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Buy more than one retailer, carve out a steelmaker

A customer holds an American Eagle Outfitters Inc. shopping bag while queuing to complete a transaction at a store in San Francisco, California, the United States, Wednesday March 6, 2013.


(This article was first sent to CNBC Investing Club members with Jim Cramer. To get real-time updates delivered to your inbox, subscribe here.)

We bought 300 shares of American Eagle Outfitters (AEO) at around $ 27.11 on Tuesday morning. Additionally, we sold 150 shares of Nucor (NUE) at around $ 119.80.

  • As a result of the transactions, the Charitable Trust holds 4,450 shares of American Eagle Outfitters and 750 shares of Nucor.
  • The purchase increases AEO’s weighting in the portfolio from 2.73% to 2.93%.
  • This sale decreases NUE’s weighting in the portfolio from around 2.58% to around 2.16%.

American Eagle Outfitters reported third quarter earnings ahead of the opening bell, and the result looks like a blowout. Revenue increased 24% year-on-year to $ 1.27 billion, beating estimates of $ 1.23 billion. Operating profit of $ 210 million topped previous estimates by $ 170 million. And adjusted earnings per share of 76 cents crushed the consensus of 61 cents. American Eagle Outfitters had a strong quarter thanks to strong demand, higher full-price sales and less promotional activity.

Despite these better than expected results, we noticed a moderate reaction at the start of the session. We believe this is an opportunity to strengthen our position as this quarter for American Eagle Outfitters is expected to prove to be one of the best in specialty retail this earnings season. We’ll have more coverage on the AEO quarter later today.

For Nucor, with stocks trading near their all-time highs in what has turned out to be one of the Trust’s most volatile holdings, we want to lock in some gains and free ourselves up to be more nimble in the event of a loss. fallback.

We still believe that NUE is one of the cheapest stocks on the market, that the pricing power can last longer than many expect, and that the steel industry is one of the biggest beneficiaries of the market. Biden administration’s $ 1 trillion infrastructure package. We’re also seeing a pick-up in demand for steel next year as semiconductor shortages alleviate, which have held back the auto industry, a huge end-market for the company.

While we believe steel demand will be strong next year, we have some supply side concerns, in part due to tariff easing on European imports that could limit the rise. By making a cut today and making a profit, we want to be prepared if tariff easing puts pressure on stocks forward. We will achieve a solid gain of around 11% with the NUE finish.

The CNBC Investing Club is now the official headquarters of my charity. This is the place where you can see every move we make for the portfolio and get my market snapshot before anyone else. The Charitable Trust and my writings are no longer affiliated with Action Alerts Plus in any way.

As a CNBC Investing Club Subscriber with Jim Cramer, you will receive a Trade Alert before Jim completes a trade. Typically, Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust portfolio. If the trade alert is sent before the market opens, Jim waits 5 minutes after the market opens before executing the trade. If the trade alert is issued less than 45 minutes during the trading day, Jim executes the trade 5 minutes before the market closes. If Jim has mentioned a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. See here for investment disclaimer.

(Jim Cramer’s Charitable Trust is long AEO, NUE.)

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