We're Trimming United Rentals on Strength and Adding to XLE

* We are taking some profits in United Rentals due to the stock's substantial run.

* We are boosting our exposure to the energy sector, by adding to our XLE position.

After you receive this Alert, we will make the following trades:

-- Sell 30 share of United Rentals (URI) at or near $645. Following the trade, URI shares will account for roughly 3.8% of the portfolio.

-- Buy 295 shares of the Energy Select Sector SPDR Fund (XLE) at or near $83.75. Following the trade, XLE shares will account for roughly 3.0% of the portfolio.

As we telegraphed in our note yesterday, we are using the additional strength in URI this morning to convert a portion of the more than 62% rise in the stock since late October into booked gains for the portfolio. The expected EPS hikes following yesterday's guidance and buy-back announcement are not only pushing URI shares higher today, they are propelling them deeper into overbought territory, another reason for us to take some prudent action.

We will still keep a sizable exposure to URI given the upside we see ahead, but as should be clear from the trade we are making, members will want to wait for the stock to pull back before contemplating buying back the shares.

The decision to add to our position in XLE stems from China looking once again to stimulate its economy, as well as the U.S. economy continuing to perform better than expected. There are also the larger production curbs that go into effect this quarter from OPEC+. That combination suggests we could see the return of demand-supply imbalances that tend to lift oil prices.

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed pricehere. Be sure to toggle the chart to sort by Purchase Date.)

Action Alerts PLUS is long URI and XLE.