Raphael Stevens

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CNBC’s Jim Cramer said Thursday that despite conventional wisdom, he believes investors should pick up shares of homebuilding stocks the next time they plummet.
“I believe these stocks will drop again, but when they do … I think you’ve got to pounce,” the “Mad Money” host said.

CNBC’s Jim Cramer said Thursday that despite conventional wisdom, he believes investors should pick up shares of homebuilding stocks the next time they plummet.
“I believe these stocks will drop again, but when they do — and that might be on a statement from the Fed that says they’re still seeing signs of inflation — I think you’ve got to pounce,” the “Mad Money” host said. “That could be as soon as the next rate hike.”

Homebuilder sentiment fell to a two-year low on decreasing demand and rising costs in May. Mortgage rates rose sharply this week after easing over the last few weeks, as home prices also continued to rise.
But Cramer says there are bullish signs for the market suggesting that despite the Federal Reserve getting ready to tighten the economy, homebuilding stocks might go against the tide and be attractive assets for investors’ portfolios.
He pointed out that the pandemic has changed the homebuilding industry’s landscape, leaving downtown offices empty because of work-from-home, plumping potential buyers’ bank accounts and driving a baby boom that could mean more business for homebuilding companies.
In addition, skyrocketing rent prices have meant some people invested in homes rather than signing a lease, while constrained supplies of houses have kept properties from depreciating in value and led to bidding wars between potential buyers, he said.
“We’ll get more downgrades and maybe even some estimate cuts, but when they come I’m going to go out on a limb right here and I’m going to say the time is right to buy the homebuilders,” Cramer said.

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CNBC’s Jim Cramer on Thursday urged investors to purchase shares of Deere at the start of the next trading session.
“You can now get its stock for just 15.5 times earnings, which I just think is absurd. So, you’ve got my blessing to buy it tomorrow morning,” the “Mad Money” host said.

CNBC’s Jim Cramer on Thursday urged investors to purchase shares of Deere at the start of the next trading session.
“I’ve told you to buy Deere all year. Liked it even more when Russia invaded Ukraine, because …  it’s created a powerful bull market in all things agriculture,” the “Mad Money” host said. “This is a textbook real company that makes real stuff and sells it at a profit, with a reasonable valuation,” he added.

“You can now get its stock for just 15.5 times earnings, which I just think is absurd. So, you’ve got my blessing to buy it tomorrow morning,” he said.
Shares of Deere tanked 14% after the equipment maker missed Wall Street expectations on revenue but beat on profit in its latest quarter. However, the stock bounced during last week’s marketwide rally.
Cramer said that he believes the stock fell because investors were expecting a blowout quarter due to the current bull market in agriculture, and dumped the stock after Deere reported quarterly results that left more to be desired.
The company’s guidance also left investors unenthusiastic, Cramer said, adding that the stock rallied after Deere had its analyst day and investors reassessed the company’s latest quarter.
“This one is an important bellwether, and not just for farm equipment. The crazy action in Deere stock … can tell you a lot about the temperament of this market and how it’s changed,” Cramer said.

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Disclaimer

Questions for Cramer?Call Cramer: 1-800-743-CNBC
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Lululemon expects the momentum in its business to continue in spite of broader economic headwinds.
The athletic apparel retailer posted earnings and revenue that topped Wall Street’s expectations.
“Our product pipeline remains very strong and it’s the bedrock of the business,” CEO Calvin McDonald said.

Lululemon customers so far aren’t balking at higher prices on the retailer’s leggings and sports bras, Chief Executive Officer Calvin McDonald said Thursday.
The athletic apparel maker reported fiscal-first quarter profit and revenue that outpaced Wall Street’s expectations, boosted by double-digit growth online and in the retailer’s still nascent men’s division.

It also raised its financial outlook for fiscal 2022, expecting the momentum in its business to continue in spite of broader economic headwinds, including red hot inflation and the snarled supply chain.
Lululemon, which caters to a more affluent customer, joins a group of retailers including Levi Strauss & Co., Nordstrom and Macy’s high-end Bloomingdale division that are luring shoppers with enough extra money to splurge on new clothes and accessories while prices are rising at rates last seen four decades ago. In late March, Lululemon said it would be raising prices on certain items to help offset higher costs for raw materials, labor and air freight.

