The market opened with a plan to sell 25 shares of Linde at approximately $465.62 each, reducing Jim Cramer’s Charitable Trust’s ownership to 165 shares, decreasing its portfolio weighting to 2.42%. Linde’s stock price was lower after UBS downgraded it to a hold-equivalent rating from buy, with a price target of $510 per share. The downgrade was based on a valuation call rather than concerns about earnings estimates. UBS believes that Linde’s strong execution and expansion into the energy transition market are already reflected in its current stock price, which is trading at around 30 times forward earnings, historically high for the company. While energy transition projects show promise, they are not expected to impact earnings for a few more years, and UBS sees a lack of near-term catalysts to drive Linde’s multiple higher.
The downgrade from UBS is seen as a wake-up call to take profits for those who have held onto their shares for a long time. The last trim of Linde shares for Jim Cramer’s Charitable Trust was in June 2021 at $375 per share, resulting in a rally of about 25% since then, compared to an 18% gain in the S & P 500. The decision to sell shares now will lock in an approximate gain of 74% on the shares purchased in 2021, and the price target has been raised to $500 from $440 to indicate where the next trim may occur. Subscribers to the CNBC Investing Club with Jim Cramer receive trade alerts before Jim makes a trade, with a waiting period of 45 minutes after the alert before executing the trade. If a stock has been discussed on CNBC TV, there is a 72-hour wait before trading. It is important to note that there is no guarantee of a specific outcome or profit, and the information provided through the Investing Club does not create a fiduciary obligation or duty.
Overall, the decision to sell shares of Linde at this time is driven by UBS’s downgrade and the high valuation of the stock, which is trading at historical highs in terms of forward earnings. While the energy transition projects show promise for the company’s future growth, they are not expected to impact earnings for a few more years, limiting near-term catalysts for driving the stock’s multiple higher. By taking profits now, Jim Cramer’s Charitable Trust is locking in gains from previous investments and preparing for potential future trims at higher price levels. Subscribers to the CNBC Investing Club with Jim Cramer receive trade alerts before trades are made, with waiting periods in place to ensure careful consideration before executing trades. It is important to note that investing always carries risks, and there is no guarantee of specific outcomes or profits in the market.
