← Halftime Report
Halftime Report
The Resilient Rally 02/14/25
00:44:22
Scott Wapner and the Investment Committee debate the resilient rally as the S&P trades near a new closing high. Plus, the desk debates the latest Calls of the Day. And later, Josh Brown shares some of his best stocks in the market.
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- [00:00]
Discover Representative
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? 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 card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report at Capella University.
- [00:29]
Scott Wapner
Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more@capella.edu I'm Scott Wapner and you're.
- [00:46]
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, Michael, thanks so much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, the resilient rally. Mike, just talking S and P near a new closing high. It was above that level. We'll watch it closely. Debate and trade. These markets tell you about some new committee moves as well today. Joining me for the hour, Stephanie Link, Jason Snipe, Josh Brown and Kevin Simpson. We will go to the markets. We do have a mixed picture, but nonetheless, our top story today is the resilient stock market inflation data this week, hotter than expected tariffs, trade war possibilities, retail sales were weak, all so called bad news. And yet here we are on the doorstep of another record high. Tom Lee today saying equities finally stage an upside breakout on that bad news 2025 proving stocks remain resilient and resistant to a large sell off. Investors are buying the dip. We're tracking better than expected. Josh Brown, why so resilient?
- [01:59]
Josh Brown
I think it's a, I think it's a vibe shift that started sometime in the fall of last year. I don't want to get political on the show, but I just think people continue to give this administration the benefit of the doubt that the tariffs, if and when they come, A, will not be permanent, last forever, B, will not be allowed to do quite as much damage as some of the worst case scenarios being pondered by Wall Street. And as a result, we're sort of looking through them. Of course, the mood can change on a dime, but the vibes right now, the mood right now is, look, they're doing what they said, they're deregulating, they're gutting the securities regulators. They're going after their own FBI, their own Department of Justice. They're ripping out all of these agencies that are running up the costs on American business and throwing red tape up and they're cutting the red tape. And that's, look, you don't have to agree with it, you don't have to like it. I'm not telling you how to vote. I'm just telling you when you talk to people, even people that four years ago were voting Democrat, they like it, they're into it. And I think that that filters through to the way that people are thinking about investing. The other thing they're looking through are inflation scares. It was like 48 hours ago that a CPI report sent the 10 year treasury yield spiraling higher. That scare lasted for 90 minutes and we've already round tripped it on the 10 year yield. So people are willing to give the inflation picture the benefit of the doubt. They're willing to give the administration and the tariff stuff the benefit of the doubt. And of course it could change. But right now that's what's happening. That's why you're getting this breakout and that's why stocks are so resilient.
- [03:46]
Scott Wapner
Steph, maybe the biggest answer as to why markets are ignoring the quote unquote bad news because earnings have been really good. You have, we're above expectations in terms of the number of beats. Earnings growth is 15.3%. We came into earnings season saying well the bar is high. Market wants 13%, 14, 15. Well there you go, you got it. First and foremost, that's the number one reason. Right. Earnings are more important than this other.
- [04:14]
Stephanie Link
Stuff right now, 100%. And also the economy is actually doing okay. We're running at 2.9% GDP according to Atlanta Fed Tracker. Initial claims at 213,000. Historically low. Credit spreads are very narrow. That's really a big tell as well. We've talked about ISM manufacturing in expansion services has been an expansion for two years. So now you have both components happening. Even retail sales. I know that they were disappointing but you had revisions higher to the prior.
- [04:45]
Scott Wapner
That's right, right.
- [04:46]
Stephanie Link
And that's number one. Number two, let's look at a year over year basis on retail sales. It's actually growing 4%. That's pretty healthy. So exactly to your, to your question and you answered it. This all equates to double digit corporate profits as well as capex going higher and hiring intentions actually going higher. So all of these things are great and we're seeing a broadening out right in the earnings picture. So it's not just comm services, which actually has been really positive, but discretionary is also up about 30%. Financials up 17%. So you're having a lot of various different sectors do well. And I think that's one of the.
- [05:25]
Scott Wapner
Reasons the market is the other thing you have here. Yes, we're talking about tariffs every day, but we're not implementing tariffs every day. They're being, you know, you could say they're being slow walked. Why? Because the President doesn't want his own inflation problem. Can only blame Biden for so long.
- [05:41]
Kevin Simpson
Right.
- [05:42]
Scott Wapner
It's sooner or later, you're the president, you own it. Right. That's. Everybody finds that out the hard way. So it's been slow walked. B of A flow show says the hot CPI this week was a blessing in disguise. Those are their words. Why? Because Trump's going small, not big on tariffs and immigration at least now to avoid a second wave of inflation. What do you think?
