Cramer cuts TJX stake after analyst downgrade, rotates into Kimberly-Clark and Constellation Brands

Jim Cramer’s Charitable Trust reduced its position in TJX Companies on Friday, selling 475 shares at approximately $135. The trust now holds 500 shares of TJX, lowering the company’s weight in the portfolio to roughly 1.8% from 3.4%. The move follows a downgrade by Gordon Haskett, who lowered his rating on the stock to hold with a $130 price target.

Haskett cited persistent competitive pressure from Ross Stores as a primary driver for the downgrade. His analysis indicated that foot traffic at co-located Ross Stores and Marmaxx locations continues to favor the former. Marmaxx is TJX’s largest segment and includes the TJ Maxx and Marshalls chains. The analyst also suggested that the market share Marmaxx had gained from Target in previous years may be stagnating due to Target’s operational improvements.

The trust had previously bought TJX shares in September when the stock dropped from $140 to the $120s. At that time, Cramer believed the market was overreacting to an isolated execution issue. The trust sold most of those shares in mid-October as the price recovered to about $145. Cramer stated at that time that he believed the company had quickly resolved its internal issues. The realized gain on the recent sale is approximately 113% on stock purchased in August 2022 and March 2023.

Proceeds from the TJX sale were distributed between two consumer stocks. The trust purchased 300 shares of Kimberly-Clark at roughly $108. This increases its holding to 900 shares and raises the weighting to about 2.5% from 1.65%. Cramer noted that the market may be undervaluing Kimberly-Clark’s capacity to turn around its consumer health brand, a sentiment reinforced by the company’s better-than-expected quarterly results released the previous week.

The trust also bought 220 shares of Constellation Brands at approximately $145. This transaction increases the position to 490 shares and adjusts the weighting to 1.8% from 1%. The investment follows an earlier position initiated this week, which cited improvements in beer sales. Cramer also pointed to potential benefits from easing immigration policies following the Democrats’ midterm election victories.

TJX Companies is scheduled to report earnings next Wednesday. Cramer stated that the upcoming results will test whether the company has successfully addressed its operational challenges. He acknowledged the difficulty of holding a large position ahead of an earnings release if the Marmaxx segment delivers another disappointing quarter.