Carnival Corporation & plc (NYSE:CCL) is one of the stocks that was on Jim Cramer’s radar. Cramer explained why the stock is “exciting to people,” as he said: “The AI theme lost its luster, didn’t it? Buyers moved on to other, more exciting areas. That consumer’s resurgence out of nowhere, that’s an exciting story. For example, it’s ignited retail, anything connected to discretionary spending, and that’s what drove, say, the stock of Carnival, almost 10 points higher today on greater numbers that it relea ...

Core Viewpoint - Bath & Body Works, Inc. reported disappointing third-quarter results, missing earnings expectations and lowering its full-year outlook, indicating a decline in discretionary consumer spending as the holiday season approaches [1][5]. Financial Performance - The company reported third-quarter adjusted earnings per share of 35 cents, below the expected 40 cents [1]. - Quarterly sales were $1.594 billion, a 1% decrease year over year, missing the analyst consensus estimate of $1.634 billion [2]. - Gross profit for the quarter was $658 million, down from $700 million a year ago, with a gross profit margin of 41.3%, a decline of 220 basis points year over year [3]. Margin and Operating Income - Merchandise margin dropped by approximately 260 basis points, impacted by a ~$35 million tariff hit, which accounted for about 200 basis points [4]. - Operating income was $161 million, down from $218 million a year ago, with an operating margin of 10.1%, a decrease of 340 basis points [4]. Fourth Quarter and Fiscal 2025 Outlook - The company anticipates fourth-quarter sales to decline in the high-single-digit range due to a challenging holiday season and weakening consumer sentiment [6]. - The full-year outlook has been revised to low-single-digit sales declines, with adjusted EPS now expected to be at least $2.87, significantly lower than the previous range of $3.35–$3.60 and the consensus estimate of $3.44 [9]. - The projected gross profit rate for the full year is approximately 43.3%, factoring in a ~100-basis-point tariff drag [9]. Cost Management - SG&A rate is expected to be about 24%, reflecting deleverage from softer sales but supported by tight cost controls [7]. - Adjusted SG&A is projected at about 28.3% due to weaker sales [10].

Core Insights - Expedia has reached a new all-time high after exceeding earnings expectations and raising full-year sales guidance, with gross bookings up 12% year-over-year and revenue increasing by 9% in the quarter [1][5][22] - Piper Sandler upgraded Expedia's shares to neutral from underweight following the positive earnings report, resulting in a 17% increase in share price [1][22] - The travel sector shows a mixed performance, with other companies like Airbnb and Trip Advisor experiencing declines after their earnings reports [2][3] Company Performance - Expedia's business-to-business growth is notable, indicating that this segment is not facing the same credit and liquidity challenges as the consumer sector [4][5] - The company outperformed competitors like Airbnb and Booking.com in terms of room bookings, surprising investors [5] - Year-to-date, Expedia's stock has risen approximately 40%, reflecting strong market performance [9][22] Market Context - The overall travel industry is experiencing varied results, with airlines and cruise lines also showing mixed demand trends [6] - There are concerns regarding discretionary spending among consumers, particularly among subprime borrowers, which could impact future growth [8] - The potential government shutdown may disrupt travel operations, although current flight cancellations remain low at about 3% [10][11][13] Trading Strategies - A trading strategy involving a neutral to bearish stance on Expedia has been suggested, taking advantage of the stock's recent highs and potential consolidation [16][22] - The strategy includes selling slightly out-of-the-money call options to manage risk while capitalizing on the stock's upward movement [17][20]

Company Overview - Block, Inc. is a fintech and financial-services company based in Oakland, California, focusing on technology ecosystems around payments, commerce, and financial services [1] - The company operates platforms such as Square for merchants and Cash App for peer-to-peer payments, along with other ventures like "buy now, pay later" services [1] - Block's current market capitalization is approximately $44.9 billion [1] Stock Performance - Block's shares have underperformed the broader market, with a year-to-date decline of 13.3% and a 52-week increase of only 1.8%, compared to the S&P 500 Index's 15.6% rise in 2025 and 17.5% over the past year [2] - The stock has also lagged behind the Technology Select Sector SPDR Fund, which saw a 26.9% increase in 2025 and a 30.1% gain over the past 52 weeks [3] Market Challenges - The decline in Block's stock is attributed to softness in consumer-driven segments, particularly within its Cash App business, amid weak discretionary spending and heightened competition [4] - A challenging macroeconomic environment and muted growth have raised concerns among investors regarding the potential for growth re-acceleration [4] Earnings Outlook - For the full fiscal year 2025, analysts project Block's earnings per share (EPS) to be $1.02, reflecting a significant year-over-year decline of 69.7% [5] - The company has a mixed earnings surprise history, missing bottom-line estimates once in the past four quarters while surpassing projections three times [5] Analyst Ratings - The stock holds a consensus "Moderate Buy" rating, with 42 analysts covering it, including 26 "Strong Buys," four "Moderate Buys," seven "Holds," and five "Strong Sells" [5] - Recent analyst sentiment has become slightly more bullish, with UBS maintaining a "Buy" rating and a price target of $95, citing strong momentum in its Square and Cash App ecosystems [6] - The mean price target for Block is $86.89, indicating an 18% premium to current price levels, while the highest target of $105 suggests a potential upside of 42.6% [6]