- [06:04]
Kevin Simpson
100%. Scott, there's no way that Trump wants to be a part of the inflationary story. Right. So a delay on tariffs is a big deal and clearly the market has responded to that. And as Stephanie already mentioned, earnings fantastic, up 15, you know, 0.3%, led by financials, communication services and consumers. Discretionary. Right. So for me, I think it's a very important point to see what is already playing out the market, which is a broadening of the market. Right. So we've heard from the Mag 7 names. Obviously the price action hasn't been great because the story has been about Capex and the abundance of Capex and where is, where is profitability going to show up? You know, that's why we like some of the software names and cybersecurity and a lot of other places. But I think the broadening story is, is a positive. To Josh's point earlier, you know, this kind of doge move and kind of looking at operating leverage and, you know, almost from a company perspective and making sure we're kind of clearing the deck, getting the fluff out of the system. The market is responding well to that and I think that's what's kind of moving markets over the last couple of weeks.
- [07:07]
Scott Wapner
Piper Sandler today says a lot of investors are beginning to think Trump may be more bark than bite when it comes to tariffs. We think that's a mistake now. I mean, maybe they're right. I mean, right now it appears to be more bark than bite. Why? Because even that event yesterday at the White House was to initiate a study. It wasn't the actual implication of or inputting, I'm sorry, the reciprocal tariffs in yesterday. So are they right, Kevin? Do we have an eventual tariff related sell off? What do we think?
- [07:44]
Jason Snipe
I think that's inevitable. But Josh hit the nail on the head when he talked about these things being a lot muted, a lot more muted than early expectations, probably temporary and a lot of exceptions in there. The uncertainty surrounding tariffs are the real risk I think for the markets right now because as everyone else on the panel is articulated appropriately, earnings are great and that can keep the stock market really resilient. And you led that with the open. I feel like we look at things now with strong economy, great earnings, you've got still a fueled expenditures, but there are a few things bubbling under the surface that we need to pay attention to. We saw that with cpi, ppe, retail sales. Maybe the consumer is getting a little bit tired, but it's the tariff uncertainty that I think is the big fear factor beneath it all. And until we see something that has some teeth in it, the markets can move higher. So I agree with the comment Judge.
- [08:39]
Scott Wapner
Yeah, yeah, Josh, go ahead.
- [08:41]
Josh Brown
I think I want to add to what Brian, Kevin and Belsky were saying. Stephanie were saying you think about the environment that we're in. Everyone's citing this 16% year over year earnings growth number for Q4. If you take energy stocks out, it's like 19%. So if I told you on January 1st we're going to go through an earnings season where the end result with 79% of companies reporting net of energy stocks which are on their own planet, 19% earnings growth, what would you guess the S&P 500 would be doing? If I told you every sector, 11 sectors would have upside surprises to both earnings and revenue. On balance, what would you guess the markets would be doing? And then if I threw in the fact that international stocks are also rallying, you would say, oh well, it would make sense then to have a double digit rally here. And in fact we have that for a lot of stocks. We don't yet have it for the overall S and P, but we have a lot of stocks off to an incredible start. More so than we had in early 2023 when it was all about AI and MAG7. A lot of this is a better tape.
- [09:57]
Scott Wapner
A lot of this stuff is just noise until it isn't. And the market's looking past all of it because it can. It hasn't impacted earnings. Yes, it's caused some uncertainty, sure. CEOs are going to be more uncertain about certain things moving forward because they don't know about the tariffs. But the market is not worried about that now. It is one of the reasons though, I think you could say that why you've had money go back into tech, the safety trade of this market.
- [10:27]
Stephanie Link
Well, versus tech. Well, I was what I was going.
- [10:31]
Scott Wapner
To say but come on, I mean that's meta. Let, let, let's go.
- [10:34]
Stephanie Link
Well, no, what I was about to say was technology. The sector is only up 1% this year and I think a lot of that is because of the strong dollar concerns, but also because of tariffs and concerns there because they would be getting hit much than.
- [10:47]
Scott Wapner
My point is the best sector this week, it's the.
- [10:49]
Stephanie Link
I hear you but year to date, guess what other sectors are.
- [10:52]
Scott Wapner
Right, but my point is that this week when you got too hot inflation reads and you got a lot of tariff talk, you had money go back into tech because people believe that the metas, the apples and names like that are the safety plays of this market.
- [11:06]
Stephanie Link
Well, I would say Comm services as a whole, that earnings were actually quite good and the reactions were quite bad. And so I think people are playing catch up and buying the dip, which they absolutely should. That's comm Services. I mean tech. Tech is only up 1% this, this year. Year to date it has absolutely lagged. So when you're asking the question about tariffs and it not being as big a deal. Well, it is a big deal for tech and that's why it has lagged. Financials and health care of up 7% right behind comm services and materials and energy up 5%. Even though everybody hates energy, it's still doing better than tech. So you are seeing this massive breakout in terms of other sectors and broadening out and that's very, very healthy.
