Weekly Roundup

Markets were volatile this week as North Korea conducted its sixth missile test last weekend and investors were left unable to do anything until Tuesday due to markets being closed for Labor Day. Despite Tuesday's small pullback, the news was largely shrugged off as the short week moved on. Also driving trading, investors are still assessing the damage of Hurricane Harvey and bracing for the impact of Hurricane Irma, which is expected to hit Florida this weekend.

We also learned that President Trump would be putting an end to the Deferred Action for Childhood Arrivals (DACA) policy enacted under President Obama that protects certain minors who may have entered the country illegally. On Wednesday, we were surprised to learn Federal Reserve Vice Chairman Stanley Fischer would be stepping down for personal reasons. He is expected to stay in his position until about Oct. 13, roughly eight months before his term was set to expire.

Treasury yields trended lower this week as investors again sought safety in the bond market due to Harvey and geopolitical unrest regarding North Korea. Along with this rationale, gold reached a new high for the year, only to see a slight dip during Friday's session. In addition, the euro trended higher this week as the dollar weakened in value. Lastly, oil ended the week slightly higher as a large Friday selloff erased gains earlier in the week (more below).

Second-quarter earnings are officially in the books and have been largely positive vs. expectations. No portfolio companies reported this week.

Economy

Turning to the economic front, the Commerce Department reported Tuesday that new orders for manufactured goods declined in July for the third time in four months, falling 3.3% after a 3.2% increase in June (revised up from 3% previously reported). Manufacturing is responsible for roughly 12% of the U.S. economy. The reading was in line with expectations and marked the largest one-month decline since August 2014. Shipments, which have increased in seven of the last eight months, increased 0.3% on the heels of a 0.1% rise in June. Unfilled orders dropped for the second time in three months, falling 0.3% after a 1.3% rise in June, while inventories increased for the eighth time in nine months, rising 0.2% after a 0.3% increase in June.

Importantly, despite the poor (but expected) headline results, the Commerce Department also revised estimates for non-defense capital goods excluding aircraft (i.e., core capital goods) upward, from 0.4% to 1% in July following a 0.1% decline in June. Recall that capital goods are not sold to consumers, rather they are tangible goods used in the manufacturing of consumer goods. For this reason, core capital goods is a key metric that many consider to be a proxy for business investments. It is important to consider new orders excluding transportation equipment (planes and automobiles) because the high value of these goods can easily skew month-to-month readings, increasing volatility and making it more difficult to analyze the underlying trend.

Breaking down the reading, new orders for manufactured durable goods declined 6.8% in July, following a 6.4% increase in June, and were pulled down by a whopping 19.2% decline in orders for transportation equipment, which were down for the third time in four months. That decline is a perfect example of why we always make a point to examine non-defense capital goods without including aircraft. The decline in new orders for durable goods was marginally offset by a 0.4% increase in new orders for non-durable manufactured goods. Shipments for manufactured durable goods rose for the second time in three months, increasing 0.2% in July (a downward revision from the previously reported 0.4% increase) led by a 1% rise in computers and electronic products. Shipments of manufactured non-durable goods rose 0.4%, marking the third increase in four months, and was led by a 2.2% increase in petroleum and coal products. Unfilled orders for manufactured durable goods fell 0.3%, driven by a 0.6% decrease in transportation equipment. Finally, inventories of manufactured durable goods rose for the 12th time in the past 13 months, increasing 0.3% aided by a 0.4% increase in transportation equipment (up for the first time in three months). Inventories of manufactured nondurable goods also increased in July, rising 0.1%.

Moving to Wednesday, the Institute of Supply Management (ISM) reported that the August non-manufacturing index bounced back from a July decline, rising to 55.3%, in line with expectations. Recall that anything above 50% represents expansion while anything below 50% indicates a contraction. The higher the reading is above 50%, the faster the rate of growth.

Overall, August marked the 92nd consecutive month of growth in the non-manufacturing sector. Making up the reading, business activity grew 1.6% (to 57.5%) in August while new orders grew 2% (to 57.1%), both marking their 97th consecutive month of growth. Employment increased 2.6% (to 56.2%), indicating the 42nd consecutive month of growth. Lastly, the prices index also increased in August, rising 2.2% (to 57.9%).

Digging deeper, of the 17 non-manufacturing industries tracked by ISM, 15 showed growth in June. Leading the way was Retail Trade; Information; and Management of Companies & Support Services. The only two to report a contraction in August were Agriculture, Forestry, Fishing & Hunting; and Transportation & Warehousing.

Employment

On Thursday, the Department of Labor reported that initial jobless claims for the week ending Sept. 2 were 298,000, an increase of 62,000 claims from the prior week's unrevised level and 57,000 claims above expectations of 241,000 initial claims. This marks the highest level of initial claims since April 2015. It is worth noting that part of the large miss can be attributed to the effects of Hurricane Harvey, something to keep in mind as we await the impact of Hurricane Irma. Importantly, the four-week moving average for claims (used as a gauge to offset volatility in the weekly numbers) was 250,250, an increase of 13,500 from last week's unrevised average. The low rate of layoffs reflects a strengthening labor market as claims have remained below 300,000 -- the threshold typically used to categorize a healthy jobs market -- for an incredible 131 consecutive weeks, the longest streak since 1970.

