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Shortly after the opening bell, we will sell 145 shares of Caterpillar at roughly $291.20. Following the trade, Jim Cramer’s Charitable Trust will own 145 shares of CAT, decreasing its weighting to 1.37% from 2.70%. Results have been mixed so far this earning season for industrial stocks, as expanded valuations from the market run-up at the end of 2023 made expectations too high, and ongoing weakness in China has led to outlooks that have failed to meet Wall Street estimates. Look no further than Wednesday’s disappointment from DuPont , the materials manufacturer that reported a soft to in-line fourth quarter, but gave guidance for the first quarter that was much weaker than expected, sending shares appreciably lower. DuPont follows soft guidance from 3M on Tuesday and from PPG last week. The common theme we are seeing is that this group of stocks all got a little bit ahead of themselves. We sold some DuPont shares a couple of weeks ago to protect against this, but after seeing the reaction to these shortfalls we are compelled to take more action. That’s why we are selling some Caterpillar. After battling the industrial equipment maker for much of 2023 — and ultimately winning with the stock now trading near all-time highs — we do not want to give back our gains if the company’s management team offers conservative commentary about 2024. Caterpillar is historically conservative, even when many great things are happening around it, and it’s likely that the stock will get dinged for it. We’ll realize a gain of about 18% on CAT stock purchased in early 2023. As for DuPont, we sold some shares around $76 two weeks ago because we were concerned things weren’t coming together fast enough. While it was positive to see the electronics recovery taking shape, with management noting a “slight” sequential sales lift in the fourth quarter, weakness in its industrial business and China is dragging the company down. We bought DuPont because we wanted an industrial with a low price-to-earnings multiple to play the recovery in the semiconductor industry. But it would’ve been much simpler buying a pure play in a semi or capital equipment company, as their elevated multiples haven’t been a roadblock to gains. Electronics may be DuPont’s largest business, but it’s the other parts that are weighing down the results. Even after making a DuPont sale much higher, our plan is to be patient before we make our next buy. The company will get through its excess inventory and the electronics recovery is on track, but it will take some time. We won’t buy more stock until the company is closer to that inflection point or if it stabilizes and is appreciably below our basis. (Jim Cramer’s Charitable Trust is long CAT and DD. 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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