We’re buying 25 shares of Facebook-parent Meta Platforms (META) at roughly $177 each. Following Friday’s trade, the portfolio will own 450 shares of META — increasing its weighting to 2.77% from 2.62%. We could not buy shares of Johnson & Johnson (JNJ) on Friday due to our Club trading restrictions, as explained earlier , but we still want to put a small amount of cash to work because stocks have been hit hard the past three days and Friday’s hotter than expected consumer inflation number could be the data point that was needed for the Federal Reserve to get more aggressive with raising interest rates. That’s something we believe would be initially viewed negatively by the stock market but then positive as it would mean the economy is on a faster path to stamping out inflation. The stock we are buying this afternoon is Facebook-parent Meta Platforms . In a market that’s still in a valuation reset due to the impact of higher rates, we think META screens as classic GARP — growth at a reasonable price — with the stock trading at 15x estimated 2022 earnings per share and less than 13x estimated 2023 earnings per share. The company formerly called Facebook effected the last part of its name change this week, switching its ticker symbol from FB to META. Sure, there are concerns that the “E,” or earnings part of the price to earnings valuation formula, is too high following Snap ‘s profit warning a few weeks ago. But we think Meta’s business will be far more resilient in an online advertising spending slowdown. When advertisers need to pull back on spending, they typically don’t cut back from it all. They eliminate the weaker ones that don’t have as large of a reach and generate lower returns on investment. In this case, we think advertisers are likely to circle the wagons around more proven platforms that offer higher ROIs like those of Alphabet ‘s (GOOGL) Google and Meta’s Facebook. Lastly, we want to note that META isn’t a perfect fit for our shareholder return criteria because the company does not pay a dividend. However we are willing to make an exception here because management buys back a ton of stock. In the first quarter of 2022, Meta Platforms repurchased $9.4 billion of stock. (Jim Cramer’s Charitable Trust is long META, JNJ and GOOGL. 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.
