Shortly after the opening bell, we will be exiting our position in Procter & Gamble, selling 325 shares at roughly $167.19. Following the trade, Jim Cramer’s Charitable Trust will no longer own a position in Procter & Gamble. Shares of P & G have had a good run this year, rallying 14% on top of three dividend payments collected along the way. As we pointed out in a recent trim , P & G rose to new highs at the start of September when the market rotated into defensive stocks. The first reason for the group’s rally was economic-slowdown fears. When Wall Street gets worried about the growth outlook, money tends to flow into defensive groups that don’t need a hot economy to expand earnings. The second reason was declining bond yields, specifically a sharp drop in the 10-year Treasury yield. That made dividend-growth stocks such as P & G look more attractive to investors. We didn’t think that rotation — and a similar one in early August — had legs, which is why we opportunistically trimmed our position several times during those periods. P & G’s stock gains didn’t sync with the so-so quarter reported by the company at the end of July. For a couple of weeks, we debated whether we should sell the rest of this position. While the stock has dipped a few bucks since then, recent events led us to conclude we should exit. The Federal Reserve has started cutting interest rates at a time when the economic picture looks healthy – a fact on display in Friday’s September jobs report . Against that backdrop, we see less need to hold onto traditional slowdown stocks like P & G that don’t have enough growth to satisfy their valuations. The stock trades at roughly 24 times its earnings-per-share estimates for the next 12 months, a premium to the S & P 500 consensus of about 21.7, according to FactSet. Due to this premium, we don’t think P & G has the potential upside we seek in the portfolio. The company is only expected to grow its topline by 2% to 4% in fiscal 2025 with core earnings per share up 5% to 7%. If economic activity picks up due to Fed rate cuts, the market will want stocks with more growth. Plus, the recent rise in bond yields makes the stock’s dependable dividend less attractive. We’ll realize a gain of about 18% on our remaining position. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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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