We're selling shares in this cosmetics giant, locking in an 18% gain

Published Fri, Jan 6 20233:09 PM ESTUpdated Mon, Jan 9 20237:54 AM EST

We're selling 40 shares of Estee Lauder (EL) at roughly $267.33 apiece. Following Friday's trade, Jim Cramer's Charitable Trust will own 250 shares of Estee Lauder, decreasing its weighting in the portfolio to about 2.37% from 2.74%. We're taking a big win in Estee Lauder Friday, locking in a gain of about 18% on stock we purchased in late September of 2022 . We're also downgrading our rating on EL to a 2 , meaning we would wait for a pullback before buying again. Shares of this leader in prestige beauty have been on an absolute tear since the beginning of November, rallying from the high $180s to the high $260s today. This was a move of about 42%, compared to the S & P 500 's gain of roughly 4% during the same period. Estee Lauder has been such a strong outperformer lately due to continued optimism around China abandoning its zero-Covid policy and reopening its economy . We have repeatedly said Estee Lauder is one of the best ways to play the China reopening because the country represents about a third of the company's total business. As Beijing continues to loosen Covid-19 restrictions, travel in China is set to boom. That's big for EL because the travel retail market and duty-free channels are significant growth opportunities for the company. Although our thesis on EL still holds, we're starting to feel a little greedy about the stock's move, a theme we touched on during Friday's "Homestretch." We believe it's disciplined to lock in some profits here, especially with the stock's next 12 month's price-to-earnings multiple now stretched to 47-times, given we're generally averse to high-multiple stocks in this high-interest rate environment. (Jim Cramer's Charitable Trust is long EL. 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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