector-specific trends, and offers strategic insights for investors looking to capitalize on the prevailing market momentum.

Momentum in the Market

Scott Wapner opens the discussion by highlighting the impressive performance of momentum Exchange-Traded Funds (ETFs) that have reached new all-time highs. Notable mentions include the MTUM ETF, which is also witnessing significant gains.

Insights from Joe Terranova

Joe Terranova provides a foundational understanding of momentum's success in bull markets. He emphasizes that "in a bull market you are going to see that investors are going to pay a premium for where they could Find confidence, confidence reflected in strong technicals" (02:21). Terranova explains that the rise of algorithmic funds, which prioritize price movements, further amplifies momentum factors. He also posits that momentum can serve as a leading indicator for market inflection points, referencing how momentum peaked in November 2021 before the market downturn.

Perspectives from Josh Brown

Josh Brown shares his strategy for selecting momentum stocks across a diverse array of industries, avoiding dependence on specific themes. "There's the range of industries and sectors... it's all over the map. There's no specific theme...you don't have to just be an expert or key on, on one or two themes," he notes (03:27). Brown underscores the advantage of this approach, allowing investors to benefit from momentum without being confined to particular sectors, thereby capturing growth from varied market segments.

Stephanie Link on Financials

Stephanie Link spotlights CrowdStrike as a prime example of a momentum stock recovering robustly. She highlights the company's impressive growth metrics: "This company is going to grow revenues at about 30% and earnings about 40%. ... retention is about 98%..." (05:22). Link argues that cybersecurity, much like artificial intelligence, is a burgeoning field with significant growth potential, positioning CrowdStrike as a leader in an expanding industry.

Surat Sethi on the Financial Sector

Surat Sethi provides a comprehensive overview of the financial sector's momentum, noting its broad-based strength beyond just asset management firms. "You've got a combination of not just price but earnings and cash flow... what is the true valuation for these?" (07:00). Sethi emphasizes that financial companies are benefiting from positive interest rates, a steeper yield curve, and robust lending activities, making the sector a cornerstone of the current momentum-driven market.

Semiconductor Sector: Rotation into Equipment

The discussion shifts to the semiconductor industry, where a notable rotation from chip manufacturers to equipment producers is underway. Josh Brown points out, "Semi equipment is on fire. KLA up 20%, AMAT up 11..." (10:51), highlighting the stellar performance of companies like KLA and Applied Materials. Joe Terranova echoes this sentiment, noting that while semiconductor stocks like Nvidia and AMD face short-term challenges, the equipment segment is booming due to increased demand for manufacturing tools essential for chip production.

Stock Specifics: Broadcom and Nvidia

Broadcom emerges as a focal point, with Stephanie Link detailing its diversified revenue streams and strong free cash flow: "it has a diversified total revenue mix between a software and some of the cyclical end markets that haven't seen a recovery just yet and their free cash flow is enormous," she explains (12:56). Meanwhile, Nvidia is discussed in the context of its substantial year-over-year gains and ongoing demand fueled by AI advancements, although concerns about overvaluation persist.

Interaction with Al Michaels: Stock Picks and Super Bowl Insights

In a special segment, sports broadcasting legend Al Michaels joins the panel to discuss stock picks and the upcoming Super Bowl. Josh Brown presents Moody's (MCO) as a new recommendation, stating, "This company sits in the sweetest of sweet spots... I'd like to put you down for a thousand shares just to get to know each other," (35:35). The conversation seamlessly blends sports insights with investment strategies, emphasizing Moody's dual role in investor services and AI-driven data analytics.

Spin-offs: Honeywell's Strategic Split

The panel examines Honeywell's announcement to spin off into three separate companies: Automation, Materials, and Aerospace. Stephanie Link provides historical context, noting that past spin-offs like GE Renova have significantly outperformed the market: "spinoffs tend to outperform the market by 10.2% two years after completion," (43:28). Link advocates for spin-offs, highlighting that they allow both the parent and new entities to focus on their core strengths, often leading to enhanced growth and profitability.

Final Trades and Strategic Recommendations

As the episode draws to a close, each expert shares their final stock recommendations and strategic moves:

• Stephanie Link endorses Boeing and Oracle, citing their strong market positions and growth prospects.

• Josh Brown maintains a long position in Uber, commending its strategic positioning in autonomous vehicles: "this company is the best positioned autonomous vehicle player. I think it's better positioned, quite frankly, than Waymo or Tesla," (21:28).

• Joe Terranova and Surat Sethi reinforce the strengths of the financial sector and the importance of maintaining diversified investments across momentum-driven industries.

Conclusion

This episode of Halftime Report offers a comprehensive analysis of current momentum stocks, sector-specific trends, and strategic investment insights. The panel underscores the importance of diversified momentum investing, the shifting dynamics within key sectors like financials and semiconductors, and the potential opportunities arising from corporate spin-offs. For investors looking to navigate the fast-paced market, the expert advice provided offers valuable guidance to harness the power of momentum and capitalize on emerging trends.

Notable Quotes:

• Joe Terranova (02:21): "In a bull market you are going to see that investors are going to pay a premium for where they could Find confidence, confidence reflected in strong technicals."

• Josh Brown (03:27): "There's the range of industries and sectors... it's all over the map. There's no specific theme...you don't have to just be an expert or key on, on one or two themes."

• Stephanie Link (05:22): "This company is going to grow revenues at about 30% and earnings about 40%. ... retention is about 98%..."

• Surat Sethi (07:00): "You've got a combination of not just price but earnings and cash flow... what is the true valuation for these?"

• Josh Brown (10:51): "Semi equipment is on fire. KLA up 20%, AMAT up 11..."