Oil

On the commodity front, crude prices were lifted back near the $50 level earlier in the week as refineries in the Texas region regained some of their lost capacity, which drove up demand. However, slower-than-expected recovery put some pressure on the commodity later on, as oil gave up most of its gains. On Thursday, the U.S. Energy Information Administration reported that crude inventories increased by 4.6 million barrels during the week ended Sept. 1, which was in line with analyst expectations. Turning to Hurricane Irma, while the threat of the storm originally boosted the price of the commodity due to the unknown impacts to production in the Gulf of Mexico, investors are still waiting to see how the storm affects the region. In total, despite heavy selling on Friday, crude prices traded slightly up for the week, coming in around the mid-$47 level.

Stocks

In the portfolio this week, we initiated a position in First Data Corp. (FDC) on Thursday, purchasing 1,000 shares. In addition, on Monday we increased our position in TJX Companies (TJX) , adding 100 shares, as we believe the launch of its HomeSense stores will provide a new source of growth for the company. Lastly, on Thursday, we bought 200 shares of KeyCorp (KEY) as we think there might be an improving probability of another interest rate hike.

Moving on to the broader market, second-quarter earnings have come to an end and were largely positive vs. expectations, with 72.1% of companies reporting a positive EPS surprise. Total second-quarter earnings growth increased roughly 11.2% year over year vs. expectations for an overall 10.74% increase throughout the season; of the 431 non-financials that reported, earnings growth is up 11.8%. Revenues are up 4.9% vs. expectations throughout the season for a 5.08% increase; 72.1% of companies beat EPS expectations, 18.4% missed the mark and 9.5% were in line with consensus. On a year-over-year comparison basis, 71.9% beat the prior year's EPS results, 17.6% came up short and 10.5% were virtually in line. Healthcare and information tech have had the strongest performance vs. estimates, whereas materials, telecom and energy have posted the worst results in the S&P 500 for the second quarter.

Next week, one company in the S&P 500 will report earnings. No portfolio companies will be reporting. Other key earnings reports for the market include: Investors Real Estate Trust (IRET), Layne Christensen (LAYN), Limoneira (LMNR), Peregrine Pharma (PPHM), Farmer Brothers Co. (FARM), Hill International (HIL), Radiant Logistics (RLGT), Applied Genetic Technologies (AGTC), Cracker Barrel (CBRL), Lakeland Industries (LAKE), United Natural Foods (UNFI) and Oracle (ORCL).

Economic Data (*all times ET)

U.S.

Monday (9/11)

Tuesday (9/12)

NFIB Small Business Optimism (6:00)

Wednesday (9/13)

MBA Mortgage Applications (7:00)

PPI Final Demand MoM (8:30): 0.3% expected

PPI Ex Food and Energy MoM (8:30): 0.2% expected

PPI Final Demand YoY (8:30)

PPI Ex Food and Energy YoY (8:30)

Monthly Budget Statement (14:00)

Thursday (9/14)

Initial Jobless Claims (8:30)

CPI MoM (8:30): 0.3% expected

Continuing Claims (8:30)

CPI Ex Food and Energy MoM (8:30) 0.2% expected

CPI YoY (8:30) 1.8% expected

Bloomberg Consumer Comfort (9:45)

Friday (9/15)

Empire Manufacturing (8:30) 18.0 expected

Retail Sales Advance MoM (8:30) 0.2% expected

Retail Sales Ex Auto MoM (8:30) 0.5% expected

Retail Sales Ex Auto and Gas (8:30)

Industrial Production MoM (9:15) 0.1% expected

Capacity Utilization (9:15) 76.8% expected

Univ. of Mich Sentiment (10:00) 95.0 expected

International

Monday (9/11)

Japan Tertiary Industry Index MoM (00:30) 0.1% expected

Japan Machine tool Orders YoY (2:00)

Tuesday (9/12)

Japan PPI YoY (19:50) 3.0% expected

UK CPI MoM (4:30) 0.4% expected

UK CPI YoY (4:30) 2.7% expected

UK CPI Core YoY (4:30)

UK Retail Price Index (4:30)

UK Retail MoM (4:30)

UK Retail YoY (4:30)

UK PPI Output NSA MoM (4:30)

UK PPI Output NSA YoY (4:30)

Wednesday (9/13)

China Retail Sales YoY (22:00) 10.5% expected

China Industrial Production YoY (22:00) 6.6% expected

UK Claimant Count Rate (4:30

UK Jobless Claims Change (4:30)

UK ILO Unemployment Rate 3 Months (4:30) 4.4% expected

Eurozone Industrial Production SA MoM (5:00)

Eurozone Industrial Production WDA YoY (5:00)

Germany CPI MoM (2:00)

Germany CPI YoY (2:00)

Germany CPI EU Harmonized MoM

Germany CPI EU Harmonized YoY (2:00)

Thursday (9/14)

Japan Industrial Production MoM (00:30)

Japan Industrial Production YoY (00:30)

Japan Capacity Utilization MoM (00:30)

UK Bank of England Bank Rate (7:00) 0.25% expected

UK BOE Asset Purchase Target (7:00) 435b expected

Friday (9/15)

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Here's the quick guide to the rating system, too: Ones are stocks we would buy right now, Twos are stocks that we'd buy on a pullback, Threes are stocks we would sell on strength and Fours are stocks we want to unload as soon as our trading restrictions allow.