Core Viewpoint - The retail sector is facing significant challenges due to President Trump's tough stance on China tariffs, leading to a notable decline in the XRT ETF and affecting major retailers like Five Below, Estee Lauder, Best Buy, and Capri [1]. Retail Price Adjustments - An index tracking retail price adjustments indicates that tariff-driven price increases have stalled recently, which is a notable development [2][3]. - Retailers appear hesitant to raise prices despite the looming threat of new tariffs, which could complicate their ability to pass on costs to consumers [4]. Holiday Season Concerns - The upcoming holiday season is critical for retailers, as it typically accounts for a significant portion of their annual sales, raising risks associated with pricing strategies [5]. - There are currently no signs of excessive promotions, but the potential for retailers to raise prices could negatively impact consumer demand during this key selling period [6]. Consumer Spending Pressure - The discretionary spending environment is described as "okay, but not great," indicating underlying pressures on consumers that could be exacerbated by rising retail prices [6]. - If retailers are forced to increase prices, it may further strain discretionary spending, impacting overall sales performance [7].

Financial Planning During Government Shutdown - Approximately 750,000 federal workers are estimated to be furloughed, potentially missing paychecks [1] - Individuals should calculate cash flow, focusing on fixed expenses and available funds to cover them [1] - Discretionary spending may need to be reduced, prioritizing needs over wants [2] - Emotional factors can influence financial decisions during this time, but focusing on cash flow is crucial [2] Job Security and Benefits - Furloughed employees may face potential job cuts, causing concern [3] - Understanding severance packages is important in the event of a layoff [3] - Applying for unemployment benefits should be done as soon as possible after a layoff [3] - Maintaining healthcare coverage through programs like TCC (for federal employees) or COBRA (for private, state, or local employees) is essential [4] - Reviewing out-of-pocket healthcare costs and other expenses previously covered by work is necessary [5]

Core Viewpoint - Target's stock is trading at multi-year lows, reflecting significant challenges in the retail sector due to macroeconomic factors and internal management decisions [1][2][9]. Group 1: Company Performance - Target's sales have been stagnant, with a 37% decline in valuation over the past 12 months, and the stock is at levels similar to the 2020 market crash [2][3]. - In the most recent quarter ending August 2, Target reported net sales of $25.2 billion, down 0.9% year-over-year, and operating income fell by over 19% to $1.3 billion [11]. - The company anticipates a low-single digit drop in sales for the full fiscal year ending in January [11]. Group 2: Leadership Changes - Target announced Michael Fiddelke as the new CEO, effective February 1, 2026, succeeding Brian Cornell, who will remain on the board [5]. - Investors expressed skepticism regarding the internal hire, fearing it may perpetuate the status quo rather than implement necessary changes [6][7]. - The need for significant changes is emphasized, as the current strategy has not yielded positive results [8]. Group 3: Market Conditions - The retail sector is facing challenges due to rising interest rates and consumers reducing discretionary spending, impacting sales growth across the industry [9][12]. - Despite the current struggles, the business is not fundamentally broken, and long-term investors may find value in Target's stock, which has a low price-to-earnings multiple of 11 compared to the S&P 500 average of 25 [14]. - Target offers a 4.7% dividend yield, which may provide compensation for patient investors during this downturn [14].

Core Viewpoint - Southwest Airlines has not experienced a rebound in travel demand, disappointing investors who anticipated a quick recovery [1][4] Group 1: Company Performance - Southwest shares fell as much as 4.5% following comments from the CFO, eventually trading down 1% [1] - CFO Tom Doxey indicated that unit revenue in Q1 was about three points worse than expected, and Q2 unit revenue is trending six points worse than anticipated [4] - The company is undergoing a business model revamp, including the removal of popular features like free checked bags, which may lead to consumer booking elsewhere [6][7] Group 2: Industry Context - Airline stocks are cyclical, with demand typically falling during economic downturns as consumers cut discretionary spending [3] - Several airlines have scaled back full-year guidance due to a surprising drop in demand late in Q1, although there was initial hope for a quick recovery [3] - In contrast, United Airlines reported a "stable" revenue and booking environment, highlighting a potential Southwest-specific issue [5][6]

Core Viewpoint - Target's stock has experienced a significant decline of 55% over the past few years, contrasting sharply with the S&P 500's 20% increase during the same period, raising questions about its investment potential [1][2]. Group 1: Company Performance - Despite the stock's poor performance, Target is a blue-chip company with a strong brand and a history of success, including 58 consecutive annual dividend increases [2]. - Target's business fundamentals remain solid, but its stock price has suffered due to its cyclical nature compared to competitors like Walmart, which has a higher proportion of staple goods sales [2][4]. - Target's merchandise sales include only about 40% from groceries and household staples, making it more vulnerable during economic downturns when discretionary spending decreases [4][6]. Group 2: Financial Health - Target maintains a strong financial foundation, with a current dividend yield of 3.9%, a payout ratio of only 45% of cash flow, and a manageable leverage ratio of 1.8 times EBITDA [8]. - The company has $4.7 billion in cash and holds an "A" credit rating, indicating stability despite current challenges [8]. - Analysts project earnings growth of just over 6% annually over the next three to five years, resulting in a reasonable PEG ratio of 2.1, suggesting the stock is now more appropriately valued [11]. Group 3: Investment Considerations - While the stock is not considered a generational bargain, it could provide solid total returns of 10% to 11% annually through dividends and earnings growth, making it a potential buying opportunity [12]. - The stock may continue to struggle until discretionary spending recovers, but the current financial stability allows for a degree of investor confidence [9][12].