Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE) in New York, US, on Thursday, May 16, 2024.
Alex Kent | Bloomberg | Getty Images
We are making two trades Friday:
- Selling 100 shares of Bristol Myers Squibb at roughly $62.39. Following the trade, Jim Cramer’s Charitable Trust will own 1,700 shares of BMY, decreasing its weighting to about 3.10% from 3.3%.
- Buying 15 shares of Home Depot at roughly $371.82. Following the trade, the Trust will own 330 shares of HD, increasing its weighting to about 3.57% from 3.4%.
We are capitalizing on the move to a new 52-week high in drugmaker Bristol Myers Squibb and locking in profits. The stock has been a big winner in a difficult market this year, rallying more than 11% thanks to the rotation into defensive stocks with limited economic sensitivity.
We pounded the table on Bristol Myers after the stock fell in early February in what the market thought was soft 2025 guidance. We picked up shares at $55 apiece shortly after because the difference between the Street and the company’s outlook was due to currency headwinds and generic pressure in its legacy portfolio. In other words, it was unrelated to our thesis, which is centered around a strong ramp of its new schizophrenia treatment Cobenfy. Since that trade, Bristol Myers has rallied nearly 14% compared to the S&P 500’s decline of roughly 6%. We want to capitalize on this strong outperformance.
To be clear, we are making no change to our positive long-term view on Bristol Myers and still believe Cobenfy’s sales potential is being underappreciated by the Street. But we are downgrading our rating to a 2, meaning buy on a pullback. Our only issue with Bristol Myers right now is that the bulk of its recent gains are due to the market rotation. Some of these gains could reverse quickly if economic data starts to improve and the market rotates back into cyclicals.
We will realize a solid gain of about 5% on stock purchased in late November 2024. It doesn’t seem like much, but the S&P 500 has fallen about 5% over the same period.
We’re taking the cash from the sale to add to our position in Home Depot on its weakness. We also nibbled on some Home Depot shares earlier this week. Home Depot isn’t immune to the economic uncertainty, and there may also be some tariff risks for the company. Still, the recent decline in mortgage rates could be a positive tailwind for the home improvement retailer ahead of the all-important spring selling season. On Thursday, Freddie Mac said the average 30-year mortgage loan was 6.63%, down from 6.76% the week before. If mortgage rates fall below 6.50%, we should start to see housing turnover – the biggest driver of Home Depot’s business – accelerate.
(Jim Cramer’s Charitable Trust is long BMY and HD. 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.
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