ONES

Abbott Laboratories (ABT) ; $52.02; 500 shares; 0.96%; Sector: Healthcare -- Abbott Laboratories traded higher this week, reaching a 52-week high along the way. While there was no new information released by the company contributing to the rise, the stock continues to perform well based on its recent announcements and expectations of the future. Last week, ABT announced it had received FDA approval for its Full MagLev Heartmate 3 Left Ventricular Assist device, which the market is encouraged about. In addition, the reimbursement from Japan for the company's FreeStyle Libre glucose monitoring system should help increase the product's customer base in the country. This product has already been very successful in the international diabetes market, and we expect this to carry over domestically once it receives FDA approval. Lastly, with all the speculation over tax reform occurring this year, we note that over 50% of ABT's sales come from overseas. Because of this, a one-time tax holiday would help increase the company's cash available for use. We reiterate our $53 price target

Activision Blizzard (ATVI) ; $64.93; 1,400 shares; 3.35%; Sector: Technology -- Activision Blizzard had a volatile week, but shares ultimately declined by the end of Friday's session. The stock dipped on Wednesday after it was announced that ATVI's highly anticipated Destiny 2 game (released this week) was experiencing capacity issues that prevented players from accessing the game. This was caused by the enormous popularity of the game, and the issue seemed to be resolved the following day. We expect this game to be heavily monetized in a trend that has been supporting ATVI's revenue growth as video game publishers shift toward digital trends and revenue streams outside of game sales. Boosting the stock on Thursday was a very positive report from KeyBanc over the potential of Activision Blizzard's Overwatch e-sports league. Members can recall this upcoming league as the main catalyst in our ATVI thesis. In the report, KeyBanc suggests the league could generate $200 million to $400 million in revenue through team sales, media and sponsorship rights, supporting material earnings growth from its launch date through 2020. We have continually stated this is the name to own out of the list of companies looking to capitalize on the fast-growing e-sports industry, and with Overwatch expected to launch near the end of the year, a successful campaign could create immediate upside leading to future growth opportunities in ATVI's other titles. We reiterate our $68 price target.

Allergan (AGN) ; $233.55; 600 shares; 5.16% Sector: Healthcare -- Shares moved higher this week, lifted by a strong trading day Friday. Driving the rise in share price was the announcement that AGN is selling all its Orange Book patents on Restasis to the Saint Regis Mohawk Tribe. As part of the deal, the tribe will own the patents, but will license its use to AGN. The Restasis patents have been the focus of an upcoming Inter Partes Review (IPR) but since the tribe will now own the patents and declare sovereign immunity, we believe this removes a headwind against AGN. With some operational negativity no longer a factor in the shorts' thesis against the stock, we hope sentiment shifts back toward the great opportunities AGN's business has in capturing share with growing demand for medical aesthetics. We believe this opportunity coupled with the potential of the company's "six stars" pipeline will provide long-term growth. We'll continue to monitor for news of the "six stars" as they move through AGN's pipeline, and since five of the six are in Phase 3 trials, each data point could create positive price reactions if results are favorable. We reiterate our $270 price target. 

Broadcom (AVGO) ; $244.11; 250 shares; 2.25%; Sector: Electronics -- Shares declined this week, erasing part of the rebound that occurred since the stock's selloff following its quarter. Contributing to the stock's decline was speculation that Apple's iPhone 8 may be in short supply when it is released. Causing the shortages were glitches in the phone's OLED display that occurred over the summer. While new iPhones are typically in short supply during their initial release, investors are concerned that the shortages may extend into the holiday season, a crucial time for sales. In our view, while any delay in production is a temporary negative for AVGO, we believe iPhone production will still be great for Broadcom. If anything, a supply delay could simply shift out AVGO's revenues into the next quarter, which would increase revenue above seasonality, something management hinted at as a cause for their merely in-line guidance issued a few weeks ago (read our analysis of the quarter here). In addition, we believe AVGO was cautiously modest in its guidance in order not to raise Apple's iPhone estimates, as this would clearly make its biggest client unhappy. Overall, we continue to view shares as attractive at this level as we believe the iPhone 8 production cycle will be big for AVGO. The company makes eight chips in the new smartphone (up from five in the last release), making strong sales in the iPhone a great revenue booster for AVGO. We reiterate our $290 price target.

Cimarex (XEC) ; $99.48; 900 shares; 3.30%; Sector: Energy -- Shares moved lower as oil's Friday selloff erased gains from earlier in the week. The stock had been trading higher, driven by higher crude prices and an encouraging company presentation. During the presentation, management spoke to their commitment to financial discipline when it comes to exploration and production. Instead of focusing on covering cash flows and increasing growth just for the sake of targets, a strategy that is too short-term to be sustainable in this environment, management stressed the importance of rate of return. This strategy has paid off for the company as it delivered one of the strongest quarters out of all the Permian producers. We believe this has positioned the company to be effective for the long term despite industry pressures, and if relief is ever found in the commodity, we expect Cimarex's efficient drilling approach to drive further success. We reiterate our $150 price target. 

Comcast (CMCSA) ; $38.21; 2,000 shares; 2.82%; Sector: Consumer Discretionary -- Shares moved sharply lower this week after management announced they expect to see about 100,000 to 150,000 fewer video subscribers in the third quarter. Management said that contributing to this decline was an increase in competition and the also effects of the recent storms that have swept across the southern U.S. The market immediately reacted to this news by sending CMCSA more than 6% lower on Thursday; however, we believe there was a silver lining to management's discussion that may have been overlooked. Despite the loss of subscribers, which is a clear negative for the company (and most likely heavily due to competition and not the storm), management did reiterate that the company is on track to reach its financial targets for the quarter. They noted that despite the loss in video subscribers, they are anticipating an overall increase in total customer relationships, which they feel could drive a higher average revenue per user (ARPU). In addition, despite competitor pressures in video, we reinforce that Comcast's Wi-Fi services must still be used to stream the video content that customers may switch toward. All this said, we believe the demand for Comcast's services will remain strong, and management's efforts to increase profitability through ARPUs should not be overlooked. We reiterate our $45 price target. 

