Cramer's Investing Club: We're adding to two portfolio stocks in this volatile market

Published Fri, Jan 28 202212:02 PM ESTUpdated Fri, Jan 28 202212:27 PM EST

We will be buying 700 shares of Bausch Health (BHC) at roughly $23.30. Additionally, we will look to pick up 100 shares of Cisco Systems (CSCO) at roughly $54.78, repurchasing a portion of what we sold a little over 10% above these levels back in December. Following the trade, the Charitable Trust will own 3,500 shares of Bausch Health and 1,750 shares of Cisco. These buys will increase BHC's weight in the portfolio from about 1.69% to about 2.11% and increase CSCO's weight in the portfolio from about 2.32% to 2.45%. Following our trim of Walmart (WMT) on Thursday, we want to put some of that money raised to work Friday in Bausch Health as the market throws lower prices at us once again. While this position has been a tough one to start given our initiation right ahead of some of the most vicious selling the market has seen in decades — as CNBC's Jim Cramer previously noted , "going back 20 plus years there is no ten day period straight like this that decliners led advancers." However, we remain undeterred as we continue to believe that significant value will ultimately be unlocked by the separation of Bausch Health units Bausch + Lomb and Solta Medical. While we do acknowledge that it will be difficult to IPO Bausch + Lomb and Solta Medical in this market environment, the fundamental view of the breakup has not changed and when the market sentiment turns, we believe investors will once again be focused on the value-unlock that CEO Joe Papa is engineering. When we last sold Cisco, we said that we were "pretty torn" on the sale given our view that it was type of stock that can work in this market. It is the exact opposite of a high-flying, unprofitable "conceptual" company at risk of Federal Reserve tightening, given a 2.7% dividend yield, a sub-16x forward price-to-earnings valuation, and a cash backed earnings profile. We also noted that we didn't sell when shares were in the low-$50s but that trimming in the upper $50s due to supply chain uncertainty was simply prudent portfolio management. Well here we are, back in the lower-$50s with roughly two months having gone by, a period that's brought us a ton of updates from management teams now that we are in the heart of earnings season. After hearing from Microsoft , Apple — both portfolio names — and others that have direct views into the semiconductor supply chain, we are inclined to think that the worst of it is either behind us or just now being overcome. That supply chain easing, combined with market selling that's the most relentless that we have seen in decades and Cisco holding back in the low-$50s, has us viewing this as an opportunity to reload on this high quality company that we continue to believe has the exact profile of what investors should want to own in the market. Final market thoughts In addition to the advance/decline dynamic noted above – the worst in over 20 years – the oscillator traded down to -10.7 as of Thursday, a level only truly breached in recent years during the depths the Covid sell-off in March 2020 (hit about -24%); and before that, in late 2018 when Fed Chairman Jerome Powell misspoke about his eagerness to raise rates (hit about -12%); and early 2018, when then President Donald Trump announced tariffs on China (hit about -10%). All of those declines demanded that investors hold their noses and do some buying. That's exactly what we must do now as we seek to put some of the money raised Thursday back to work in the market Friday. (Jim Cramer's Charitable Trust is long BHC, CSCO, WMT, MSFT and APPL. 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.

Jim Cramer

Scott Mlyn | CNBC