• Josh Brown (35:35): "This company sits in the sweetest of sweet spots... I'd like to put you down for a thousand shares just to get to know each other."

• Stephanie Link (43:28): "spinoffs tend to outperform the market by 10.2% two years after completion."

Disclaimer: All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, or its affiliates. The content is for informational purposes only and should not be construed as financial advice.

Transcript

[Scott Wapner]

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[Josh Brown]

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[Scott Wapner]

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[Scott Wapner]

I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. All right, Carl, thank you. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, Momentum's moment as several widely held names hit new highs today. We will trade them of course with the investment committee. Plus we have some new moves to tell you about. And that man, Al Michaels, he'll be with us today on the super bowl on stocks and he's going to get a new stock pick from our very own Josh Brown. Also with us for the hour today, Stephanie Link, Joe Terranova, Surat Sethi. We will go to the markets, show you what's happening today on Wall street. Mixed picture, Dow's negative of the S and P and the Nasdaq is a fractional winner. But I want to stay on this Momentum story because I think it's an interesting one. Many names that are probably in all of your portfolios, certainly in a bunch of ours as well. The whether it's the Jyoti or whether it is the MTM, those ETFs, at least 52 week highs. The MTUM is hitting an all time high, Joe, today. Names like Goldman which are in there. There's some cross ownership too between this and yours, jpm, Costco, Robinhood, nasdaq, ice, Walmart, Gallagher, Palantir. Well, we're calling Momentum's moment. Why?

[Joe Terranova]

Why? Because in a bull market you are going to see that investors are going to pay a premium for where they could Find confidence, confidence reflected in strong technicals. And what's interesting about that is that the market is becoming more and more non discretionary oriented. You have all these algorithmic funds that are populating the market right now. So in a bull market, it is only natural that when they're observing price more than anything else, and their time frame on how they're observing price might be somewhat different than each other, but ultimately the center of gravity is looking at price itself. That's when you're going to see this factor perform remarkably well. And what's interesting, Scott, it almost can be a leading indicator for a bull market market reaching an inflection point. Because if you look back on the end of 2021, momentum peaked in November of 2021 and the market rolled over right after.

[Scott Wapner]

So this doesn't look like it's in the process.

[Joe Terranova]

By no means.

[Scott Wapner]

Necessarily by no means. Josh, you know, you, J.P. morgan, one of yours, NASDAQ, for example, which you've talked about before. Why don't you weigh in on this too?

[Josh Brown]

Well, part of my strategy, when we talk about the best stocks in the market on the show, frequently you're looking to hang around the goal, you get lucky. Joe comes from a hockey household, so he's nodding. You get lucky. When you hang around the goal, you get more shots on goal number one. Number two, you find yourself in the right place at the right time. It's why I love the strategy that Joe has built an ETF form and it's why I try to bring these ideas onto the air. And you just like when you just take a look at some of the highest quality names right now that have momentum, that are close to highs, that are above their intermediate term trend lines. What I love so much, Judge, is that the range of industries and sectors and subsectors these names come from, it's all over the map. There's no specific theme. It's not, oh, these are all stocks. Yes, you have a lot of AI stocks, but then you've got your LPL financials, your Willis Tower, Watson, Baker Hughes, 100% Deckers Outdoor. There's no AI. It's, it's Uggs, relax. So I love a market like that where you don't have to just be an expert or key on, on one or two themes. And if you missed that theme, you missed everything. This is an unbelievable market environment right now. You get dips, you get nasty days, you get opportunities to buy in, but the strong stocks remain strong. Nasdaq's great example. 83. Look at the follow through in Palantir. A lot of people wanted to come in. Oh, it's up 22%. Faded LOL. Fade you there are a lot of those types of names here. Follow through after great earnings, not just a one day population. And I hope it stays this way throughout earnings season because people are doing very well right now.

[Scott Wapner]

Crowd a record high as well, up 5% on the week. Speaking of where a momentum is in a wide range of stocks. And this one's yours.

[Stephanie Link]

Yeah. I mean crowdstrike has been a nice recovery story and that's because the fundamentals are so strong. This company is going to grow revenues at about 30% and earnings about 40%. Subscriptions are running at about 30%. And the retention, that's the most important thing in my mind. The retention is about 98% in spite of the fact that they had that security issue. So I think it's not cheap. It's had a nice recovery but it's certainly one that I really want to be involved in for the long term. Scott, because cybersecurity, we've talked about this many times. I think it's just as big, if not bigger than a I and I think as a result the big five are going to get bigger and this is the number one player in the industry.

[Scott Wapner]

I meant Gallagher. Joe A record high there. We talked about insurance yesterday. I believe this was a new addition in your rebalance. AG yes. Welltower. We said Wal Mart, we said ice, we said Robinhood. You want names like Netflix and Paychecks and Baker Live Nation is when you want to hit on on jpm. I mean it's just one of those that that's on this list that is in yours.

[Surat Sethi]

But to Josh was saying if you look at the strength in a sector like financial services, which has a lot of these, six months ago we were sitting here saying where are financial services going? They're not doing anything. What are we going to do? Well, they're leading and they're leading across a range. So Josh, to your point, it's not just money management firms or asset management firms, it's insurance companies. It's, it's exchanges.

[Josh Brown]

It's a whole wide variety payments, data. It's incredible.

[Surat Sethi]

And it's not just momentum, it's actually earnings growth.

[Joe Terranova]

No, it is.

[Surat Sethi]

So you've got a combination of not just price but earnings and cash flow, which is not just for the next six months to a year, but you can look out a couple years now and say, hey, what is the true valuation for these?