Danaher (DHR) ; $86.76; 1,150 shares; 3.68%; Sector: Life Sciences -- Shares of Danaher greatly outperformed the market this week as the stock continued to climb. DHR has traded nicely in recent weeks, gradually rebounding from the selloff that occurred when the company last reported earnings. The main driver of the selloff was a lagging dental segment that limited core sales growth. Although the company boasts high-margin businesses such as Life Science, Diagnostics, and Environment and Applied Solution, pressures in its dental division has been holding the stock back. However, a report published on Thursday indicated that the dental-chair market was growing due to an increasing number of dentists and dental practices, helping lift the stock as DHR was listed as one of the key vendors in the market. In addition, we detailed Friday (read here) how analysts at JPM believe DHR's other businesses can more than offset any softness in dental. Viewing dental's headwinds as temporary and not the new norm, JPM believes past weakness should provide a stable backdrop for future growth beats. We reiterate our $94 price target. 

DXC Technology (DXC) ; $84.17; 1,000 shares; 3.10%; Sector: Tech Services -- Shares moved lower this week, slightly underperforming the overall market. There was not much news released by the company this week; however, management did speak at the Citi Global Technology Conference on Friday. The presentation was business as usual for the company, and did not trigger a material reaction in either direction. During the call, CEO John Lawrie spoke to the importance of leveraging relationships in building out the company's ecosystem by integrating different technologies and products. We continue to like the story of this relatively young company due to the cost synergies management expects to realize. We believe the company will hit its target of $1 billion in year-one cost synergies, and we feel there is great potential for more savings to occur. We feel these savings will more than offset any softness in revenue as the saving contributions to the bottom line will increase margin expansion and boost the stock price. We reiterate our $89 price target. 

iShares MSCI Eurozone ETF (EZU) ; $42.42; 1,000 shares; 1.56%; Sector: Europe -- The EZU traded higher this week as the markets in Europe (excluding the U.K.) broadly ended the week flat to higher. Also of note, the euro rose this week vs. the dollar after European Central Bank chair Mario Draghi spoke about how the strengthening euro has caused the ECB to refrain from winding down its stimulus package. We chose to use an unhedged ETF (i.e., one with exposure to the local currency) for this as we believe the euro to be undervalued relative to the dollar (a view that was bolstered on Tuesday when the currency hit a 2.5-year high) and that the European economy is beginning to reaccelerate. This rationale has been demonstrated since we have seen the euro gain on a weaker dollar in recent months. In addition, rather than select a specific European company, we decided an ETF was best as it would prevent us from potentially being tied to a sector or region that may be lagging the recovery while still providing broad market and currency exposure. Lastly, we chose the EZU over others such as the Vanguard European Stock Index Fund (VGK) due to its lack of U.K. exposure, a region we decided was best to avoid given Brexit-related uncertainties. Given that this is an ETF encompassing over 200 companies, we will not have a price target. 

Eli Lilly (LLY) ; $82.92; 1,450 shares; 4.43%; Sector: Healthcare -- Shares maintained their momentum and pushed higher this week after news that the company was restructuring its global workforce. On Thursday, the company said it would be cutting about 8% of its global workforce in a move that could lower the operating expense target for 2018 by 100 basis points and lead to a projected $500 million increase in savings. In addition, LLY said it is making this move to help support investment in new drugs in advance of the patent expirations that will eventually decrease sales. We are encouraged that management is keeping a pro-active approach in refreshing their product lineup, and this commitment to new investment is why we are optimistic in the company's ability to produce new drugs. Next week, the company will present data on its Monarch-3 study. Should the results prove to be favorable compared to peers, we could see an additional positive price reaction. However, if the results are merely just comparable, we expect the stock to slightly dip. Either way, the company's healthy amount of new drugs moving through the pipeline has us encouraged in the name, as this new product cycle will supplement its current established lineup. We reiterate our $93 price target. 

Facebook FB ; $170.95; 1,000 shares; 6.30%; Sector: Technology -- Shares dipped slightly this week, falling roughly in line with the overall market. Always looking for ways to improve customers' experiences, on Monday the company announced it had bid $600 million to stream Indian cricket matches. Although this was not the winning bid, we believe this shows the company's commitment to break into live-streaming sports on its platform. On Tuesday, the company announced it would be taking feedback to improve its WhatsApp communication application. While generally free in the market, this could be another application that Facebook plans to monetize in the future with improved features. Later that day, Bloomberg reported that the company is planning to pay hundreds of millions of dollars to record labels and publishers for rights to legally include songs in videos. On Wednesday, the company launched its Watch tab, which will feature original TV content. Facebook is making a big bet in this space as it was reported on Friday that the company is willing to spend upward of $1 billion to develop TV shows. This move is consistent with Apple's recent push into this market as both companies are looking to take market share from Amazon and Netflix in this highly lucrative business. Facebook's commitment to improving its members' experiences has led to the company's strong ability to monetize its products, and customer loyalty remains so high that the core platform has almost turned into a need. We continue to believe Facebook can further develop this and grow its member base, as it seems like the only thing capping its potential is the number of people in the world. We reiterate our $175 price target. 

