CNBC Investing Club: We're paring a problem stock on strength, would buy at lower levels

Published Wed, Feb 9 202211:50 AM ESTUpdated Wed, Feb 9 20221:45 PM EST

We are selling 25 shares of Club holding Boeing (BA) at roughly $215.20. Following the trade, the Charitable Trust will own 525 shares of Boeing. BA's weighting in the portfolio will decline to 2.78% from 2.91%. As discussed earlier today in our Morning Meeting , we are right-sizing our Boeing position into the stock's rally back to the mid-$210s. In addition, we are downgrading our rating to a 2, meaning that we would be buyers only on a pullback. ( Here's an explanation of our rating system .) The idea behind this trim is to sell into strength and free up space in our position so that we are able and ready to buy shares lower on a pullback, whether it be macro related (hypothetically, like Covid delaying the aerospace recovery) or yet another execution misstep by management. Of course, we are hoping that this does not happen. In our ideal scenario, China will start ordering 737 Max jets soon, the 787 gets clearance for deliveries, free cash flow generation is strong this year, and Boeing ramps up its 737 Max production without a hitch. We still think all of these events will happen, explaining why we will continue to hold a position in the jet manufacturer, but execution matters too and we simply do not have full confidence in management's ability to execute. So in a way, our decision to book profits this afternoon acts as a way to both right-size the position and hedge against an execution misstep or an event-driven situation that would send shares back below $200, which is where, all else being equal, we would be buyers again. This sale will lock in a gain of about 27% on shares we purchased in October 2020. (Jim Cramer's Charitable Trust is long BA. 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.

An American Airlines Boeing 787-9 Dreamliner approaches for a landing at the Miami International Airport on December 10, 2021 in Miami, Florida.

Joe Raedle | Getty Images

We are selling 25 shares of Club holding Boeing (BA) at roughly $215.20.