We’re locking in a big gain on a tech stock that erased most of a recent sell-off
We are selling 25 shares of Palo Alto Networks at roughly $318.35. Following the trade, Jim Cramer’s Charitable Trust will own 250 shares of PANW, decreasing its weighting in the portfolio to 2.43% from 2.67%. Palo Alto Networks has had a strong week, rallying more than 5% to trade back near its highest levels since before the stock’s dramatic February sell-off . It’s also clawed back most of its May earnings drop. The catalyst for the recent cybersecurity run may have been due to another high-profile data breach, with the latest incident involving data-analytics firm Snowflake . Palo Alto may not be involved in the recovery process, but the news further reinforces the notion that cybersecurity is important to every industry and company, big or small. Still, we think it’s prudent to lock in some gains on Palo Alto considering Wall Street’s recent attitudes toward the company. As the reaction to its May earnings report showed , the market continues to have a difficult time believing in management’s platformization strategy and the short-term billings softness that comes with it — even though we would argue its accelerating remaining performance obligation is a better way to view the company. We’ll realize a strong gain of about 80% on stock purchased in February 2023. In addition, we would be trimming 10 shares of Broadcom if we were not restricted from trading it Friday. We haven’t taken any gains in Broadcom this year, but with the chip stock up more than 50% to date, we want to lock in this big win. The stock soared Thursday after reporting a beat-and-raise quarter the night before, driven by a surge in artificial intelligence-related revenues and upside from the VMware integration. The company also announced a 10-for-1 forward stock split, which doesn’t create any shareholder value in theory, but one cannot deny that they have had a positive impact on stock prices. While we still think the stock can work higher over the long run , the broader market’s run to fresh record highs was driven almost entirely by the AI trade. For that reason, we don’t want to be greedy after a parabolic move we’ve seen in names like Broadcom. (Jim Cramer’s Charitable Trust is long PANW and AVGO. 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.
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