[Josh Brown]

I say one Thing about that, it's such a great point. One of the things that happens when you have an actual positive interest rate and I don't just mean nominally it's 4%, it's 5%, but when you have an interest rate that net of inflation is positive, all of a sudden it kicks this whole financial services cycle into gear where you've got like a steeper yield curve, you've got people making money on lending, you've got issuance. We're going to talk about a name later in the show that is like the perfect name for this moment. But the entire sector, to Surrot's point, companies have ways of. So this idea that oh, they're raising rates, it's bearish for the market. Actually no, it's really good for the financial services sector for there to be a real rate of return on fixed income and all of the knock on effects that come as a result.

[Joe Terranova]

You know, I said yesterday, I feel as though we're pushing the limit in terms of our weighting. We increased financial sector exposure up to 31% right now. But to your point, we're combining two factors. We're saying okay, momentum, technical confidence and quality. Looking at fundamental confidence as well and whether it's bank of New York Mellon, which we own 10% revenue growth recently, I think Steph owns that name as well. Interactive Brokers, we purchased this name In October of 22, we're up 185%. Do you know how many times myself personally I would have sold out of that position? The rules are saying no, Joe, sit on the sidelines of don't touch it because it's working.

[Surat Sethi]

And look at capital formation and look at the companies like Black, Blackstone and Apollo and kkr, they're also all participating in this. So I think you're really being spread wide and it's not an inch deep. It's actually real relative value being created.

[Scott Wapner]

Steph, what other names? I mean they may not be on this list but that should be on our viewers lists.

[Stephanie Link]

Well within financials, I think Truist has done the best job of the super regionals in terms of kind cutting costs and improving profitability and a little bit better loan growth. Their capital levels are great. They can return cash to shareholders. They're doing about 500 million in buybacks a quarter. I think that number gets raised when we get Basel three endgame rules. And you guys were just talking about in terms of yields. The industry has not seen net interest income and net interest month margin expansion in many, many years and last quarter. We actually heard from many companies, Wells Fargo said this as well, that they thought that net interest income and margins have bottomed and it will be a 2025 story to see a recovery. These stocks still trade truist trades at under book, which I think is insane. And so that's my biggest position. But I think Wells Fargo, they have a catalyst with the cap asset, cap lift that's coming sometime, we think this year. And I think the stock will be rewarded really well when that comes out. But I still like Morgan Stanley as well and bank of America for M and A capital markets deregulation of the whole nine yards. So I'm very overweight at financials.

[Scott Wapner]

I mean, momentum cuts both ways. And that's the reality, as all of you know from however long you've been investing in these markets. That brings me to what's taking place between the chip stocks which have been hit, as you know, lately because the deep SEQ news, we made a wall just to show you the deep sea sink for many of these names. Nvidia is still down 11 and a half percent. This is since January 27th, the day that all this really unfolded. AMD had news this week which wasn't good. Stock down 10%. There's Taiwan semi and, and, and Broadcom, which arm holdings today cutting the guidance. The stock was lower earlier. Josh, how do we view what's happening with some of these chips?

[Josh Brown]

There's been a rotation. They're moving out, they're moving out of the, they're moving out of the chip companies. They're moving into the chip equipment companies. Semi equipment is on fire. So we didn't have any of those names in this graphic, but like AMAT and lan. Let's do them right now. Real quick. Let's do them right now. Out of the top five best performing holdings in the semiconductor holders is index. Three of them are semi equipment. Here's KLA 10 core plus 20%. Guys, the year to date number, I'm giving you 20%. It's February. What is it? Fifth Lamb Research up 13. AMAT up 11. The median return for the semi equipment names here to date, the ones that are in the s and P500 is plus 12%. So it's not a bear market for semis. It's a mentality shift. It's like, oh, all right, wait a minute. Maybe this whole thing is not just about GPU sales, but it's about all the supporting businesses that are involved in companies maximizing the yield that they get out of the chips that they Are buying, will buy. And so I think like the cycle doesn't have to die for you to make money in chips. You just have to think bigger.

[Joe Terranova]

We've owned KLA Corp. Since November of 2020, since inception. Josh is spot on just in terms of the semi equipped names. We also own Applied Materials. I'm disappointed that right now the strategy is not lam research. Just personally I think it's ridiculously cheap and the fundamentals support it. But we have been cutting back our semi exposure. We're only down to 4% right now in semis. We were up at 11% just one year ago. And I also think beyond the rotation that Josh is talking about semis into semi equipment, if you observe the relationship between semiconductors themselves and software software, go back to July 11th, you're going to see remarkable, remarkable outperformance in the software names. The IGV since July 11th of 2024 is up around 22%. You've got the SMH which is down 12%. So that negative correlation trade is in play with a lot of hedge funds and speculators and it's going to work until it doesn't staff.

[Scott Wapner]

Broadcom is your principal chip name, correct?

[Stephanie Link]

Yeah, I've been pretty selective in terms of semiconductors just because they've all had such a nice run and they seem to be pretty crowded, which is why you're seeing the corrections that you're seeing. But just think about it, Scott. Nvidia is still up 86% in the past year. Broadcom up 88%, TSMC up 75%, SK Hynix up 50. You get my point. These stocks have had enormous runs and they are beneficiaries of AI and the spend. And we didn't get any capex spend. In fact, we got increases from a lot of the hyperscalers. So I don't think the semis are done. I just think you want to be a little bit more selective. IBM had an analyst meeting Scott this past week and they said that they expect spending from enterprises on AI to go from 245 billion this year to 835 billion by 2028. They said 98 billion percent of enterprises have been examining and working on AI, but only 26% have processes in place. So the trends are still very favorable. And in any given quarter you're going to see mix mixes and mix shifts from semis, maybe semicap equipment, maybe to software. But the pie is really big and it is growing and you want to have exposure. Broadcom is just like I said, up 88% in the past year. So I'm waiting for it to pull back more, more because it hasn't pulled back enough. But it's a pretty fairly big position for me because it has a diversified total revenue mix between a software and some of the cyclical end markets that haven't seen a recovery just yet and their free cash flow is enormous, so they're going to continue to buy back stock, etc. It's just not as cheap as when I bought it initially. So I'm just watching it. But I still like it. But I'm remaining selective overall in semis.