First Data Corp. (FDC) ; $18.49; 1,000 shares; 0.68%; Sector: Technology -- Shares ended slightly lower this week but outperformed the overall market. We called this name out of the bullpen and into the portfolio on Thursday (read our initiation Alert here) as we believe this financial technology company offers a unique story different from its peers. Previously burdened with debt, we are very encouraged with management's commitment in improving their balance sheet. Aiding this process will be the company's integration of its recent acquisition of CardConnect, which is expected to create a seamless combination with FDC's existing Clover point-of-sale system. We believe this product could drive sales for the company and improve its cash flows, which will play into the company's hand of paying down debt. With less debt on the books, we believe the company will be able to increase its franchise value, and the deleveraging and interest savings could allow for further multiple expansion. Lastly, with CardConnect remaining outside of the company's most recent guidance, we wanted to make sure we initiated our position in advance of the upcoming quarter as we believe a strong forecast there could raise the stock valuation as well. We reiterate our $21 price target.

General Electric (GE) ; $23.82; 2,450; 2.15%; Sector: Industrials -- Shares traded sharply lower this week as the stock felt pressure from a bearish note put out Thursday morning by JPMorgan. From the note, the analyst believes an earnings reset is upcoming from management, and the analyst's previous price floor now represents a ceiling. In addition, they noted that the dividend is safe, but it may come at the expense of the company divesting assets to cover cash flow. Although they suspect GE's current levels do not reflect reset to earnings, they do believe all of new CEO John Flannery's restructuring plans and estimates are already being reflected in the stock price. While this post is clearly negative, we most likely will not gain more insight into Flannery's plan until the company reports its third-quarter earnings in October and, more importantly, Flannery's "state of the union" address in mid-November. During this call, we will get a better perspective of the steps Flannery will take to turn the business around. In addition, while a note like this has the power to influence the stock, there is no guarantee it will be accurate. We view the recent and upcoming cost reductions and strategic alignment as signs of a positive transition. Although the short-term reaction may be negative, we believe Flannery is making the moves the previous leadership team was not willing to make, which is why we have long-term optimism in this name. Finally, we recognize this process will not occur overnight, which is why there is value in a 4% yielding dividend to pay for patience, especially with Treasury yields trending lower. We reiterate our $35 price target. 

Alphabet GOOGL ; $941.41; 150 shares; 5.20%; Sector: Technology -- Shares moved lower this week, underperforming the overall market. On Tuesday, a report was out that GOOGL may be charged with an additional fine by the European Commission later this month, this time involving the company's Android software. However, it is worth noting that the company submitted a plan to comply with EU's standards over search (which got the company into trouble in the past), and although it could create another one-time hit, this news does not alter our long-term view of the company's push to diversify its products. Supporting this was news on Wednesday that the Trump administration is set to update self-driving-car guidelines. Automakers have been hoping for easier regulations so that cars could hit the market sooner rather than later, and a favorable vote on the proposal could put autonomous vehicles on the road as early as 2020. This would be a boost for GOOGL's Waymo division, seen as the leader in the field. In addition, we think GOOGL's upcoming partnership with Walmart offering voice-command ordering will be beneficial for the company as this move should increase demand for the smart-speaker Google Home. Overall, we continue to appreciate the company's consistent efforts to increase its relevance and diversify its portfolio beyond search. Management has been very successful in looking for new and innovative ways to utilize its achievements in artificial intelligence and machine learning, both of which play a crucial role in learning and understanding consumer behavior to offer an easier, more convenient shopping experience. We reiterate our $1,100 target.

Illinois Tool Works (ITW) ; $140.04; 550 shares; 2.84%; Sector: Industrials -- Shares traded higher this week, outperforming the overall market. Although the bears in the name have pointed to a declining auto industry, which could pressure the company's OEM sales, we note that there may be relief in this segment based on the wide expectation that there will be many new car purchases in the aftermath of Hurricane Harvey. This could create a temporary unexpected tailwind for the company, which could help push the organic growth target in the upper end of management's targeted 2%-4%. In addition, we like ITW's product portfolio with a diversity that does not just relate to its products, but also extends geographically. Also, the 80/20 business initiative the company has adopted makes each unit highly efficient with expanding operating margins. This strategy gives ITW a strategic advantage over its peers. Lastly, we will hear from the company Thursday when it presents at the Morgan Stanley Laguna Conference. We reiterate our $170 price target. 

KeyCorp (KEY) ; $16.62; 2,200 shares; 1.35%; Sector: Financials -- Shares were pressured this week as the rotation out of financials continued. Due to the heavy decline, we increased our position in the name on Thursday (read here), and this move was timely as the stock rebounded on Friday. With little news surrounding the company, KEY's trading remains tied to interest rate sentiment. Although we had mentioned before that a third interest rate hike seemed unlikely this year, we believe an extension to the debt ceiling and increased government spending for hurricane relief could change this narrative. That being said, we still like this regional bank play due to Key's integration with First Niagara. Last quarter, CEO Beth Mooney indicated that the synergies realized from this deal were on track, making KEY one of the most profitable large regional banks. Lastly, if the company can sustain its momentum in its growing investment banking division, we believe KEY can continue to deliver strong earnings growth. We reiterate our $21 price target. 