- [11:45]
Scott Wapner
Kevin, what about this meta run? We're going for 20 in a row today. It's just been extraordinary and it is by the way up yet again, you own the stock btig. Jonathan Krinski is talking a lot about it today, sort of stating the obvious. I'm not going out on a limb. He says to say it's due for a pullback, but with the waiting in the queues, it would be meaningful if it did. Correct. I mean, I think everybody knows that. But what do we make of this incredible run? We keep saying, well it's due for correction. Well how many days can it really go? And yet here it goes.
- [12:20]
Jason Snipe
This is a great stock that we own in both of our portfolios. Growth dividend, we don't have it covered up. And last night they increased their dividend yield by 5%. And this is what we want to see with a great company. We talked about it being the cheapest Mag 7 company coming into the 2025 calendar year. Yes, they delivered off the hook so far. But think about this also in the past 12 months they've had $44 billion of share buybacks. So you're reducing the float by 2%. This is a stock that's humming on all cylinders. Massive free cash flow, dividend growth, share buybacks. All we need now is for Zuck to give us a stock split and hopefully that's coming.
- [12:59]
Scott Wapner
Apple's the other one. It's the best performer, the Mag 7 this week. And that is maybe the poster stock of alleged safety within this market. It certainly has been in the past. It's the best week since July of 24. They're talking about releasing that new phone next week, the SE iPhone. It's the cheaper model. It did hit. There you go. It's a two. What is that, 245, 243. It touched 219 on June 21st. It's up 10% since then. You got the China news this week that was deemed to be positive. The partnership with Alibaba. Jason Snipe.
- [13:35]
Kevin Simpson
Yeah, I mean I remember when the Stock was down 14% just a couple of weeks ago. Right. So the quarter was fine. You know, I think a couple of things as it relates to tariffs and just kind of overall big tech. I mean they are moving some of their supply chains to Indonesia. They've obviously been steadily moving some of their, some of their supply chains to India, you know, away from China. So less exposure there. Huawei and Vivo obviously have been, we talked about that over the last couple of weeks, kind of taking market share in China. They've kind of got past a lot of that news. I mean, services were up 14% this quarter. We talk about services as a, as a nice upspring for them, beat on the top and bottom. You know, the 8% growth rate, you know, the multiple obviously at 33 times. But again, I mean, you know, for as Apple as one of those Mag 7 stocks, you know, the, the feeling around them hasn't been positive. And I think this, there has been a strategic slip. It's a highly liquid stock and they have that big bad buyback, you know, in their, in their back pocket. So we continue to like it. We're market way here and we'll kind of write it up.
- [14:39]
Scott Wapner
Josh, reiterated by the day to 94 at Goldman Sachs this stock seems like it's back. I mean it just really has this China overhang. But if you can get over that, then what's to stop this stock from having this nice recovery and bounce that it's enjoying?
- [14:54]
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.
- [15:07]
Discover Representative
Learn more@mycare.org Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck, 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. Learn more@discover.com creditcard based on the February.
- [15:36]
Scott Wapner
2024 Nelson Report at Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at capella. Edu.
- [15:56]
Josh Brown
Yeah, I agree. And I think if they are able to work with other parties to build AI into their products around the world and they demonstrate that it's not the LLM that really matters, it's the wrapper around it, that's the genius of this company. This is what they have always done. Is it disappointing as a technology, like a technology fan, to not see them be first out of the starting gates with their own version of the technology itself? Maybe. But is that what really matters to earnings? Not really. What has always mattered in this situation is does this company make the best version of whatever somebody else invented three years earlier? And I have yet to see a product cycle where that didn't end up being the case. So that's, that's how I feel about it.
- [16:52]
Scott Wapner
Kev.
- [16:54]
Jason Snipe
I couldn't agree more. You know we talked about met his share buyback and Jason touched on the Apple share buyback. To put it in perspective, it's $110 billion and they generate that $110 billion simply from the free cash flow on their service model. So you think about Apple tv, Apple Music, all of the App Store. It's a, it's a product that we're just constantly, from a software perspective and a continuing revenue perspective, leaning into taking advantage of. And if they happen to get it right with AI, which eventually they Will, like Josh said, you're talking about the stock poised for another upward trajectory and you can trade it. I mean, we trade this thing like crazy. We got back in at 220 to 30. We're loving it here. And if it gets up over 250 to 60, we'll cover it up again.