[Scott Wapner]

I know, I'm just reminded of those famous words, past performance is not indicative of future returns. I mean, almost to Rod, I'm like, okay, the stocks were up a lot, great. If you're in them, great. But is now the time to reassess it? If the goal posts related to these names have moved, like, who cares that they were up a lot? If the goal posts have moved, they could be down a lot.

[Surat Sethi]

Yeah, and I think you saw that with aam. And we'll be interested to see what Nvidia says on their call because if they give any hint of hey, demand has slowed or all this capex is not coming our way, even though the stock trading in the high 20s, you could see a pullback. However, you know, I still think Nvidia is one of our largest holdings. We've cut it back over time but I do think the secular tailwind there and you could have a couple of quarters and we know Nvidia can be down double digits or be up. So you want to also pick high quality companies and I think, you know, for us, Nvidia is one of them.

[Scott Wapner]

What's your, what's your read on Qualcomm and the report?

[Surat Sethi]

So really strong report. I mean it's kind of one of those things where good news was bad news for them. The overhang is at the end of this year, will Apple finally pull away and say we're not using your chips and that's what the stock is now reflecting. So I think this uncertainty once it's taken away will really do much better. For Qualcomm, it's trading at 14 and a half times earnings with a strong balance sheet and dividend. So I do think you don't have, I mean, to Joe your point, you're not going to have any momentum or catalyst right now until that happens.

[Joe Terranova]

Do you think there's a bigger problem though with smartphone exposure when you're looking at the Semiconductors like Qualcomm.

[Scott Wapner]

Well, you mean like Skyworks, which is getting destroyed today. Yeah, Jenny, by the way, Jenny Harrington owns that. She's traveling. She is with us I think this week, maybe tomorrow, maybe next week.

[Josh Brown]

Better not let that.

[Scott Wapner]

No, we tried, we tried, believe me. She's pulling us a rock. Well, at least she responded. She responded true. Remember last time, last time you tried to hide.

[Surat Sethi]

You know what they say, ignore bad behavior. That's what I'm gonna do. Okay so, but, but this is why it trades at 14 and a half, right? I mean the, the SMH trades at 22. So you've got a 33% discount for a stock like Qualcomm that's discounting not just Apple, but saying hey, do the Android phones. Can you maintain that amount of royalty? And I think, you know, the stocks have proven over time to do it. So it's like a value play in semiconductor which is just a contradiction in terms by itself.

[Scott Wapner]

So I want to hit a bunch of names before we take a break and they're important stocks to Amazon tonight. How are you feeling about this?

[Josh Brown]

I'm going to tell you right now, for me, this is, this is the super bowl of the Mag 7 reports. To me, I think it's going to be more exciting than in video. They're expecting 187 billion in revenue. That would be a 10% year over year number EBIT of 19 billion which is 44% growth year over year. People don't think of Amazon that way, but they really should. The earnings per share, $48. You ready for this? 49% year over year growth award US should be 19. Not too high of a hurdle. More interestingly out of the max 7. Amazon is expecting the second highest earnings per share growth for 2025. 77% is what the Street's expecting. Only Nvidia is higher at 127, which is like from another planet. Lastly, Amazon is expecting the second highest earnings per share growth in the next 12 months out of all of the top 75 market caps in the S and P. So I told you last year, 170. 175. This is a $250 stock in disguise. I think she wants 300. I don't think I get it on one earnings report or two earnings reports. It might take the course of the year but that's where I think ultimately this, this trajectory could be.

[Joe Terranova]

I love the enthusiasm and I agree. I speak spoke yesterday about the fact that you can have it both ways with revenue Growth as it relates to the Mag 7 and Amazon. What they have done in the last several quarters is say to the street, okay, here's the revenue growth and we're going to accelerate that revenue growth. It's clear cloud business is going to be interesting tonight because you've heard from Microsoft that the cloud business wasn't so good. You've heard from Google, but here's, here's the giant, here's the biggest cloud business there is. Are they able to defy what we heard from those other two?

[Scott Wapner]

Max 7 guys want to hit Metta real quick which is up again again in capital letters because Today will be 14 straight days of gains for surround shares of Metta.

[Surat Sethi]

Well, it's been an incredible run. I mean you have a couple of things going on here. Their usage in Instagram is doing really well and also they, you know, as the deep Sikhs of the world do well. They do well because it's not proprietary for them. And I think you've got, you know, this huge take tailwind behind it. And Zuck said he's going to spend Capex. The last time he did he got killed. But now people are believing that he can have a return because he's actually done it.

[Josh Brown]

So this is the key point on Metta and I talked to Dan Ives about this last week their LLM was open source from day one. They never pitched the LLM to the strama as like this is the by itself the cash cow. We're going to sell this like Chachi pt. The idea was people are going to build, build on top of this which is what's going to give it value and that's why the stock was unscathed.

[Surat Sethi]

Which gives them the network effect which.

[Josh Brown]

Is exactly what this thing up last week with all the deep sea casualties. I totally agree with you feel the same way about Amazon. Sorry, I'm sorry, I know we're trying to get to a break.

