Two stocks have been selected from the list of bullpen stocks to watch. We are initiating positions in BlackRock and CrowdStrike’s Jim Cramer’s Charitable Trust. Purchase 17 shares of BlackRock at $1012.44 per share. Buy 60 shares of CrowdStrike for $305. After Wednesday’s trade, BlackRock will have a roughly 0.5% weight in the trust, a portfolio used by investment clubs. CrowdStrike’s weight will be approximately 0.5%. BlackRock is the world’s largest asset manager and leading provider of investment, advisory and risk management solutions. We offer a wide range of equity, fixed income, multi-asset, alternative and cash investment products to institutional, individual and ETF clients around the world. Approximately 43% of base fees are actively managed products, 42% are ETFs, 8% are indexes, and 7% are cash. BlackRock announced strong third-quarter results last Friday. Total revenue increased 15% year-over-year to $5.2 billion, driven by favorable market impacts on average assets under management, 5% organic growth in base fees, and increased performance fees. And its base rate growth rate of 5% was the company’s highest level in the past three years. BLK YTD Mountain BlackRock YTD BlackRock lived up to its reputation as a premier asset aggregator, generating $221 billion in net inflows in the quarter, a company record. The company is having a great year. Net inflows through the first three quarters of 2024 have already exceeded full-year net inflows in 2022 and 2023. At the end of the third quarter, assets under management were approximately $11.5 trillion, an increase of $2.4 trillion from the same period last year. Profitability was another highlight. The company continues to deliver sustained growth in asset and technology services at scale while controlling expenses. Adjusted operating margin expanded 350 basis points year over year to 45.8%, and adjusted earnings per share were $11.46, well above expectations of $10.40. The company purchased $375 million worth of stock during the quarter, reducing its weighted average diluted share count slightly. The company has a dividend yield of approximately 2% and has increased its dividend for 15 consecutive years. Currently, one of the company’s biggest strategic initiatives is in alternative strategies such as private markets and infrastructure. Earlier this month, BlackRock completed its acquisition of Global Infrastructure Partners, a leading independent infrastructure fund manager. The company believes the combination “gives customers access to investment and operational expertise across their infrastructure.” BlackRock believes that infrastructure is currently a $1 trillion market and will continue to be one of the fastest growing segments of the private market. The transaction increased client assets under management by an additional $116 billion and fee-paying assets under management by $70 billion. It also added long-term non-redeemable assets to BlackRock’s business, which the company likes because it diversifies its revenue and revenue mix. Management believes these private market assets will have a positive impact of 0.5 to 1 full basis point on the firm’s overall effective fee rate. The stock has moved wildly this year, rising about 24%, and we think this rally could continue. It’s a fairly stable business with market-leading organic growth, expanding margins, plus dividends and share buybacks. BlackRock also expects flows into bonds to accelerate as central banks lower interest rates and some of the record money market assets flow into bond funds and ETFs. Chief Executive Officer Larry Fink referred to investors’ large cash holdings during an earnings call, saying, “Investors need to reconfigure risk to meet their long-term return needs.” Explained. Fink sees opportunities for investors across several structural trends, including “rapid advances in technology and AI, the rewiring of globalization, and the unprecedented need for new infrastructure.” Mr. Fink is a thought leader in the banking industry. Given the recent highs, we are starting with a small position, but intend to take advantage of the pullback to increase our position. Our price target is $1,150, approximately 24 times the FactSet 2025 EPS consensus estimate of $48.47. CRWD YTD Mountain CrowdStrike YTD Next up is CrowdStrike, a cybersecurity company led by co-founder and CEO George Kurtz, who Jim co-starred with many times on “Mad Money.” CrowdStrike specializes in endpoint protection through an AI-native platform called Falcon. The Falcon platform runs entirely in the cloud, allowing for rapid updates, scalability, and ease of deployment. The CrowdStrike website published by IDC has an excellent white paper that explains the value of the CrowdStrike Falcon XDR platform. It deters violations. But it saves time by protecting and responding to threats faster, while helping security teams do more with less. Save money by reducing cybersecurity costs. Companies can retire ineffective platforms and consolidate point solutions. According to an IDC report, customers realized a return of $6 for every $1 invested with a five-month payback period after using the Falcon XDR platform. CrowdStrike was virtually unstoppable this year until July 19, when a flaw in a software update to the company’s Falcon Sensor security software system caused a worldwide problem for computers running Microsoft Windows. . This was a huge blow to cybersecurity companies, especially those with good reputations. There was widespread speculation that the outage would negatively impact business due to customer backlash, leading to a decline in market share. However, CrowdStrike reported at the end of August that sales were up 32% year-over-year and adjusted earnings per share were impressive at $1.04 versus consensus for 97 cents. Even better, the company had an overall retention rate of 98%, indicating virtually no business was lost due to this event. Most recently, the company held its annual Fal.Con conference in September, which was a huge hit with attendance up 30% compared to last year. Microsoft CEO Satya Nadella, speaking at the event, suggested that the two companies are on bad terms. The two companies had been rivals for years, but ironically this incident brought them closer together. CrowdStrike stock may be up nearly 40% since its lows in early August, but it is still down more than 10% since the July 19 incident and from its July 1 closing high of $392.15. has fallen by about 23%. This could actually be an opportunity. No business was lost. Our initial price target is $350, which is about the same price the stock was trading at just before the July 19 outage. We believe the stock price should return to this level as there was virtually no business loss. You may be wondering if adding CrowdStrike to your portfolio means leaving Palo Alto Networks. Does owning two cybersecurity companies violate our rules on diversification? We typically don’t like to double down on one area, but position sizing allows us to identify these best stocks. We believe there is room for both in the portfolio. Palo Alto Networks doesn’t have a huge place in our portfolio as we have secured huge profits. Cybersecurity is a great area to invest in. Given all the hostilities that are occurring, we are in an environment of heightened threat. all over the world. Artificial intelligence and Gen AI are making bad actors more sophisticated and companies need to invest with industry leaders to stay protected. It’s been almost a year since the new SEC rules regarding disclosure of cybersecurity incidents were enacted, and they’re being driven by increased threat awareness. (Jim Cramer’s Charitable Trust is long BLK, CRWD, MSFT, and PANW. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, Jim Receive trade alerts before making a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. 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