- [17:37]
Scott Wapner
Yeah. The other stock I want to talk about was, was Tesla. You know, had had a rough run. It's down 11% this month. You had the big bump following the election. And then you've had, you know that the fundamentals obviously have weighed on this stock. You may have some of the residual impact of, you know, musk in the White House. You know, maybe there's a good portion of people who are upset about that and then some, obviously a good portion who are not. Whatever you make of it, the Stock is down 11% in a month. Kevin, you bought Tesla. That's our news today. You bought it. Why?
- [18:15]
Jason Snipe
Well, we, again, in our growth strategy, we can have a lot of fun trading things. So literally on February 3rd, we sold out at 385, not the entire position. We trimmed it in half yesterday at 350. We brought that half back into the portfolio. There's, there's more volatility here than with most names, for sure, for all the reasons that you mentioned. But there's a stock here that's not just an automobile company, and we've talked about that a lot here at the desk. But the thing that we're most excited about moving forward is the power generation and the Optimus robot. So whether free self driving comes to fruition in the time frame in which they're projecting, probably not likely. But there's so much to like about this company, broader picture, longer term, that when you get it, when it's cheap, you buy it. When it gets a little rich, you sell it.
- [18:59]
Scott Wapner
All right, let's talk cyber because I think we've talked about it every day and with good reason. Because as part of the momentum trade, a lot of stocks in this group, like CrowdStrike, for example, and some of the others have just been on fire. Palo Alto announced their earnings and the stock was down on its weak outlook. We can throw it up there and you can take a look at the slide we're seeing in that Ripe for the picking, the Stephanie link. Because you bought the stock on the weakness, you bought on the pullback or you buy it into the print.
- [19:32]
Stephanie Link
I bought a little bit yesterday and I bought a bigger position today.
- [19:35]
Scott Wapner
So you bought some before and more.
- [19:37]
Stephanie Link
After or after Right. And I sold zscaler. I'm up 25% since I bought that. And what I'm doing is I'm upgrading because Zscaler is not as good as Palo Alto. Their products are not as good as Palo Alto. And Palo Alto is going through a transition. They'll get through it to offer more platform services all on one big platform, if you will. And they're offering their clients much more. And this stock in the last three months, it's actually flat, it's lagged. It's trading at a 14% discount to its peers and they're going to grow revenues at about 15% for the next several years. Free cash flow margin. Last night they actually reiterated at 37%. And so I'm just thinking if I can get kind of number one and number two in cybersecurity that are down a little bit or have lagged, I'll take that any.
- [20:23]
Scott Wapner
And you think crowd and Palo are one and two by far.
- [20:27]
Stephanie Link
And I also think that they're going to benefit from the M and A that I expect to happen. We have 4,000 vendors out there in terms of, in cybersecurity world, so there's so many companies they can buy, get better and offer more products to their customers.
- [20:39]
Scott Wapner
Aren't you in Palo also?
- [20:40]
Kevin Simpson
Yeah.
- [20:41]
Scott Wapner
What do you, what do you think of this, this slide?
- [20:42]
Kevin Simpson
I mean, you know what I think about when I, when I kind of widen the lens and just think about earnings period. Right. 75% beat rate. And this quarter was mostly in line. New platform, new platform strategy. Obviously that's going to take time. You know, I could see why the trade off, why the stock has, has traded off some just because it wasn't a blowout quarter. But when I think about AI innovation, I think about CTOs across all industry trying to figure out how do we guard against all this innovation in AI Palo Alto. CrowdStrike. I think you could. There's a number of these stocks that can continue to work.
- [21:16]
Scott Wapner
I mean, I should mention Twilio today too is getting crushed on earnings just because we're talking about software. I wanted to mention that it's obviously a Joe stock. Joe, not Joe's not on and he's traveling. But you'll hear from him, I promise you, the next time that he's on. Then there's, there's a stock, there's Arista today, which was reiterated a buy at Goldman Sachs. 145 is the price target. They note the underperformance this week. They say that despite that investor sentiment remains positive and that this company has a best in class switching portfolio. You own the stock, right?
- [21:48]
Kevin Simpson
Leader in the cloud network solutions business. I mean sales were up 20%. EPS was up 31%. It's obviously negative for the year, but it was up 88% last year. And I think some of the deep seek news over a couple of weeks ago was a little bit of a drain on the stock. But as the innovation continues in the AI space that's only going to lift up stocks like Anet.
- [22:09]
Scott Wapner
Steph's so right. I mean there, there has been a lot of conversation of late about stocks outside of the MAG 7. The equal weighted NASDAQ 100 by the way broke out to a new record high. That's talking about strength outside of the Mag 7. If you look at performance, as Steph was saying, yes, Comm services is the standout and there are stocks within that that are beyond the metas of the world. Kevin, like your T Mobile which is up 21% year to date.
