Investing Club: We're trimming two stocks in Friday's rally and adding to a troubled tech stock

Published Fri, Feb 25 202211:37 AM ESTUpdated Fri, Feb 25 202212:11 PM EST

We're making a bunch of trades for the Charitable Trust on Friday. We're selling 50 shares of Chevron (CVX) $139.24; and 50 shares of Nucor (NUE) at roughly $127.87. In addition, we're buying 50 shares of beaten down PayPal (PYPL) at roughly $108.09. Following the trades, we'll own 400 shares of Chevron, decreasing its weighting to 1.43% from 1.61%; 450 shares of Nucor, decreasing its weighting to 1.44% from 1.60%; and 825 shares of PayPal increasing its weighting to 2.25% from 2.12%. After aggressively buying stocks into Thursday's decline, we're peeling back a couple of names — oil giant Chevron and steel company Nucor — into strength Friday. We're raising some cash that will be ready to opportunistically redeploy should we see another pullback in the market. Additionally, we're making a small buy of fintech player PayPal, which has seen several insider buys over the past few weeks after the stock cratered earlier this month. We are making another sale in Chevron Friday as we view the spike in oil stocks as a solid opportunity to book more profits. We sold 250 shares on Thursday. While it's true that these oil stocks are printing money with WTI crude above $90, think of this sale as a hedge against a potential resolution to the Russia-Ukraine conflict. From a humanitarian standpoint, we would certainly root for such as resolution, even as it would likely result in a decline in oil prices because geopolitical risk would need to be taken out of the commodity. From Friday's sale, we will realize a fantastic gain of roughly 20% on stock purchased in late November of 2021. We are also booking some gains in Nucor to capitalize on the stock's recent strength. This stock has been a big winner for the portfolio this year, gaining more than 11% compared to the roughly 9% decline in the S & P 500 because of its low multiple and management is practically buying back every piece of stock that they can get their hands on. But we don't want to be greedy either, and Friday's push back towards the all-time highs feels like a good time to lock in a profit. From this sale, we'll realize a fantastic gain of roughly 22% on stock purchased in June 2021. We'll use about half of the cash we raised from those sales in Chevron and Nucor shares to fund a purchase in PayPal. We've waited and waited and waited to buy after the stock crashed after earnings — but now, the time and the price look right to step in and do some buying. What gives us confidence after the endless amount of disappointment? First off, we like the insider buying that's happening as three people, including CEO Dan Schulman, have purchased stock in the past few weeks. Second, we think the stock's price-to-earnings multiple has re-rated to a level that looks attractive against the company's growth rate. The forward 12-month multiple now sits just below 23x and we think this is a very reasonable price relative to the company's topline growth rate ex- Ebay of 19% to 21%. Finally, the good earnings out of Block , formerly Square, Thursday night gives us a view that maybe business isn't all so bad right now for these fintech companies. (Jim Cramer's Charitable Trust is long CVX, NUE and PYPL. 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.

Dan Schulman, CEO, Paypal speaking at the World Economic Forum in Davos, Switzerland, Jan. 23, 2020.

Adam Galacia | CNBC

We're making a bunch of trades for the Charitable Trust on Friday.