We're taking profits in this beer maker and buying more of our newest stock

Published Wed, Jul 3 20249:21 AM EDT

Shortly after the opening bell, we will sell 50 shares of Constellation Brands at roughly $267.50. In addition, we will buy 150 shares of Nextracker at roughly $45.71. Following the trades, Jim Cramer's Charitable Trust will own 325 shares of STZ, decreasing its weighting in the portfolio to 2.5% from 2.9%; and 500 shares of NXT, increasing its weighting to 0.7% from 0.5%. Constellation Brands shares are getting a boost in pre-market trading Wednesday after reporting its first-quarter results. Net sales of $2.66 billion were nothing to write home about and slightly missed estimates, by $10 million. But what is driving the stock higher is the solid 11 cent earnings-per-share beat. The better bottom line performance was driven by a huge 260 basis point increase in beer operating margins which pushed above 40%. Beer's depletion volume growth of 6.4% also looked better than feared after a slower start for the quarter. While we are upbeat about Constellation Beer business, which continues to look resilient despite sluggishness across the category, wine and spirits remains a drag, with sales down 7% and margins down 370 basis points. We've argued that weakness in this unit is preventing the stock from breaking out to higher levels. Since we have yet to see evidence of a turnaround, it's prudent to lock in some gains and downgrade our rating back to 2. The stock is finally a few dollars away from its 52-week high dating back to last summer. We'll realize a gain of about 11% on stock purchased in May 2022. We'll use about half of those sale proceeds to make another small buy in Nextracker, the solar company we started a position in last week . As we called out in our initial trade alert, Nextracker is a highly volatile name that is sensitive to interest rates and government policy. Even though the stock received a positive recommendation from Susquehanna on Friday — the analyst started coverage with a positive rating and a $59 price target — the stock has been straight down because interest rates spiked and renewable energy policy support could wane if Donald Trump is elected president again in the fall. Even so, we'll take advantage of this recent weakness because the electricity demand story driven by AI data centers, electrification, and the reindustrialization across the United States remains strong. With major hyperscalers like Amazon , Meta , Microsoft , and Google committed to 100% renewable power or clean energy, the future of utility scale solar is bright and those projects will need tracker systems from Nextracker to boost their energy yields. (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.