Please ensure Javascript is enabled for purposes of website accessibility

Why Apple, Kraft Heinz, and California Resources Jumped Today

By Dan Caplinger - May 4, 2018 at 4:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Learn which of these stocks benefited from the Buffett effect.

Friday was a strong day on Wall Street, as major benchmarks finished higher by 1% to 2%. Market participants focused their attention on the April jobs report, which included a drop in the unemployment rate to 3.9%, its lowest level in more than 17 years. Nonfarm payroll gains of 164,000 weren't extremely strong, and some saw wage growth of just 2.6% as bad news for workers. Yet from many investors' perspective, weak wage growth is actually a positive, as it indicates a lack of inflationary pressure that's good for most stocks. Good news regarding several key individual companies also helped stoke favorable sentiment. Apple (AAPL 2.45%), Kraft Heinz (KHC 1.45%), and California Resources (CRC) were among the best performers on the day. Here's why they did so well.

Apple gets more love from Buffett

Shares of Apple climbed 4% to hit a record high after Berkshire Hathaway CEO Warren Buffett reported that he had increased his stake in the iPhone maker during the first quarter of 2018. Buffett said in an interview with CNBC that Berkshire bought 75 million more shares of Apple, worth roughly $13.5 billion at current prices, and that brought the total holdings for the insurance conglomerate to 240 million shares, worth more than $43 billion. With the Berkshire annual shareholder meeting taking place this weekend, Buffett's words carry even more weight than usual, and some still believe that Apple shares are bargain-priced even at all-time-high levels.

Apple store location from outside, with palm tree near entrance, near dusk.

Image source: Apple.

Kraft Heinz looks tastier

Kraft Heinz stock rose almost 6%, adding to its gains from Thursday following the company's first-quarter financial report. The food giant suffered from weak sales, with overall revenue falling 0.3% on a 1.5% decline in organic sales. Yet adjusted earnings grew from the year-earlier quarter, and investors liked the fact that the ketchup maker held onto its pricing power even in a tough retail environment. Because Kraft Heinz is a Berkshire holding, the pre-annual meeting media blitz elicited comments from Kraft CEO Bernardo Hees, who noted that even though Buffett has left the Kraft board, he doesn't see any change in strategy going forward. Some thought that the departure might give Kraft the go-ahead to consider a major acquisition, something many investors think would be a good avenue for growth.

California Resources looks more energetic

Finally, shares of California Resources soared more than 22%. The oil company reported a surprise profit in its first-quarter financial report, due largely to stronger production figures than most of those following the stock had expected to see. Between higher production and rising energy prices, California Resources was able to make a good-sized dent in its outstanding debt, improving the health of its balance sheet in a way that could boost its ability to make future capital investments. The oil company still has further to go, but the results were encouraging for those who've stuck with California Resources through several difficult years.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$141.66 (2.45%) $3.39
California Resources Corporation Stock Quote
California Resources Corporation
CRC
Kraft Heinz Intermediate Corporation II Stock Quote
Kraft Heinz Intermediate Corporation II
KHC
$38.40 (1.45%) $0.55

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
321%
 
S&P 500 Returns
111%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.