[Scott Wapner]

No, sorry, I got to get to a couple of their names.

[Josh Brown]

Bedrock AI is, is Amazon's LLM platform and they were saying bring your own. We don't have to sell you Amazon proprietary LLM. You want to use Llama, you want to use ChatGPT, do what you want to do which is I think the right strategy in the wake of Deep sea.

[Scott Wapner]

Two more quick names. Oracle, Morgan Stanley Wealth Management, adding it Surat to its US all cap growth model portfolio. That means it's going to be in your portfolio if you are a wealth management client of Morgan Stanley, more than likely. What about that? You own that stock, I own the stock.

[Surat Sethi]

I mean, it is really done well. It's turned a corner. It's got application software, AI usage, data center growth, which is going to be so large, and nobody's cutting back on that. And this was a sleepy, you know, CRM software company, and now it's actually got some good growth drivers to it.

[Scott Wapner]

Okay, so not technically a tech name in industrial, but it is a big NASDAQ name. It is Uber, which has had a tumultuous week, as we know. I wanted you to weigh in on this, Josh. The price target gets raised today at B of A, which reiterates its buy. So they had the earnings. The stock was down a lot. You're getting a nice rebound as we see here. What you take. You said this was the most mispriced stock in the nasdaq.

[Josh Brown]

I don't understand this. I honestly don't understand the sellers at all. I listen to the call in real time. I use the quarter app to do that. So I'm looking at the slides, I'm looking at the live transcript. There was like, not one thing discussed on that call, either by management or the sell side that gave me any difference of opinion in terms of what the opportunity is here. The numbers were fantastic. The guidance was within the range, not soft. It's just like the first idiot that wrote an article wrote soft in the headline and then the algorithms did what they did. But look at the comeback today, because people are stupid short term, not long term. Any seller of the stock below 70, you couldn't come up with a justification for why it was down to the degree it was yesterday. So that does not explain what happened to my face, by the way. So I don't want anyone to think that I got hit with the Uber earnings call, and that's why I have a stitch. But it really felt like a punch in the face. I'm going to tell you, though, this company is the best positioned autonomous vehicle player. I think it's better positioned, quite frankly, than Waymo or Tesla, because it's not enough to just have autonomous vehicles when you want to ride. You need a network so that if an autonomous isn't available but a human is, those things are interchangeable. Dara laid out that strategy beautifully on the call, and I think if he didn't listen to it yet, that's what you want to do, whether you own the stock or you're looking for an entry that's the right move, is listen to his explanation on avoid. I think they're gonna win.

[Scott Wapner]

I Was wondering a little bit about the stitch. I was wondering if someone not from Uber if someone tried to get between you and a camera or microphone.

[Joe Terranova]

I was thinking maybe eyebrow stitching.

[Josh Brown]

Chick Fil A.

[Scott Wapner]

All right, thanks. We're gonna take, we're gonna take a quick break and when we come back, we do have a lot of committee moves to hit yet. We have new trades from Josh and Steph and Surat. And later, remember this halftime highlight when Josh pitched a new stock to broadcasting icon Al Michaels.

[Josh Brown]

The name of the company is ebay. Ticker symbol, believe it or not, ebay.

[Scott Wapner]

Well, Al bought it and the trade worked. Now Al's back. It is the super bowl right ahead of us. And he's going to get a new pick from Josh as well. Coming up.

[Stephanie Link]

For 140 years MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together, we're building a healthier future. Learn [e-mail] Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days?

[Scott Wapner]

Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your car, you automatically earn cash back. Welcome to the Now It Pays to Discover.

[Josh Brown]

Learn more at discover.com credit card based.

[Scott Wapner]

On the February 2024 Nelson Report.

[Stephanie Link]

Learn how to use AI to be more successful with CNBC. Make it's new online course. We'll give you examples that can help you master AI tools.

[Josh Brown]

Go to CNBC make it.com AI and register now.

[Scott Wapner]

All right, we're back. Let's take care of some moves here. You sold Bristol Myers already?

[Josh Brown]

Yeah, it was a technical trade. It had a tight stop. Reported earnings? The earnings were fine. The stocks were selling off in the pre recovered somewhat came out of the name. Look, if you're buying something where you think you're about to get a breakout and then price tells you no, that's not happening this time, right? At Resistance, it failed. It doesn't mean it can't go higher. It just means there are better, better places to be.

[Scott Wapner]

I mean, you bought it on Monday. Just to put it into perspective for people, Surat, they did have earnings. You see what the stock is fine.

[Surat Sethi]

But earnings are fine and the pipeline is stronger. So it's a question of when does that catalyst come in given the overhang of the nomination. And I can see why in the short term, people don't want to own it. But I think longer term it's that sharp back.

[Josh Brown]

Put that chart back up. You can very clearly see 60, 61, 62 is meaningful resistance here. Maybe a little bit further back, guys. You can very clearly see the stock failed at the same level multiple times. Call me when it's 61. I'll take, I'll take a fresh look is the way I would phrase it.

[Scott Wapner]

Since we're talking health care staff. How about Lilly? The mixed quarter that they reported. We can see what the stock is doing here. But do you have a take?

[Stephanie Link]

Yeah, I mean I thought it was a very solid quarter earnings be. I think the revenue was really in line and thinking about it year over year and growth up 4, 45%. I don't know any pharmaceutical company that's growing 45%. Manjaro grew 60% year over year. Zeppelin grew 52% sequentially and almost 100% year over year. And gross margins expanded by 90 basis points. Very solid quarter against low expectations. But the, the underlying revenues and the mix, really very strong.

[Scott Wapner]

And by the way, you also bought more UnitedHealth, correct?

