Club holdings Wells Fargo (WFC), Ford (F) and Apple (AAPL) are in the news Wednesday, with potential implications for our investment outlook. Here are the noteworthy headlines of the day, along with the Club take. Wells Fargo The news: Wells Fargo could initiate another round of layoffs at its home mortgage division amid a collapse in homebuyer demand, according to a CNBC report . The bank, which is one of the largest mortgage lenders in the U.S., has been cutting staff at the division since April after the real estate market starting cooling. In its fiscal-third quarter, revenue from Wells Fargo’s home lending unit fell 52% year-over-year, due to lower mortgage originations. Consumers are responding to higher interest rates and inflated home prices. Mortgage applications to purchase a home fell 1% for the week, down 41% year on-year, according to the latest data from the Mortgage Bankers Association . Club take: While there was a considerable revenue decline at Wells Fargo’s home lending segment during the third quarter, it was offset by strong net interest income due to higher interest rates, which remains the driver of our investment thesis for the bank. Moreover, the drop in mortgage lending didn’t impact Wells Fargo’s overall revenue in the latest quarter, which rose 2.5% year-over-year, to $19.5 billion. Shares of WFC are down 2.3% year-to-date, outperforming the S & P 500, which has shed roughly 19% during the same period. The stock was trading mainly flat Wednesday, at roughly $47 a share. Ford The news: The automaker’s sales fell 10% in October, a result of supply chain issues that delayed shipments , Ford said Wednesday. The company sold a total of 158,327 vehicles last month, down from nearly 176,000 during the same time last year. This is the second consecutive month sales are down, with September’s figure tumbling 8.9%. Club take: We’re not surprised by the sales drop, given the supply issues Ford faces are well documented. We think inflation and parts shortages are temporary headwinds Ford can work through, which is why we’re sticking with the stock long term. Despite the sales slowdown, Ford continues to benefit from demand for its popular product line of vehicles. We’re also happy to see that Ford remains the number 2 electric vehicle brand in the U.S., showing its growing leadership in a competitive EV landscape. Apple The news: China enacted Covid-19 lockdown at an industrial park in Zhengzhou, which houses the world’s largest assembly plant for Apple’s iPhones. The latest draconian Covid restrictions come as the tech giant is scrambling to meet demand for its newly launched iPhone 14 series. Shares of Apple were trading down Wednesday around 1%, at roughly $149 a share. Club take: China has been a source of pain for multinationals doing business in the country given its ongoing zero-Covid policy, which has severely limited economic activity for nearly 3 years. However, Apple’s fierce customer loyalty to the brand has allowed for missed sales due to supply constraints to be made up in subsequent quarters, supporting our investment case. Despite a brutal earnings season for Big Tech, Apple bucked the trend , delivering a sales and profit beat in its fiscal fourth quarter . We think the China headwind is temporary and stick with our mantra on the stock: Own it, don’t trade it. (Jim Cramer’s Charitable Trust is long WFC, F, AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Club holdings Wells Fargo (WFC), Ford (F) and Apple (AAPL) are in the news Wednesday, with potential implications for our investment outlook.
Here are the noteworthy headlines of the day, along with the Club take.