Three More Trims and an Exit

After you receive this Alert, we will be selling 25 shares of Salesforce (CRM) at roughly $262.69. In addition, we will be selling 50 shares of Honeywell (HON) at roughly $200.66. In addition, we will be selling 100 shares of Waste Management (WM) at roughly $123.30. Lastly, we will be exiting our position in TJX Companies (TJX) , selling 500 shares at roughly $61.20. Following the trades, CRM, HON, and WM will represent 2.40%, 3.36%, and 3.75% of the portfolio, respectively.

Salesforce is a bit of an oddity today. While many names in tech are lagging the broader markets because stay-at-home winners like the Amazon's (AMZN) of the world don't need a vaccine to accelerate their businesses, Salesforce is holding its own relative the S&P 500 and we think this could be on the belief that corporate IT spending is about to pick up. Before, executives could have reigned back budget allocations to IT investment as a way to save on costs during the pandemic. But now that the vaccine has made the future more certain - and business execs have learned from the pandemic how crucial digital transformations are for their success - perhaps we see spending pick up again. While this may be the case, we view the divergence of CRM from the rest of tech as an opportunity to trim a very small portion of our position. We will realize a great gain of about 94% with this trim.

We will also be trimming Honeywell with shares making a new all-time high today. HON is up nearly 9% because the effective Covid-19 vaccine has greatly improved the outlook for commercial aerospace and oil & gas end markets. We also do not want to overlook the other positive in the stock today in that a Biden presidency could lead to abating trade tensions with China, Honeywell's second largest region by revenue. While we remain encouraged about Honeywell's future and see no reason to change our longer-term thesis in the name, we want to use today's extraordinary move to lock in some of the big gains we have here. We will realize a gain of about 33% with this trim. We will also downgrade our rating to TWO as we prefer to see buyers come in on a pullback.

For Waste Management, we simply want to lock in some gains here as the stock has rallied roughly 15% in a near-straight line since it closed around $106 per share on October 28th. We stood by this position amid several sell-side downgrades, including in our Alert here where see said advancements in the Covid-19 vaccine/therapeutic front would improve business conditions. With that catalyst hitting today, we will take some profits and realize a gain of about 10% with this trim. We will also downgrade our rating to TWO as we prefer to see buyers come in on a pullback.

Lastly, there is TJX Companies. Shares have rallied slightly since our trim earlier this morning here and are now roughly flat year-to-date. We view this additional push as an opportunity to exit the small position we have left to increase cash and further improve our portfolio optionality. As a reminder, we favor Walmart  (WMT) over TJX right now partly due to the uncertainty facing brick and mortar retailers that have a limited e-commerce presence this holiday season through the start of 2021. While we think TJX's third quarter could be better than anticipated off very low expectations (weak guidance), what we are more worried about is the future. As an off-price retailer that provides its customers with an unbeatable in-store treasure hunt experience, we are worried with how management will guide for the all-important fourth quarter as rising Covid-19 cases across the country could lead to a consumer that is unwilling to leave their homes to shop in stores. Additionally, we still cannot rule out that possibility of some form of a modified lockdown later this year or in early 2021 similar to what is going on in Europe, a region that represents about 15% of TJX sales. All in, we think TJX represents a great off-price retailer for the long run, but their time is still yet to come. With the stock now flat year to date and much higher than the levels where we did the majority of our buying, we think today's double-digit rally is an opportunity to cash out the rest of our shares. We will exit TJX by locking in a gain of about 29%.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long CRM, HON, WM, TJX, AMZN, WMT.