Magellan Midstream Partners (MMP) ; $69.34; 1,500 shares; 3.83%; Sector: Energy -- Shares declined slightly this week, but trading remained stable during Friday's oil selloff. In the news this week, the company announced the commencement of two separate pipelines that should be additive for the company. The first one, announced on Tuesday, will carry crude and condensate from the Delaware Basin. Its expected costs will be $150 million, and it will be operational in mid-2019. The second pipeline, announced on Wednesday, will be wholly owned by MMP in an undivided joint interest agreement with Valero Energy. Expecting to cost MMP about $375 million, this new pipeline will run from East Houston to Hearne, Texas, and is expected to be operational in mid-2019 as well. While the two deals are only expected to support modest incremental revenue boosts, our takeaway relates back to the great balance management has achieved in capital expenditures to support future cash flow growth without losing sight of the dividend. This was evident during last quarter's earnings results as the company again proved that the dividend (yielding an excellent 5.2%) was safe despite challenges in the oil environment. Lastly, MMP reported no major infrastructure damages in the wake of Hurricane Harvey, making the storm's impacts only temporary. We reiterate our $89 price target. 

Nucor (NUE) ; $54.55; 2,050 shares; 4.12%; Sector: Industrials -- Shares traded lower this week, underperforming the overall markets. We believe part of this can be attributed to the limited operations of Nucor's facilities in Houston. While the hurricane's impacts are still being calculated, the company did note that it does not expect any material damage. Although storms may initially limit activity, there is typically an economic benefit that follows. That being said, with billions of dollars expected to be used toward a relief package to repair the damage in cities and infrastructure, we expect the need of steel to become a major player in the program and we believe Nucor may benefit from this. We briefly mentioned Nucor's involvement in a potential recovery on Friday (read here) as we indicated that this week's selling has made shares attractive. In addition, another potential catalyst that awaits the company is an update to the Section 232 trade investigation into China steel imports. We believe that if President Trump imposes tariffs on imported steel, the demand for domestic steel would rise. Since Nucor is the largest producer of steel in the country, we believe it would stand to benefit the most from this potential policy change. We reiterate our $75 price target. 

Nvidia (NVDA) ; $163.69; 200 shares; 1.21%; Sector: Technology -- Shares pulled back this week, driven by Tuesday's market selloff and a report on Friday detailing how China is intervening in the cryptocurrency market. China is looking to limit the initial coin offerings (ICO) market, which could affect potential shipments of NVDA's graphics cards to the country. If China ends up closing local bitcoin exchanges, the demand for mining the cryptocurrency and the need for NVDA's superior GPU chips would diminish. While this news is a slight negative, we remind members that NVDA is not a cryptocurrency story. We continue to believe Nvidia provides one of the best ways to play the growing technological move toward artificial intelligence and deep learning. The company is in a unique position to prosper from advancements in a vast number of fast-growing industries such as data center, automotive and gaming, which all provide strong revenue streams. Although the stock can be volatile at times, we believe this company represents the strongest investment in both the present and future of computing. We reiterate our $180 price target. 

Schlumberger (SLB) ; $64.86; 1,400 shares; 3.35%; Sector: Energy -- Shares moved higher this week, trading up over 2%. Although there was not much news released by the company, the stock benefited from a rising price in crude. A report by Reuters on Friday detailed how SLB has been steadily investing billions of dollars into stakes of their customers' oil and gas projects. In addition to the potential benefits of improved profits, the increased stakes will allow SLB to have a say in customers' operations, including drilling decisions and the management of the fields. Although this type of investment increases the company's risks to the commodity, we believe SLB management team's often insightful outlooks of the macro environment may give them a leg up here. This history of understanding the markets and what strategic plans are necessary to turn profits has us encouraged that SLB is making the right decisions with this business model change. In addition, we expect SLB to keep some flexibility in who and how much it invests in, as its premiere oil services business provides a strong support level for the company. Therefore, we see this strategy as a positive shift in direction for the company as it increases the potential for stronger revenue growth. We reiterate our $93 price target. 

Southwest Airlines (LUV) ; $52.87; 1,200 shares; 2.34%; Sector: Transportation -- Shares traded higher this week as pressures in the airline industry subsided. Although the stock was originally weakened during the height of Hurricane Harvey (since Houston represents a major traffic hub for the airline), we viewed the selling as a buying opportunity, which is why we added shares last week. While the hurricane may have created a loss in traffic, we believe the impact was temporary as we expect flights to increase back into the Houston area once relief efforts ramp up. Presenting at a conference this week, management estimated that the company will realize a $40 million to $60 million negative impact from the hurricane. However, management reiterated that their new reservation system is estimated to provide a $200 million incremental EBIT benefit. Lastly, the company reported on August traffic on Friday. During the month, LUV saw a 5.3% year-over-year increase in revenue passenger miles, a 4.9% year-over-year increase in available seat miles and a year-over-year increase in load factor to 84.9%. We like this news because it signals that not only are LUV's opportunities increasing, the company is doing a better job of improving efficiencies on flights with higher utilizations and more revenue per passenger mile. Despite the recent weakness, we like this name long term as we believe this is the best U.S. airline with growing potential due to the company's new reservation system. We reiterate our $70 price target. 