- [22:43]
Jason Snipe
I wish we could own T Mobile and the dividend strategy, Scott, because we're stuck with Verizon that has, although certainly a pulse over the past 24 months, been an underperformer for sure. But you look at what they're doing with Elon Musk and the ability to bring satellite technology to everyone's phone. This is a stock that I think will continue to move higher. We're thrilled that we have it in the growth strategy and like I said, I wish they'd initiated dividends and we could own them in both.
- [23:08]
Scott Wapner
How about your Freeport position? I bring it up because materials second best performing sector year to date, up 8% percent. Freeport's up 6.
- [23:17]
Jason Snipe
Yes. So we're actually rotating out of Freeport and into Agnico Eagle. Yesterday my final trade was AEM heading into earnings. They disappointed a little bit because they've had some expenditures going up. But this is a stock that I think can absolutely buy here on weakness. They're up 20% year to date even with the pullback today versus Freeport. It's a little bit more gold than Copper, but they have a significant commitment to reducing debt. They buy back shares like crazy and they have a nice dividend. And those are things that we like.
- [23:45]
Scott Wapner
At capital wealth Planning financials up 7%, third best performing along with health care. Josh. Goldman's up 16. Goldman's up 15. Excuse me, JPM is up 16. What has been very much a part of that momentum trade as we've highlighted the MTUM etf. These are part of that. How about this run?
- [24:06]
Josh Brown
It's the higher for longer trade. And I want everyone to remember this so that in 10 years when we're having debates about whether or not we need the Fed to cut in order to keep the rally going or whatever, you know, whatever we name the segment, I want people to remember not all segments of the market want lower rates. Rate cuts lower for longer. And this is a really great example. This is the best group of stocks that I've seen in a long time that didn't make software. And within financials, the amount of diversity in the ecosystem we have in publicly traded XLF names, they span the gamut. And what they all have in common is they need for there to be a real risk free rate in order to price their products and services somewhere where there's an actual profit margin. And it's not any any longer going to be this monolithic conversation of how many rate cuts do we need for the ball to continue on. We don't want rate cuts. We're fine. If we get one, we could live with it. We don't need seven. We don't need emergency rate cuts. We don't need qe. This environment has been outstanding for banks, insurers, you name it. Go on down the list.
- [25:18]
Scott Wapner
Industrials up 5% on the year. Steph, your GE up 25%. Your 3M up 16.
- [25:25]
Stephanie Link
Yeah. And earnings have been really pretty good across the board. Right. And 3M is a turnaround story and the expectations are very low and I think they're in the second inning and the stock still remains cheap. GE is the one that scares me because it goes up every single day. And.
- [25:39]
Scott Wapner
Well, I mean it took a while.
- [25:41]
Stephanie Link
I did definitely took a while. But, but, but GE Health Care had a good number. This was up 10% yesterday. GE for Nova. So spins work. We've talked about that a lot. But ge, I'm not sure I'm chasing it here. Hold on to it. But I'm not.
- [25:55]
Scott Wapner
Patience is, you know, such a, can be such a virtue in investing. Right. Because I remember when you bought this stock. Oh, I got beaten up really against the tide. I mean the analyst notes against it were so negative. I can think of one in particular.
- [26:08]
Stephanie Link
Yes.
- [26:09]
Scott Wapner
Who we talked to on a number of occasions. You were forced to defend your position so many different times and you're finally getting the fruits of that patience that you, that you had.
- [26:19]
Stephanie Link
I think bowing is going to be the other one this year.
- [26:21]
Scott Wapner
Year.
- [26:21]
Stephanie Link
It's my favorite stock of the year.
- [26:23]
Scott Wapner
All Right. We're gonna take a quick break. When we come back, we'll have our top calls of the day. We're back in just two minutes.
- [26:34]
Discover Representative
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? 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 and every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report, is it time.
- [27:03]
Scott Wapner
To reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.
- [27:47]
Let's do some calls of the day. We start today with Baker Hughes. Josh. Which was reiterated by Morgan Stanley as its top pick. Overweight. 55 bucks on the price target. The earnings beat they say is a testament to the resilience of this company.
- [28:04]
Josh Brown
Yeah, this name is 6% from its 52 week highs. It's about 54 on RSI. So momentum is healthy. It's above its 50 day by 6% as well, above the 200 day by 22%. And I have to tell you, this has been in a long term uptrend now really going back to 2022. It's a unique asset. There aren't 50 of these companies publicly traded anymore. But anywhere people are trying to maximize yield from an oil field or set up new rigs or whatever. You almost can't avoid doing business with Baker Hughes. So I think it's a bull market for this company and I'm staying long.