Pedestrians seen walking past Canadian athletic apparel retailer Lululemon in Shanghai.
Alex Tai | SOPA Images | LightRocket | Getty Images

Lululemon in particular was seen as a pandemic beneficiary, as people sought out stretchy pants and comfortable clothing to wear at home. But now, even as Americans emerge from their homes to return to offices and social outings, they’re still buying so-called athleisure items. Lululemon has also broadened its assortment more recently to include footwear and skin-care products.
“Our product pipeline remains very strong and it’s the bedrock of the business,” McDonald said on a call with analysts.
Lululemon sees sales in fiscal 2022 in a range of $7.61 billion to $7.71 billion, up from a prior forecast of $7.49 billion to $7.62 billion. Analysts were looking for $7.54 billion, according to Refinitiv data.

The company expects to earn, on an adjusted basis, between $9.35 and $9.50 per share, up from a prior range of $9.15 to $9.35. Analysts were looking for per-share earnings of $9.28.
Lululemon’s shares were little changed during extended trading.
Here’s how Lululemon did in its fiscal first quarter compared with what Wall Street was expecting, based on Refinitiv data:

Earnings per share: $1.48 vs. $1.43 expected
Revenue: $1.61 billion vs. $1.53 billion

The retailer reported net income in its fiscal first quarter of $190 million, or $1.48 per share, compared with net income of $145 million, or $1.11 a share, a year earlier.
Lululemon’s revenue grew roughly 32% to $1.61 billion from $1.23 billion a year earlier.
Same-store sales, which track revenue online and at Lululemon stores open for at least 12 months, rose 28% from the prior year. Analysts had been looking for an increase of 20.4%, according to StreetAccount estimates.
Women’s sales grew 24% on a three-year basis, and men’s grew 30% versus 2019 levels, the company said.
For the second quarter, Lululemon expects revenue to be in the range of $1.75 billion to $1.78 billion, topping analysts’ expectations for $1.71 billion.
Excluding the gain on the sale of an administrative office building, adjusted earnings per share are expected to be in the range of $1.82 to $1.87, ahead of analysts’ expectations for $1.77.
Regarding China, which is still facing Covid-related restrictions in some regions, McDonald said that roughly one-third of Lululemon’s 71 stores in the country were closed for a period of time in the latest quarter and into the second.
However, he said the company will continue to invest in China, viewing the softened demand as a short-term challenge. “Our brand momentum remains strong,” the CEO told analysts.
Lululemon shares are down about 23% year to date.

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The IRS is working to boost audit rates for the wealthiest Americans, according to a statement from the agency.
While plummeting audits have drawn congressional scrutiny, the numbers doubled for higher earners over the past seven months, the IRS reported.
Still, “resource constraints” have limited the agency’s ability to review high net worth individuals, large corporations and complex business structures.

Jeffrey Coolidge | Photodisc | Getty Images

The IRS is working to boost its audit rates for the wealthiest Americans, according to a statement recently released with the agency’s annual Data Book, covering activities for the 2021 fiscal year.
While plummeting audits have drawn scrutiny from Congress, percentages have doubled for filers making over $100,000 to more than $10 million over the past seven months, according to the statement. 

What’s more, audits of higher-income taxpayers often come later in the statutory period — within three years of a filing — meaning audits for 2019 may still happen through at least 2023, the agency says.
More from Personal Finance:Tax professionals ‘horrified’ by IRS destroying 30 million filers’ dataIRS insists destruction of taxpayer data won’t affect payersLate tax refunds will earn 5% interest — but it’s taxable
Still, the IRS says “resource constraints” have limited the agency’s ability to audit high net worth individuals, large corporations and complex business structures, and reviews have significantly declined since the 2010 tax year.  

“Audit rates for taxpayers with incomes of more than $200,000 decreased the most, largely because higher-income audits tend to be more complicated and require auditors to manually review multiple issues,” Ken Corbin, chief taxpayer experience officer for the agency, told the House Oversight Subcommittee in May.

Currently, the agency still has only 6,500 agents to tackle audits for high-income filers, according to the May IRS statement. 

Although the IRS in March said it planned to hire 10,000 workers to address the agency’s backlog, Corbin admitted hiring has been a challenge. The agency on Wednesday issued another call to hire 4,000 representatives.
IRS audits declined by 44% between fiscal years 2015 and 2019, according to a 2021 report from the Treasury Inspector General for Tax Administration. Audits dropped by 75% for filers making $1 million or more, and 33% for low-to-moderate earners claiming the earned income tax credit, known as EITC.
Returns claiming the EITC have “historically had high rates of improper payments and therefore require greater enforcement,” Corbin said during the May House Oversight Subcommittee hearing.
Since many lower-income filers are wage earners, audits are generally less complex and may involve an automated process.
Americans making more than $5 million annually had just over a 2% chance of being audited in 2019 compared with more than 16% in 2010, according to a May report from the Government Accountability Office, a federal watchdog.
The report cites budget cuts as the primary reason for the decline, dropping to $11.9 billion for fiscal 2021, which is $200 million less than 2010, along with limited staffing. 