Starbucks (SBUX) ; $53.49; 1,800 shares; 3.55%; Sector: Consumer Discretionary -- Starbucks traded lower this week, taking out some of the momentum that has been building in the stock. On Wednesday, the company announced the appointment of Rosalind Brewer as the new COO. Also that day, McDonald's announced it is adding an espresso-based drink to the McCafe menu as part of the company's efforts to revamp its coffee business. Although this announcement pressured shares of Starbucks due to the increased competition in the coffee space, we feel SBUX customers differ from those of McDonald's and that the brand loyalty SBUX has should prevent material changes to the company's revenues. On Thursday, the company announced it is fighting a lawsuit that would put cancer warnings on coffee products, and our view of this event is minimal given the lack of proven evidence that coffee contains carcinogenic products. That being said, we have optimism in this name, and especially this quarter, given the company's recent improvements both in-store and digitally. Some stores are undergoing remodeling, which should help attract traffic, and we expect wait lines to decline with the addition of another employee shift in stores. Along with this, improvements in their rewards program and mobile app should further decrease wait times as the company is promoting an order in advance system. These new changes are timely as the company just released its very popular pumpkin spice latte, which we expect will drive sales this season. We reiterate our $62 price target. 

TJX Companies (TJX) ; $72.39; 2,000 shares; 5.33%; Sector: Consumer Discretionary -- Shares ended flat this week as a decline on Friday offset positive analyst support from the beginning of the week. Jumping in front of the analyst activity, on Tuesday we added to our share position (read the Trade Alert here) as we believe the launching of the company's HomeSense stores would provide a strong boost to the company's growth. On Wednesday, SunTrust released a note citing that HomeSense would be a "game changer," offering differential products with little cannibalization to TJX's strong growing HomeGoods lineup. Then on Thursday, the stock received an upgrade from Northcoast as they believe the current valuation and growth from HomeSense leaves "plenty of runway" to grow sales. We continue to believe this is the name to own in retail as its off-brand business model has allowed it to stand up to e-commerce pressures. We reiterate our $85 price target. 

TWOS

Apple (AAPL) ; $158.63; 700; 4.09%; Sector: Technology -- Shares declined this week over speculation that the upcoming iPhone 8 will be in short supply come this year's holiday season. According to reports, early production of the phone was plagued by glitches that occurred during the manufacturing process, which may cause shortages when the iPhone is released. Although new iPhones are typically launched with an initial limited supply, investors are concerned that the shortages this time could extend into the holiday season, a crucial period for Apple's sales. In other news this week, it was announced the company may be eyeing Culver Studios as its location for future Hollywood productions. Apple has been making a push to enter the original entertainment space that Amazon and Netflix have been very successful in, and working with a well-respected studio such as Culver would make a great partnership. In addition, the company is pursuing the rights in the James Bond franchise, a move that would immediately put Apple on the map in movies. We will hear from the company during its major launch event on Tuesday, where we expect to learn more about upcoming product releases and innovations. We reiterate our $165 price target. 

Arconic (ARNC) ; $24.42; 2200; 1.98%; Sector: Industrials -- Shares traded down roughly 4% this week, with most of the losses occurring on Tuesday following the news that United Technologies reached an agreement to buy Rockwell Collins. This deal hurt shares of Arconic as it is expected to put pressure on the company's aerospace business, a unit that has been a point of optimism and strength. Although this deal (which still needs to be approved) may put a strain on Arconic's business, we still see upside in the name given the increase in military and defense spending. In addition, we are encouraged by how well the company performed last quarter despite not having a permanent CEO. The company has been running well with David Hess taking an interim CEO tag, and if the company finds a full-time replacement who is well received in the investment community, we would expect the stock to bounce higher. Lastly, we believe the company has moved past the dark cloud that was put on it during the initial news of the fatal Grenfell Tower fire in London. The company has maintained its limited responsibility in the cause of the fire, and management has taken the appropriate steps to mitigate against future risks. We reiterate our $31 price target. 

Citigroup (C) ; $66.17; 1250; 3.05%; Sector: Financials -- Shares traded lower this week as financials took a hit due to the drop in Treasury yields as investors flocked toward safe-haven assets. Decreases in long-term rates often cause selling in financial names as they lower the profitability of banks. In addition, while the market may be pricing in a decreased probability that interest rates will rise again this year, as we noted this week, we think the potential of a debt ceiling increase and heavier spending by the federal government could change this narrative. We continue to like this name compared to its banking peers due to C's limited reliance on trading revenues that require market volatility. In addition, the company's strong performance in the Fed's stress tests (conducted earlier in the summer) have allowed the company to increase its payout ratios to shareholders. Lastly, with the financial selloff causing shares to fall below tangible book value again, we see opportunities in initiating new positions in this stock. We reiterate our $74 price target. 

DowDuPont (DWDP) ; $64.85; 1375; 3.29%; Sector: Chemicals -- DowDuPont's shares slid this week, greatly underperforming the overall market. In addition to some investors closing their position in the stock following the completion of the Dow Chemical/DuPont merger last week, the stock has been pressured due to the unknown full effects of Hurricane Harvey. While the full specific impacts are yet to be released, it is known the company operates facilities in the Texas region. That being said, one analyst believes the impact from the hurricane has only caused logistical issues compared to damages. In addition, with the hurricane passing, the facilities are back in recovery mode and are "gradually getting back to normal." We will continue to monitor for updates by the company over this development, but in our view, this temporary issue does not alter the company's long-term story. With the formation of DWDP, the company is expected to realize $3 billion in run-rate cost synergies with the potential of an additional $1 billion in growth synergies. In addition, the company expects to spin off three separate businesses, forming companies that specialize in material science, specialty products and agriculture, which we believe will unlock additional shareholder value. These spinoffs are expected to occur within the next 18 months, and while the full plans are still being worked on by management (with activist investor influence), we ultimately view each transaction as positive. We reiterate our $70 price target. 

