I am going to sell 200 shares of McDonald's (MCD) and 300 shares of Trinity Industries (TRN) , as I am up on both positions and want to take profits. McDonald's posted a comp number for July 250 basis points better than the year-ago period, and is hitting on all cylinders -- new products, a beverage launch and continued strength in Europe are all reasons I will stick with this core holding, but I am now up 16% on the position and will trim here.
Trinity had a great quarter two weeks ago and is building its wind backlog nicely. Its rail division remains challenged, but I think it's reflected in the valuation. I am up on my position and will trim on the strong move from $31.
I'll use the proceeds from these sales to add 300 shares to my Hewlett-Packard (HPQ) position and 100 shares of Proctor & Gamble (PG) this morning. HPQ is down 1.5% today, and I want to take advantage of the pullback to continue to build this into a core position. The stock is trading at 11 times next year's earnings, which is about a 15% discount to the S&P 500 and at the low end of its historical range. The company's broad geographic scale, strength in PC/printers and cost-cutting opportunities from the EDS acquisition are reasons I like this and will continue to build in the portfolio.
P&G posted a great quarter this week and will benefit more as oil and natural gas prices continue to come down. I believe this could get back to $80 over time due to its extensive product line, broad international exposure and strong expense control.
After my trades, I will own 1,500 shares of MCD, or 2.94% of the portfolio; 2,000 shares of TRN, or 2.3%; 1,300 shares of HPQ, or 1.82%; and 2,000 shares of PG, or 4.22%.
Regards,
Jim Cramer
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DISCLOSURE: At the time of publication, Cramer was long MCD, TRN, HPQ and PG.
Send email to james.cramer@thestreet.com.