- [28:41]
Scott Wapner
Okay, the next one. Adobe overweight at Piper. Kevin, this is yours. History shows this note says that Adobe has an impressive track record of capitalizing on major platform shifts. Well, I mean we've had a major shift and this company seems to be at least as the market is concerned on the outs and it is with me as well.
- [29:05]
Jason Snipe
We know we've talked about this a lot. It becomes a Show me story. 100% with Adobe we need to see monetization of their AI. They have tremendous capabilities to get in front of everyone. Because we all use them, but to date we're just not using them from their AI perspective. So Firefly and everything that they're trying to do with video, it's really, really important that they latch on to this or they might miss it. Scott, I mean that's the, that's the reality with Adobe 100%. Show me.
- [29:32]
Scott Wapner
All right, Salesforce, Kev, back to you real quick. Buy it. Goldman. They reiterate that and they say it's quote, one of the most strategic application software companies within their coverage universe.
- [29:42]
Jason Snipe
Yeah, we're excited about the shift and pivot into software. This is absolutely a name that you're tied to the infrastructure for many, many different reasons. But when you look underneath the hood, 12 billion in free cash flow fueling 9 billion in share buybacks, those are the kinds of things that we like to see for mature companies. The dividend isn't huge at a half a percent, but we expect that to increase over time as well. We really like the name.
- [30:04]
Scott Wapner
Let's kick around Depot a little bit. The price target goes at Mizuho to 450. It's a $10 bump. Not huge, but nonetheless they bump it up. They say flats the new up for Q4. Steph, what do you think? They say that you're going to get continued top line trends from Q3 to Q4.
- [30:23]
Stephanie Link
Yeah. Well, the remodel activity data actually is showing the fourth quarter saw an acceleration in housing in general. We have a long way to go, but I'll take any improvement at this point. Sherwin Williams also talked about the pro business actually being quite strong. That's 50% of Home Depot's revenue. So the mix actually shift is, is a good thing for them. And then they very easy comparison comparisons. I think if they do a negative one comp I think people will be fine. And we're going to look to commentary for the rest of this year, which I think we will see improvement.
- [30:53]
Scott Wapner
All right, let's get the headlines now with Silvana now. Hi, Silvana.
- [30:56]
Silvana Henao
Hey, Scott. Good afternoon. The Treasury Department's Office of Inspector General said today it is starting an audit of security controls for the federal government's payment system. The probe comes after Democratic senators raised the alarm about why what access had been provided to Elon Musk's Department of Government Efficiency team. The audit will also review transactions from the last two years after Musk's assertion of alleged fraudulent payments being made by the Treasury. Nearly 1300 probationary employees at the CDC are being removed as part of the Trump administration's move to eliminate all probationary workers in the government. An official told the Associated Press that the CDC leaders were given a verbal notice this morning from the from the Department of Health and Human Services about the layoffs. And references to transgender and queer people have been removed from the national park's service website for the Stonewall National Monument in New York. The Stonewall Inn and the nonprofit the Stonewall Inn Gives Back initiative called the move a direct attack on transgender people. Scott, I'll send it back to you.
- [32:07]
Scott Wapner
All right, Silvana, thank you very much for that, Silvana. And now straight ahead, we're on Breakout Watch because Josh has his eye on one stock that just hit its highest level in nearly a decade. We are going to reveal that. Plus we revisit Josh's best stocks in the market list. We'll tell you about a brand new name he just added. It's coming up next.
- [32:28]
Josh Brown
Foreign.
- [32:42]
Scott Wapner
Welcome back. Gilead shares hitting a fresh 52 week high today. And this is the stock that technically looks pretty good to our Josh Brown. Why are you watching this? What made this pop out to you?
- [32:55]
Josh Brown
So I haven't personally bought or sold this stock in like 15 years. But this is a long standing sort of biotech pharmaceutical name used to be thought of as almost a blue chip. It's about $100 billion market cap popped up on our list of the best stocks in the market probably because last week they beat on both the top and the bottom lines. And this is a chart that that's spent about eight, eight and a half, almost nine full years in a consolidation. Now it's starting to break out. I don't know the name well enough to have a very strong opinion about whether or not this breakout will hold. But I think people that like this sector and they're looking for ideas, Gilead is a big liquid stock that nobody talks about anymore. And if you dig in on the fundamentals, this might be an area where you want to take a closer look.
- [33:47]
Scott Wapner
Okay. Best stocks in the market. You've been bringing our viewers some names that have really broken out and popped up to you and stood out. I've got two here in front of me. Cortiva hit the list on Wednesday. Steph previously owned this stock, but what about this name has it on the list?