NXP Semiconductors (NXPI) ; $112.3; 550; 2.28%; Sector: Technology -- Shares dipped slightly this week as they continue to hover around the $112 level. EU antitrust regulators said they are still reviewing Qualcomm's attempted bid on NXPI and are seeking more key details about the transaction. Members can recall that QCOM has issued a tender offer of $110 for each share of NXP, but the deal has been continually pushed out because the minimum number of required shares has not been tendered. QCOM needs a minimum of 80% of all outstanding shares to be tendered in the deal, and the offer has found little support in the investment community as activist investors push QCOM to raise their price. That said, as of the most recent announcement date on Aug. 24, only 6.9% of the outstanding shares have been tendered. Our view is that shares of NXP are worth more than the $110 offer, which is why we will not be tendering our shares in our portfolio. We see two options playing out. First (and the more likely scenario), QCOM raises its bid to a level that gains support with the activist investors, or two, if QCOM is forced to pull its bid (which would lead to major fines), NXP's stock could move higher from the $110 level due to shares currently trading at each cheap multiple with respect to its peers. That being said, since we cannot quantify what a potential updated bid would look like by QCOM, we reiterate our $110 price target, but again, we will be holding onto our shares as we believe the stock is worth more than this level. 

PepsiCo (PEP) ; $115.04; 600; 2.54%; Sector: Consumer Staples -- Shares traded slightly lower this week, ending roughly in line with the broader markets. On Friday, the stock caught a downgrade from Credit Suisse as the analyst cited the stock's strong year-to-date performance as a cause to manage expectations for the rest of the year. We do want to make a note there that the stock is up over 11% year to date and hit an all-time high in mid-August. Still, despite pressures in the U.S. beverage industry due to soda taxes, we think the company's snacks business can continue to offset headwinds. In addition, we like the secular growth story of the company that provides stability as a consumer staple. Last quarter, the company sequentially increased its organic revenue growth figures, bringing the business closer to management's 3% yearly target. Should we see another sequential increase, we think the stock can continue to climb. In addition, we like the strong dividend that the company pays out, providing a solid return that complements the steady growth. We reiterate our $120 price target. 

THREES

Apache (APA) ; $39.3; 2250; 3.26%; Sector: Energy -- Apache traded lower this week as Friday's selloff erased all the early week's gains in the stock. While we were greatly looking forward to the company presenting this week at the Barclay's CEO Energy-Power conference in the hopes of learning more about the Alpine High, management elected to stay in Houston to oversee the reopening of operations and employee initiatives that were affected by Hurricane Harvey. Despite not presenting, the company updated investors that it only felt minor direct impacts from the storm hitting the Gulf of Mexico. Although operations were briefly shut down in the Eagle Ford, the company noted that the interruption was very brief. Still, it expects that third-party downstream infrastructure impacts are still being calculated due to disruptions that occurred in the Permian Basin. Despite all this, we still believe shares are undervalued at this level and that the Alpine High is being too heavily discounted in the stock price. The play was originally believed to be one of the biggest finds in recent history, and we view that Apache's cost-cutting measures over the last few months were an effort to ramp up spending in the region. That being said, we are encouraged that the stock can move higher from this level in the long term once the Alpine High is better factored into the company's value. Because of this, we are holding our position for now as we do not believe it would be prudent to sell the stock after this large selloff. While we cannot reiterate a specific price target, we believe the timing will be known once the Alpine High catalyst is reflected in the stock's value. 

Newell Brands (NWL) ; $44.04; 600; 0.97%; Sector: Consumer Discretionary -- Shares were greatly pressured this week, plunging about 10%. On Wednesday, management lowered their fiscal 2017 EPS guidance from $30-$3.20 to $2.95-$3.05 due to implications from Hurricane Harvey. The hurricane has shut down operations for NWL's key resin suppliers in the Texas and Louisiana regions, forcing the company to look elsewhere for a source. In an effort to maintain its net sales and growth forecasts, NWL had success in finding an alternative supply, although it comes at a higher cost. Management noted that this will create margin compression over the back half of the year, causing the lower earnings-per-share guidance. Still, we must point out that the company expects to hit its core sales growth guidance of 2.5% to 4%, keeping NWL's long-term story in intact. On the positive side, on Thursday the company announced it had acquired Chesapeake Bay Candle for $75 million. Although the deal is small, this move will be additive to the company's Live segment. Because of the sharp downtrend this week, the strength we have been looking for to exit the position may take longer than what was originally hoped for as the hurricane could not have been predicted. That being said, since the growth story of the company has not changed, we may be inclined to purchase shares again since they are being offered at such a discount. Should that occur, we will offer a revised price target to reflect the lower guidance.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long ABT, ATVI, AAPL, AGN, APA, AVGO, XEC, CMCSA, DHR, DXC, FB, GE, GOOGL, LUV, KEY, MMP, NUE, NWL, NVDA, ARNC, C, DOW, PEP, NXPI, SLB, SBUX, TJX, EZU, ITW, LLY and FDC.

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