[Stephanie Link]

Yeah, I did and I've been nibbling. Every time it kind of pulls back. Yesterday it was down 3% on kind of a silly story about profits, maybe misrepresented. I do not buy that at all. This is the number one company in the industry with huge market share, growing revenues and earnings, double digits. They have an 18.2 billion buy that and it's trading at 12 and a half times EBITDA. Historically this thing trades about 15 times. So I think I'm getting a bargain. It's a longer term story, 2025, but I'm going to stay patient with it.

[Scott Wapner]

Bought more Chipotle too?

[Stephanie Link]

Yeah, I mean I thought the quarter was very good and the story remains very much intact. They've got a new product cycle coming. They have digital that is accelerating. That's going to help margins. They have solid unit growth. So I thought the quarter itself was fine. I think any restaurant company would love to have a 5.4% same store sales number with a 4% transactions pricing power as well and margins that are beating the street. So I think January seems like it's a little soft. I think it's a one off. So I bought it when it was down 6%.

[Scott Wapner]

Good to buy more Chipotle here.

[Joe Terranova]

I think so. I agree with everything Steph said there. I think over the course of time though, work them some of the challenges that they're having. The near term out and they will continue to have the premium that's being paid for them. One other thing on health care real quick, which we have a 5% weighting towards, so we're underweight on health care. There's one name out there that we used to talk about all the time on this show and that's Merck. Merck is down 33% from its June high. Merck right now looks like a literal ski slope that you could ski, ski down from the left to the right. That's a name I've been interested in in the past. I don't know if anyone else has it, but that's a very popular name to own and it's not performing well.

[Josh Brown]

Well, knife, look at this thing. That's, that's rough.

[Scott Wapner]

Speaking of doing the downhill, Edison International. Yeah, two week low today. You're out.

[Surat Sethi]

We got out a few days ago, the overhang, you know, it's very unfortunate what's happening in California, but the overhang on this stock, until they really figure out what happened, it's going to take a long time. And, and then the fundamental structural issues of voting. The stock going through, it was just too much. So we took it off the table.

[Scott Wapner]

Okay, let's get the headlines now with Bertha Coombs. Bertha. Hey, Scott. Democrats on the Judiciary Committee have pushed to delay the vote on Kash Patel's nomination for FBI director, as they call his fitness for the job into question. They held a press conference moments ago demanding that Senate blocked the nomination, saying his appointment would be dangerous for the country. The committee vote will now be held next Thursday. President Trump's social media company is taking steps toward launching a Bitcoin etf. The product will have to be approved by regulators appointed by the president. The Trump media company says it applied for trademarks and three ETFs under its new Tooth Fi brand. The company says it plans to launch the products later this year. And the public in 44 states can now get a test that claims that it can help doctors rule out autism in children using a strand of hair. A New Jersey startup, Linus Bio, launched this a test called Clear Strand today, which uses the hair strand from children 1 to 36 months old to identify biomarkers associated with autism.

[Josh Brown]

That FDA, that test has not been.

[Scott Wapner]

Cleared by the FDA. And Scott, even with a biomarker, obviously there are also environmental factors that often go in with these things. Alright, Bertha, thank you. Bertha Coombs. Up next, sports broadcasting icon Al Michaels. We will talk football ahead of Sunday's big game. He'll break that down for us. Plus, Josh has a new stock recommendation for Al. We reveal it next.

[Stephanie Link]

Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single purpose, making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn [e-mail] Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days?

[Scott Wapner]

Do you think Discover isn't widely accepted? If this sounds like you, you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover.

[Josh Brown]

Learn [e-mail] credit card based on the.

[Scott Wapner]

February 2024 Nelson Report. All right, welcome back. The Kansas City Chiefs go for three in a row this Sunday in Super Bowl 59 down in New Orleans when they meet the Philadelphia Eagles. Who better to size up the game and talk some markets than broadcasting legend Al Michaels? There he is. It's good to see you always. Welcome back, Judge.

[Al Michaels]

This is my favorite show on television. I feel like I'm looking at my extended family. Love you guys.

[Scott Wapner]

We feel the same. You're welcome at our dinner table, Al, anytime. And you know that. And it's great to have you ahead of this game. What do you think the decision deciding factor might be here for whether the Chiefs get this three in a row or the Eagles get redemption against the Chiefs defense?

[Al Michaels]

Everybody's looking at Jalen Hurts, Patrick Mahomes, Saquon Barkley. I get all of that. I think you have two of the best defensive coordinators of all time. Steve Spagnolo with the Chiefs and you have with the Philadelphia Eagles, a man who has been there for a long, long time in Vic Fangio. So I think if it comes down to one thing apart from something crazy, really determining the outcome of the game at the end, it's the defense that dominates is the it's the defensive line that I think can put the most pressure on the offensive line. You know, you're always talking about keeping Mahomes in the backfield and all that. It's the same scenario for every game. But I think defense prevails on Sunday, spreads pretty tight.

[Scott Wapner]

Kansas City's given a point and a half. You've seen so many of the great quarterbacks play. Al, where does Mahomes in your mind rank. If he gets this three in a.

[Al Michaels]

Row, well, he's near the top to begin with. And it's like, you know, what do you want for dessert? You want. You have two great desserts to pick from at the end of a fantastic meal. So, you know, you look at Brady and you look at going back obviously to Joe Montana and the other great quarterbacks. And Mahomes is right there. I mean, he is certainly in every conversation about the greatest quarterback of all time. And I know people like to delineate, this guy's got to be one, this guy's got to be two. I don't feel that way. I enjoy both of them. I think they're both terrific and I think it's very hard to separate them. But, you know, Patrick is right there, obviously with Brady. He's already there right now. He doesn't have to win another super bowl as far as I'm concerned.

