1 buy and 2 sales — how we're using recent stock market swings to our advantage

CNBC Finance

5 min read

We are making a handful of trades on Wednesday. We're buying 30 shares of Capital One Financial at roughly $208 each, increasing the weighting in Jim Cramer's Charitable Trust to 3.05% from 2.9% and increasing our COF share count to 580. We're selling 200 shares of Danaher at roughly $207, decreasing the weighting in the Trust to 1.05% from 2.1% and decreasing our DHR share count to 200. We're selling 200 shares of Texas Roadhouse at roughly $189, decreasing the weighting in the Trust to 0.95% from 1.9% and decreasing our TXRH share count to 200. Capital One We're buying back half of the 60 shares of Capital One that we sold in late December at around $242. Shares of this credit card provider have dropped roughly 14% since then. It's down a similar amount for 2026. There are a couple of overhangs on the stock at the moment. One is President Donald Trump 's proposed 1-year, 10% cap on credit card interest rates. We acknowledge there is some risk here in the future because this cap would be disastrous for earnings, but there haven't been any new developments around this in weeks. It's also possible it has been swept under the rug because imposing such a cap would be extremely problematic to the economy, making credit much less available for consumers. COF YTD mountain Capital One Y TD Then there was the recent quarter , which was generally mixed due to higher expenses. Capital One has a clear path to realizing synergies from its Discover acquisition, but investments to support growth are running high. The market also didn't like Capital One's purchase of the business credit card company Brex for $5.15 billion. Not only does management have two big acquisition integrations on its plate now, but many believe that the Brex deal means the pace of share repurchases could slow this year. We are taking the other side of that trade. The Brex deal makes Capital One's business model look even more like American Express . We argue that Capital One's price-to-earnings multiple of 8.5 times 2027 estimates is way too cheap relative to Amex's P/E of 17 times 2027 earnings estimates. We upgraded Capital One back to our buy-equivalent 1 rating on Jan. 23, and we are picking up shares with them down about $8 since then. Danaher We said last Thursday that we were anxious to boot chronic underperformer Danaher from the portfolio, and we're moving one step closer by cutting the position in half, realizing a disappointing loss of about 9% on stock purchased in 2022 in the process. The latest news was the company buying the leader in pulse oximetry Masim o for $9.9 billion, including debt. Danaher was long overdue for M & A, and the company has an excellent track record of buying assets and driving both cost and revenue synergies. DHR YTD mountain Danaher YTD However, we would have preferred to see Danaher use its cash pile on an acquisition a more life sciences focused business that caters to the faster growing biotech industry, or aggressively step up its own share repurchases given that Danaher trades at the same 18 times estimated 2027 earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple as this transaction â before the expected benefits of synergies. Another factor in our decision is the longstanding legal battle between Apple and Masimo, which could create some risks in the future. Texas Roadhouse We're taking off more shares of the restaurant chain Texas Roadhouse into strength. This is our third sale this year, and it will be at our highest price point to date despite our concerns that beef inflation will persist into 2027. Due to high beef inflation and management's preference to increase menu prices below their rising costs to protect their value proposition, we would not be surprised to see Texas Roadhouse miss analyst earnings per share estimates when it reports after Thursday's closing bell. TXRH YTD mountain Texas Roadhouse YTD We are not alone here. In our review of analyst notes ahead of the print, many are in agreement that earnings for the fourth quarter and 2026 could come in light. The "buy side" may be expecting lower numbers, but our judgment in the current market climate is that companies that miss earnings get punished. This sale will allow us to side-step any potential shortfall. From this sale, we will realize a gain of about 8% on stock purchased between February and April 2025. (Jim Cramer's Charitable Trust is long COF, DHR, AAPL, TXRH. 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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1 buy and 2 sales — how we're using recent stock market swings to our advantage

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