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Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer on Thursday gave investors the go-ahead to buy shares of valuable companies that reported bad news, yet still managed to keep their stocks afloat.
“Because the stocks have been so crushed in anticipation of multiple rate hikes, you can be bold enough to buy a discounted product without much hesitation,” the “Mad Money” host said.

CNBC’s Jim Cramer on Thursday gave investors the go-ahead to buy shares of valuable companies that reported bad news, yet still managed to keep their stocks afloat.
“The lack of new, broken-the-moment-you-buy-it stocks, and the horrendous declines in very valuable companies, have coalesced to create an environment where Wall Street’s willing to overlook some of the imperfections. Not all. But some,” the “Mad Money” host said.

“You’re free to overlook a blemish or two, and because the stocks have been so crushed in anticipation of multiple rate hikes you can be bold enough to buy a discounted product without much hesitation. I think that we’ve reached that level,” he added.
Cramer highlighted several instances in which investors ignored “textbook bad news” from a company, pointing out that shares of Nvidia, Microsoft and Salesforce all dropped after reporting disappointing financial results or forecasts but managed to rally.
Cramer said he believes this new forgive-and-forget attitude from Wall Street might be because IPOs are falling by the wayside while even valuable companies see declines.
“We’re finally at the point in the stock cycle … where the underwriters are no longer pumping out the bilge, these lethal IPOs for which there’s no appetite whatsoever,” he said. “Enough money has been lost in the new, why go back – why not go back to the old?”
Disclosure: Cramer’s Charitable Trust owns shares of Microsoft, Nvidia and Salesforce.

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New CNN chief Chris Licht told CNN staffers Thursday the network uses its “Breaking News” banner too often.
Licht’s mission, along with his bosses at Warner Bros. Discovery, is to brand CNN as less sensationalist.
Licht said CNN will evaluate reorganizing divisions and leadership but will move slowly with any changes given the amount of transition the news network has already undergone in recent months.

Executive producer Chris Licht of the television show Our Cartoon President speaks onstage during the CBS/Showtime portion of the 2018 Winter Television Critics Association Press Tour at The Langham Huntington, Pasadena on January 6, 2018 in Pasadena, California.
Frederick M. Brown | Getty Images

New CNN chief Chris Licht has a message for his employees: not everything needs to be labeled “Breaking News.”
In recent weeks, Licht, who officially started as CNN’s CEO on May 2, has held meetings with employees to solicit feedback about when and how the network uses its “Breaking News” banner, according to people familiar with the matter who asked not to be named because the discussions were private.

Licht came to the conclusion there should be parameters around when to use the red chyron and asked Sam Feist, CNN’s Washington bureau chief and senior vice president, to lead a team creating specific guidelines for its use.
“This is a great starting point to try to make ‘Breaking News’ mean something BIG is happening,” Licht wrote in the memo, which CNBC has obtained. “We are truth-tellers, focused on informing, not alarming our viewers. You’ve already seen far less of the ‘Breaking News’ banner across our programming. The tenor of our voice holistically has to reflect that.”
Licht’s decision — the first significant programming alteration he’s made — is indicative of a broader strategy supported by Warner Bros. Discovery Chief Executive David Zaslav and board member John Malone, who both publicly said CNN should emphasize journalism over sensationalism.
“I would like to see CNN evolve back to the kind of journalism that it started with,” Malone told CNBC in November.
Zaslav said in April that CNN’s measured take on news is essential for “a civilized society” and crucial for it to avoid the image of being an “advocacy” network.

Organizational changes

Licht also told employees he plans to craft a new organizational structure at CNN but will “make decisions slower than some would like” given the changes the company has already undergone over the last four months.
Former CNN leader Jeff Zucker abruptly departed in February after disclosing a relationship with Chief Marketing Officer Allison Gollust, who also left the company. WarnerMedia then merged with Discovery in April, prompting the swift elimination of streaming service CNN+ and its leader, Andrew Morse.
CNN digital editorial chief Meredith Artley announced her departure last month. She will be replaced by Marcus Mabry, who has been senior vice president of CNN Digital’s content strategy and global programming, on an interim basis, Licht wrote in the memo.
“I know this organization has been through tremendous change,” said Licht. “I am approaching this process slowly and thoughtfully as we look at all parts of the operation. We will realign where it makes sense to best serve our people and the business.”
Licht also announced a new beat, “Guns in America,” that CNN will roll out in the near future.
WATCH: CNBC’s full interview with Liberty Media Chairman John Malone

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