[Scott Wapner]

Yeah, how about Hertz? You know, he doesn't get the love, so to speak, that a lot of these other, you know, upper echelon quarterbacks do. I assume that this Sunday's game can change a lot of the conversation around him.

[Al Michaels]

It can. And don't forget, even when he lost a couple of years ago, he had a phenomenal day. So they gave up, I think 38 points. You know, he was responsible for 35 points. I mean, that's about as good as a quarterback can do or is expected to do. So obviously, you know, this is a feather and in his career cap, if he can pull off a win, and I think before his career is done, he'll win one, at least one.

[Scott Wapner]

We played the clip a little while ago in our tease of Josh giving you that ebay stock pick back on September 12, wealth, which did quite well, we must say. You sold out of that recently. Correct. You took your money and ran.

[Al Michaels]

Only because I had to avoid a margin call on some other stocks that I had, including, as Josh well knows, a day trading stock I bought in 2010 that's still in the portfolio 15 years later. So I'd like Josh to come up with a day trading stock I can buy that I can hold for the next 15 years. Go, Josh.

[Scott Wapner]

You're in luck. He has a new name for you. I'm going to turn it over to Josh and you guys can have a moment here.

[Josh Brown]

Good afternoon, Al. This is Josh Brown from Ritholtz Wealth Management. We made a commitment to get back to you only when we isolated the situation that we thought had maximum near term. Upside potential. If you have a pen, I'd like to give you the ticker symbol.

[Al Michaels]

Go for the gold.

[Josh Brown]

All right. Name of the company is Moody's. The ticker is MCO. This is a $499 stock that I think will when it breaks 500, all bets are off. You've got price targets across Wall Street. Goldman Sachs, Citigroup, significantly higher than today's price. And Berkshire Hathaway owns 13% of the company. This is one of their longest term holdings. They've been in it for about 25 years. What's happening with Moody's out? Very simple story to understand. Two companies in one. You've got the investor services side, you've got the analytics side. The analytics side is blowing up into a full blown AI data business for Wall street professionals. You name it. Private equity, private credit, hedge fund, investment bank, asset management. Everybody's using Moody's data. The markets are on fire. This company sits in the sweetest of sweet spots. I'd like to put you down for a thousand shares just to get to know each other. If this trade works out, I want a profit. Promise you'll work with me much larger in the future. What do you say?

[Al Michaels]

You're already moving the stock. You had it at 499. It's 501. When we had that. There it is, 502. Look at you, Josh. You're moving the market as we speak.

[Josh Brown]

Next week out February 14th is the earnings Valentine's Day. Be my valentine. Take a thousand shares. I'm telling you, I won't let you down.

[Al Michaels]

Be careful now, because I'll be your valentine. But you know, in.

[Josh Brown]

How would you like to tell your account, joint or individual?

[Al Michaels]

So let me ask you a question. A $500 stock is, you know, it's, it's a hard stock to buy because you like to buy, you know, a lot of shares. Would you buy calls?

[Josh Brown]

This is a function of what your, your time frame is. What I would tell you is this is how I handle it. I like to reduce the price by a decimal point. And I like to say instead of thinking about the stock was 41, and now it's 410, and now it's 500. I say it's a $41 stock that went to 50, no big deal, you'd still buy it. So I do that kind of mental math in my head all the time and I find that it's a, it's a good framework to think about these triple digit share prices.

[Al Michaels]

I want to know if Joe Taranova also agrees with you. And can we get Farmer Jim? Farmer Jim is probably out on the farm somewhere.

[Josh Brown]

No, no, no. If Jim buys it, forget everything I said.

[Al Michaels]

No kidding. No, that I didn't want to bring up Cleveland Cliffs, but I can't go on this show and not bring up steel. Right. You know that. Come on.

[Scott Wapner]

Of course.

[Al Michaels]

We're all brothers in arms.

[Scott Wapner]

We are. Amazon reports tonight. You have, you have a. I always told you, you want to talk to Josh about that as well, or the guys, because everybody on. Everybody here owns Amazon. Well, so what are you thinking about here ahead of these earnings?

[Al Michaels]

And I work with it, so somebody explain this.

[Josh Brown]

True.

[Scott Wapner]

You do Let.

[Al Michaels]

I saw Josh before. Josh thinks it's a $300 stock in disguise. I hope it is. But the thing is that I can't figure out is when stocks come out with earnings and they beat by 10% all of a sudden, you know, wow. And there's a pop early on, and then they have the call and the thing tanks 10%. The reverse also happens. Stocks don't, you know, make the number and they go wildly up. Why does that happen? It's a macro question. I'm still, I'm curious.

[Josh Brown]

Forward guidance. Because they put out the press release and tell you how they did over the last 90 days, and you get one reaction. Then they tell you what next quarter or full year is going to be, and everybody says, oh, I don't care about last quarter anymore. Now I like it, or now I really hate it. So that's why you get that effect. Which is why I think so many of the hottest tools that are coming out for investors have to do with instant transcription of conference calls.

[Scott Wapner]

Steph, I want to get Stephanie Link's take on this, too. So, you know, Al's getting those Amazon paychecks. We know that. But he wants more, Steph. He wants this stock to do well on earnings. What does he need to see tonight?

[Stephanie Link]

Well, I think all the focus is on us, their cloud business. The expectation is for imprint at 19%, but I think the whisper number, Al, is 20%. So they probably have to do 20% plus for the stock to react favorably. But the other thing that's really, really important is the profitability. The company in 2024 grew operating income at 85%. That's just enormous. So it deserves the higher multiple that it gets. But the guidance going forward, as Josh just mentioned, it's likely to be conservative. They typically are. But when I like a stock, I actually kind of root for it to go down. So that I could get a better price action for it. And I do think that if this stock were to be weak on us, I think you want to own it and buy more.