- [34:09]
Josh Brown
So this is going to be a, this is going to going to be a slow mover. But I think it's in the process of breaking out. It's not going to act like a, like a tech stock. This is Seeds branded. Seeds are about 60% of the business, 40% of the business is crop protection, so it's in the chemicals space. It was a spin out from Dow dupont, which is why not a lot of people know the name. Now I understand why Stephanie knows the name. She loves these spin offs and I know she's, she's done historically really well with these types of. But it's only been trading on its own for five years. Spun out right before the pandemic and then nobody cared about it. There's a breakout happening here. It's a really interesting chart. And when they last reported, they had a lot of good things to say. Fundamentally. Operating EBITDA margin improved by 280 basis points last quarter. They said free cash flow was up by 40% despite to 1.7 billion. They also announced $1 billion buyback for the year 2025. Assuming they act on that, I think the stock should be okay. You've got an RSI here of 58, so not overbought yet. 6% above the 50. 12% above the 200. I like that golden cross. And she's 3% from a 52 week high.
- [35:25]
Scott Wapner
The union Pacific, you want to talk about that one? That hit the list on January 20th, 24th.
- [35:32]
Josh Brown
All aboard, Union Pacific. Judge does this stock looks like she wants to head north? Operating income for the fourth quarter rose by 5% to 2 1/2 billion. This is one of those stocks that's been kind of like I think held back by all the tariff conversation and of course very severe tariffs with Canada and Mexico will hurt the name. But barring something like that, I think the stock has some room to move here. Full year operating revenue is increasing. You've got better volume, you've got better pricing. And when you look at this, this chart here, you can see if she can clear 250 on good volume. There's really no other area where the sellers would appear. Almost nobody has a profit in the stock. I think 275 is realistic.
- [36:22]
Scott Wapner
You know, I'm sure you guys have heard all of our viewers did and maybe everybody here, certainly the, the bell that was ringing while Josh was talking. It's because we did have an IPO open for business. One of the biggest bank IPO listings, by the way, something at all since 2019. It's the first bank IPO, the first US bank IPO of this year. Now obviously we're in a young year. We're off to a very slow start, but nonetheless, 7.4 million shares. We will keep our eye on that name as it is officially open for Business. Up next, Santoli. He's with his midday word. We're back. Our senior markets commentator Mike Santoli is joined here for his midday Word. I think how we led our show today is really my big takeaway of this week is just how resilient this market has been. You know, it's not the greatest looking market under the surface or anything like that. But if you tell me you're going to get too hot inflation print and you're going to get an onslaught of tariff talk and we're on the door step of new closing highs, I'll say okay, that's a pretty resilient market right now.
- [37:42]
Mike Santoli
There's no doubt the market is, is essentially metabolizing all this as could have been worse on almost every front. Well we were almost here December 6th, right. Just under 6100. So clearly we've spent a lot of time in this zone. We think earnings are supportive and coming into the week what's interesting as you mentioned too hot inflation reports but the net effect of that is all the economists cutting their expected PCE inflation numbers because of the particular components bond yields did a complete round trip and they're flat on the week. Right. So you've kind of tensed up ahead of all of these potential threats including the tariff story and none of them came front and center and is something that you had to reprice today. It's not exactly the most resounding attempt at a breakout today. Sure, it's kind of sleepy, it's churning still. Fridays have been down each of the last three weeks prior to today. So we'll see what happens today. But yeah, I would have to say you know kind of standing still is a victory in its own.
- [38:40]
Scott Wapner
You want to speaking of something that's not been standing still at all just when you see Metta going for 20. I mean you ever seen anything like this?
- [38:47]
Mike Santoli
No, I haven't. I do think that it at some point becomes sort of its own self feeding phenomenon. As long as you still you know, you have people short term traders reinforced on this. You also have it just this net beneficiary of other comparably sized companies that have a little bit of hair on their, their near term story whether it is Alphabet and you know the revenue and Capex that was not taken very well. That's been down in the last few weeks. You've obviously seen Tesla give up a lot and so I think it's kind of, kind of feeding off of being you know, kind of in a net privileged position against all that. And then you have sheer momentum working for it as well.
- [39:29]
Scott Wapner
Yeah, you know, Apple's had this nice move. You know, there's been some positive news related to China on that. Nvidia is up with a nice move of its own. It's up near 6% week to date, too. I'll see you on closing bell, Mike. Thank you very much. It's Mike Santoli up next. Place your bets. Contessa Brewer is standing by with one area of the market today that is ripping higher. We'll tell you what it is next. All right, big day for casino gaming, sports betting stocks because they are on fire today. Contested brewers here to tell us exactly what is going on because there are more than one name that we need to focus on. And you always do.
