We're selling some shares of this outperforming drugmaker to pocket gains

Published Wed, Apr 13 20222:44 PM EDTUpdated Wed, Apr 13 20223:28 PM EDT

We're selling 50 shares of Eli Lilly (LLY) at $303.75 per share. Following the trade, we'll own 450 shares of the drugmaker, decreasing its weighting to about 4.17% from 4.61% in the Charitable Trust portfolio. We are booking profits on our Eli Lilly position because we are feeling a bit piggish about the stock's strong move year to date. Eli Lilly has been a great win for the portfolio this year, with the stock gaining about 9% against the S & P 500, which has fallen about 7%. The outperformance is justifiable. Eli Lilly is one of the best growth stories in the pharmaceutical sector and is the exact type of stock investors love to go back to when they are worried about a Fed-mandated slowdown. The company is also working on one of the industry's most valuable pipelines, which is home to a revolutionary obesity/diabetes drug and a potentially groundbreaking Alzheimer's treatment. There is also a margin expansion story here: just last week Barclays estimated Eli Lilly's operating margins could expand to 41% in 2025 from 32% in 2022. But with the stock's latest move above $300, Eli Lilly now trade at a robust 35 times forward twelve-month earnings estimates. As much as we like LLY for the long term and want to own it, we must also respect the possibility that some good news is priced into the stock. Due to these conflicting forces, we believe the prudent move to make is to lock in a sale price that will be roughly $10 above the sale we made on March 21 . This sale will lock in a great gain of about 29% on stock purchased in October 2021. (Jim Cramer's Charitable Trust is long LLY. 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.

In this May 2020 photo provided by Eli Lilly, researchers prepare mammalian cells to produce possible COVID-19 antibodies for testing in a laboratory in Indianapolis.

David Morrison | Eli Lilly via AP