[Al Michaels]

On the dip, are you? Josh's Corner is just a $300 stock. By the end of the year or maybe middle of next year, I think.

[Stephanie Link]

It goes a lot higher, Al, because there's three ways that this company wins. Retail, we know they have the dominant share in E commerce. I think that grows upper single digits to low double digits. Growth for the, for the foreseeable future. Us, as I just mentioned. And by the way, margins are very high. They're going to do something like 35, 36% margins versus low single digits on retail. So that's why we root for us to do well. And then ad monetization is also very important and that's being improved by AI and the channel checks have been very good. And again, as I mentioned, profitability, this company has gotten religion. They're not just spending wildly. Yes, they will increase their capex for initiatives, but other parts of the business, business, I think they're going to be much more prudent. And that's why people are more excited about this story for the, for the next couple of years.

[Al Michaels]

Here's a shout out to Andy Jassy, who's the ultimate boss. Andy created us, of course, and that's why he ascended to the Bezos position. And I've gotten to know Andy extremely well because Andy is a gigantic sports fan. And when you're in the sports end of the Amazon universe, what better than to have a man who loves sports? And as you know, Amazon is getting more and more and more into sports. Is a story today that's out there somewhere about maybe Amazon buys Madison Square Garden network. I just saw that someplace. I have no idea where I saw that. But anyway, that there's a lot of stuff that's out there. And Amazon, as is probably the case with Netflix and they proved that on Christmas Day, more and more these streaming giants are getting into the sports world. And it's great for, you know, for me, obviously.

[Scott Wapner]

Yeah, I mean, you saw it firsthand, Al. The ratings numbers for your broadcasts on prime were up. Just huge numbers. The commissioner himself called that out in his annual press conference down at the super bowl the other day. I heard him do that. So continued success. We got to do this in person sometime. You got to come sit on the desk with us, even if it's a special trip to the New York Stock Exchange change because we'll have you? Anytime.

[Al Michaels]

Well, at the Milken Conference, you guys come out. Come over to the Beverly Hilton. A much easier trip for me.

[Scott Wapner]

Much easier for you. All right. All right. We'll see what we can do. Al, you're the best. We appreciate your time.

[Josh Brown]

Account forms out to you shortly, sir.

[Al Michaels]

Love you guys.

[Scott Wapner]

You as well. That's Al Michaels. Take care, man. We'll see you soon. Straight ahead, what we're calling split decision. Honeywell, the latest company to announce a spin got us thinking are spin offs good for investors? Sima Modi is standing by. Our expert, Stephanie Link is to. We're back after this. All right, welcome back. Honeywell shares lower today. The company officially announcing plans to split into three. It's the latest big name company to announce a spin. And that got us thinking, are they good for investors? SIMA Modi has some answers for us. Seema.

[Stephanie Link]

Scott, Honeywell splitting into three separate companies. Companies, as you just said, Automation, Materials and its crown jewel, aerospace. Motivated in part by GE. Successful spin off of GE Renova. Shares of both the parent and the SpinCo up over 45% since that deal closed last April. That's motivated other companies like 3M DuPont to separate their businesses and simplify their story to Wall Street. Intel, Lennar, Western Digital, FedEx among the companies with plans to spin off a business in the next year. Year. And get this analysis from Morgan Stanley shows that spinoffs tend to outperform the market by 10.2% two years after completion, while parent companies underperform on average by 8%. Scott?

[Scott Wapner]

All right, Sima, thanks for setting us up. We go to our guru, our spin guru, Stephanie Lake. What do you think about about this? You have so much experience in a lot of these names that have turned out to do pretty well.

[Stephanie Link]

Yeah, I mean I think the spinco absolutely works, but I think the parent company also works. So spinco works because they get a fresh beginning, new management and focus 100% of their time on the company and more growth investments. So you should see margins improve over time and growth improve. Parent company, the management gets to focus on their core business without any distractions. Conglomerates are a distraction. They don't work. So I like the spin code. By the way, the best spinco was Zoetis when it spun spun out of Pfizer in 2013 and the stock was up, has been up 500% since.

[Scott Wapner]

You're finally reaping the benefits of your patience too with GE and all that it has done. Steph, thank you. Final trades are next. Join me closing bell. We'll run you right up to Amazon with Adam Parker, Mark Mahaney, Ankar Crawford, Jason Snipe, Stephanie Gill. Let's do final trades and we start with our own Stephanie. Stephanie Link Boeing. Thank you Mr. Say T Oracle Joe T Zoom Video.

[Josh Brown]

Thank you Josh Brown Uber Hodding Right now, I'm staying long.

[Scott Wapner]

All right, thank you very much again. I'll see you at 3:00 on closing bell. It'll do it for us. The Exchanges now you've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekday days at 12 Eastern only on CNBC.

[Stephanie Link]

All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal.

[Josh Brown]

Their parent company or affiliates, and may.

[Stephanie Link]

Have been previously disseminated by them on.

[Josh Brown]

Television, radio, Internet or another medium.

[Stephanie Link]

You should not treat any opinion expressed.

[Josh Brown]

On this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the.

[Stephanie Link]

Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries.

[Josh Brown]

Warrant its completeness or accuracy, and it should not be relied upon as such.

[Stephanie Link]

To view the full Halftime Report disclaimer, please visit cnbc.com halftimereportdisclaimer Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier that comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn [e-mail].