- [40:17]
Contessa Brewer
There's a whole bucket of names that we're going to focus on. First DraftKings stock soaring after the earnings call this morning. You can see up more than 11, about 11%. CEO Jason Robbins on the call laid out an optimistic view of 2025 and really some astonishing numbers from Super Bowl Sunday. $436 million wagered that set a record for new daily sportsbook handle and led to the highest gross gaming revenue for the day in company history. I mean, that's a pretty Good start to 2025. Wynn Resorts on fire, fueled by promising business in Macao for Chinese New Year and performance in Las Vegas against some really tough comps. You've got those shares up 11%. Win said it saw a notable increase in slot play. And interestingly, we heard that from MGM as well in its earnings this week. Record slope, slot play and record wins for mgm. That stock also up on a tear this week, up about 17% for the week on what was, you know, a decent report. But the most promising bit of news was that December was by far the best month ever for booking group business. But analysts and investors seem to like the fact that Macao is starting to show a little bit of promise. If you look at the big gambling stocks purely on valuation terms, Las Vegas Sands comes in at 16.8, meaning on a forward price to earnings basis, you get the most bang for your investing buck. MGM 17 win and Melco 19. What do they have in common? They're all Macao facing. Look at Flutter Caesars DraftKings. They have a Ford P E that is much higher than that. So anyway, you know, we're keeping a close eye on this. But to me, Scott, it looks like somebody kind of walked the markets up over the head and said, hey, take a look at some of These casinos, they're a good value.
- [42:02]
Scott Wapner
Stephanie Wink knows. I mean, she's been waving her hand. Contessa. Thank you. Contessa Brewer, you own Las Vegas Sands. Yes, right. Why is that the one that you've chosen to play?
- [42:13]
Stephanie Link
Because I do want to play Macau. And the Recovery, for sure. 60% of their EBITDA comes from Macau. And they've done a ton of renovations in Macau over the last year, year and a half. And that actually comes to completion in the spring. And it also coincides with them having an analyst day over there in the spring. So I look at these stocks more on an EBITDA basis versus P E. You could look at whatever you want, but it's trading at 11 times EBITDA and historically the stock has traded at 14 times. It's down 20% in the past year. So I don't think that the expectations are high. It's barely even up on this news today. It should be up much more.
- [42:46]
Scott Wapner
What about DraftKings, Jason? It's a 52 week high there too. This is the best day since November of 23. Why don't we have any love for that?
- [42:55]
Kevin Simpson
So I used to be an mgm. You know, obviously the sports betting business, I think is. Is ripe for continued growth. You know, I think, I think the bowl obviously is, was. Was a catalyst here. You know, MGM for me was. Was about the kind of Macao store. This is kind of through the pandemic and they didn't, they don't have as much exposure to Macao. But now that Macao is coming back online in a very meaningful way, I think he wants exposure.
- [43:20]
Scott Wapner
All right, break. And then the setup is next. We call this the setup where we get you ahead of some earnings that are coming next week. Thursday. Next Thursday after the bell is Shake Shack, Josh Brown.
- [44:22]
Josh Brown
Shake Shack's actually been down about 7% over the last month. The stock has not gotten off to a good start this year. Last year was one of the best years ever. So it's a little bit of a pullback. It's now down to a 34 RSI. I think it's very oversold. I have no edge on what they'll say. But I just want to remind people, in the middle of January, new CEO Rob lynch came out and said, remember our long term target where we said maybe there could be five hundred or a thousand Shacks in the world? Actually, we think the number is more like 1500. That was exciting to me. I guess the market didn't take it that way. Expectations for revenue this year, 16 to 18% was the guidance. I think the big thing is he has to stick to that guidance. We don't know, of course, if he will, but if he does, I think it's a good setup right now given.
- [45:12]
Scott Wapner
How oversold you got, stopped out of toast. But, Kevin, you're still in toast. And maybe you did it because Josh Brown was there. They report next week.
- [45:22]
Jason Snipe
I did. I got this stock from Josh. And I'll channel my inner Josh Brown when I give you some of these statistics and I'll be brief about it. But this is a growth machine sheen. We expect them to beat top and bottom line and increase guidance next week. For the past four quarters, they've been increasing their earnings per share by 211%. That is not luck. That is execution. This is a stock that has a tremendous run rate, a tremendous opportunity. They're just tipping. They're just like tipping. The scale on this revenue was up 26% year over year. And we're. We're excited about the name.
- [45:54]
Scott Wapner
All right, we will do finals next. We're gonna rip through finals. Josh.
- [46:04]
Josh Brown
Toast, Kev, CME Group, Jason, Goldman Sachs.
- [46:09]
Stephanie Link
Time and back energy.
- [46:10]
Scott Wapner
See you on closing bell. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC.
- [46:27]
All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed 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 Halftime Report participants consider reliable. But neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com halftime reportdisclaimer. Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.