Cashing Out of Two Positions

-- Closing out Stanley Black & Decker (SWK) by selling 1,000 shares at $83.50.

-- Closing out TJX (TJX) by selling 1,950 shares at $51.64.

We're going to close out of two positions today, taking gains in both: Stanley Black & Decker (SWK) , with a sale of 1,000 shares at $83.50, and TJX (TJX) , with a sale of 1,950 shares at $51.64.

We started selling the Stanley Black & Decker position last week at $81.50, and the stock continues to trade higher into Friday's scheduled earnings report. We expect solid results, likely with strength in the construction and do-it-yourself segment, and slightly better results in industrial and security. But, seeing as the shares are near our price target, we'll take profits.

TJX has been a great stock, and shares have risen 21% since the start of the year. We've been in an out of this name over the last few years, as we've liked what management has done to deliver strong top- and bottom-line results that have consistently beaten expectations. But these shares are also near our target, so we're taking gains.

That aside, we have a few ideas on our watch list for new buys or for bulking up existing positions.

As we have written recently, we believe Europe has stabilized and that the massive monetary and fiscal action in this region will lead to better results as we go through 2013 and into 2014. Wednesday brought further evidence of this: The eurozone composite purchasing managers index finally reached above the 50 breakeven line -- 50.4, up from 47.4 in the prior month. That signals a return to expansion for the first time since August 2011. The manufacturing PMI rose for the fourth consecutive month at 50.1, and services PMI also beat expectations -- although this reading remains below 50.

These results come as several companies have said that they, too, see Europe stabilizing -- among them Honeywell (HON) , Ford (F) , Cisco (CSCO) and EMC (EMC) . We want exposure to this theme. We are restricted currently in the Vanguard Europe ETF (VGK) , but we will be adding it to the portfolio when our restrictions are cleared.

We thought former holding UTX (UTX) reported a very solid quarter, as well. We like the company's exposure to aerospace and defense, as well as the leverage from the Goodrich buyout. The stock is up from where we sold (and took gains), but it remains on our radar as a high-quality industrial name.

We're also watching Yum! Brands (YUM) for any pullback to the $68 level, as the company has done a great job at fixing the issues in China -- that is, those involving chicken supplies and bird flu. In addition, the company continues to hold its own in the competitive U.S. market.

Johnson & Johnson (JNJ) , meanwhile, did a good job on its quarter, and strong pharmaceutical sales offset a sluggish medical tech segment. But we see the device division as a restructuring opportunity -- and this is one reason we've own the stock in the past. We also believe the CEO could easily split up the company into three segments -- a value we see at $100.

Finally, we currently own no consumer-staples stocks, and we have been watching ConAgra (CAG) . We believe the synergies from its Ralcorp takeout will be greater than expected, and that this will lead to double-digit earnings growth. ConAgra shares trade at a 15% discount to the group -- so this is one we're interested in.

As for our existing holdings, we are looking to add to Cisco and Honeywell on a pullback and/or when our restrictions are lifted.

Cisco continues to restructure itself into a model that generates faster growth and more recurring revenue with software, services, and security. The balance sheet is pristine, and it's why the company is able to do acquisitions such as the Sourcefire (FIRE) buyout it announced Tuesday. We like the Sourcefire deal, and we view it as a game-changer for Cisco's security division. Ideally, we'd like to buy the stock at $24 or below.

Turning to Honeywell, the company reported a strong quarter with continued margin expansion. It has exposure to the sectors we like -- autos, aerospace and HVAC/energy efficiency. The company also continues to consistently deliver margin upside, even in a challenging environment. We've been restricted from this stock for a week, but we're watching the stock closely and will add to when we can.

Anadarko Petroleum (APC) earnings are due next week, and we expect a solid report. This, too, is on our watch list for building up the position, because we think the compelling valuation and strong production growth constitute an opportunity.

Elsewhere in the portfolio, the disappointing Caterpillar (CAT) results have clearly put pressure on holdings Vale (VALE) and Joy Global (JOY) . We want to continue slowly adding to these two stocks, but we fully recognize that these are 2014 stories.

Vale is scheduled to release its production report Wednesday night, and we expect a solid showing following encouraging results from Rio Tinto (RIO) and BHP (BHP) . This is an internal restructuring story, and it's a very cheap stock that is underappreciated. Joy Global shares are down on Caterpillar's weak mining results, but we peg its aftermarket business at a value of $42 per share. With the stock at $48, the stock trading at half of its historical multiple, and a sizable share of the bad results are priced in.

Finally, we see that the financial sector will continue to lead the market -- but, given the huge run to date, we've elected to be more selective on where we'll add. We'd buy more of JPMorgan Chase (JPM) in the low $50s, Wells Fargo (WFC) in the low $40s and KeyCorp (KEY) closer to $11.

We still like AIG (AIG) and Hartford (HIG) , though we trimmed these back following results from Ace ACE and Travelers (TRV) , which posted softer-than-expected net written premiums. Both reports were still strong on a year-over-year basis -- but, given that AIG and HIG up 30% and 40% year to date, respectively, they could see some profit-taking. In general, the financials are very big positions for us, so we'll stay disciplined on where we'll add.

After our trades, we'll be out of SWK and TJX.

Regards,

Jim Cramer, Stephanie Link, and TheStreet Research Team

DISCLOSURE: At the time of publication, Action Alerts PLUSwas long SWK, TJX, HON, F, CSCO, APC, VALE, JOY, JPM, WFC,KEY, AIG and HIG.