We’re again trimming a red-hot Fed rate cut stock and signaling another portfolio move
We’re selling 80 shares of Stanley Black & Decker at roughly $95 each. Following Friday’s trade, Jim Cramer’s Charitable Trust will own 760 shares of SWK, decreasing its weighting in the portfolio to about 2.26% from roughly 2.5%. Shares of Stanley Black & Decker were on the move again Friday, adding another 7%, following the morning release of the Federal Reserve’s favorite inflation gauge. For June, the core personal consumption expenditures (PCE) price index, which excludes the food and energy components, pretty much matched expectations. The data bolstered confidence in a September Fed interest rate cut, which sent stocks higher and bond yields lower. We’ve said all along that Stanley Black & Decker would benefit from lower borrowing costs. Lower mortgage rates tend to spur homebuying, which in turn can give the market for home renovations and homebuilding a boost. Stanley Black & Decker brands, which also include Dewalt and Craftsman, are needed for that kind of work. Stanley Black & Decker trim SWK YTD mountain Stanley Black & Decker YTD With Stanley Black & Decker set to deliver earnings Tuesday and its stock now up more than 10% this week, the bar for a strong quarterly print is that much higher. As a result, we decided to make another small sale in a stock that’s been up and down this year. We’re taking a 1.7% loss on the trade. That said, we still believe there will be more gains ahead for the tool company as management continues to execute its turnaround plan. That’s why we’re leaving a nice-sized chunk of Stanley Black & Decker shares in our portfolio going into the report. This way, we can benefit from any upside while providing some increased optionality — thanks to this sale as well as the one made Thursday — should shares pull back after the numbers. Danaher downgrade DHR YTD mountain Danaher YTD Along with this sale, we’re also downgrading Danaher to our 2 rating, which means we would consider adding more shares if they were to pull back. During our latest Monthly Meeting, we noted our intention to trim Danaher if shares got up to around $275. We’re currently restricted from trading the name, so we can’t make the trim just yet. But the downgrade signals our thinking on the matter. However, we still like Danaher and believe that further advances are in store. It’s not our style to be buyers of a stock up roughly 12.5% in a week — even if the move is the result of a solid earnings release. (Jim Cramer’s Charitable Trust is long SWK, DHR. 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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