We're booking big profits in a soaring spin-off that's free to determine its own fate

CNBC Finance

3 min read

We're selling 50 shares of Qnity Electronics at roughly $115 each. Following Friday's trade, Jim Cramer's Charitable Trust will own 925 shares of Q, decreasing its weighting to about 2.7% from about 2.8%. We're locking in big gains in the DuPont spin-off. Shares of Qnity, a materials supplier to the semiconductor industry, have gained about 40% year to date, making it the 15 th top performer in the S & P 500 . We're feeling greedy ahead of the company's first official earnings report next Thursday. The separation happened back in November, and we got one share of Qnity for every two DuPont shares we owned. Analysts at Deutsche Bank raised their price target on Qnity late Thursday to $126 per share from $92. It's a new Street high PT. Other analysts need to play catch up to the stock's strong performance this year. Deutsche Bank is bullish on the long term trajectory at Qnity due to its exposure to advantage packaging and thermal management . The analysts also said they expect institutional interest in the stock to increase throughout the year. Only 11 sell-side analysts currently cover Qnity. The more positive coverage it gets, the more big money managers will get interested in the name. Our reason to take profits on Friday is that Deutsche Bank called out the potential for a "messy" first earnings report due to what they described as "mechanical" issues post spin, as well as some potential for lower consumer electronics sales due to rising prices for DRAM, or dynamic random access memory. When we see the term "messy" in a position that's significantly outperformed, we like to take profits to hedge against some confusion-related selling. That said, we still believe Qnity is well-positioned to thrive in the booming chip space. From this sale, we will realize an average gain of about 25% on stock from August 2023. The gain represents the Qnity-interest of DuPont shares we bought back then. (Jim Cramer's Charitable Trust is long DD, Q. 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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We're booking big profits in a soaring spin-off that's free to determine its own fate

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