We're exiting a stock that has surprisingly defied the market and buying more of our newest name

Published Fri, Mar 14 202511:20 AM EDTUpdated Fri, Mar 14 202512:22 PM EDT

We are making two trades Friday. We are exiting our position in Nextracker , selling 850 shares at roughly $45.08. Following the sale, Jim Cramer's Charitable Trust will no longer own a position in NXT. We are buying 50 shares of Capital One Financial at roughly $170.63. Following the trade, the Trust will own about 400 shares of COF, increasing its weighting to about 2% from about 1.75%. Nextracker shares have had a strong week and bucked the market sell-off, gaining roughly 9% compared with a 3% decline in the S & P 500 . For the year, shares of the solar-technology company are up about 24% and have significantly outperformed its peer group. The Invesco Solar ETF (TAN) is down about 6% year to date, and Nextracker's close competitor Array Technologies is up about 1%. One reason for Nextracker's strong returns could be that it is a best-of-breed company with a strong management team and a clean balance sheet. It beat and raised in its current fiscal year despite political uncertainty. The stock's gains in a weak tape validate our patience with this position, which we've always called more of a "speculative" play. However, we don't have a strong reason to explain Nextracker's significant outperformance this week. And when we don't have a reason why it has moved up in such a volatile and fickle market, our discipline is to sell because we refuse to turn this hard-fought gain into a loss. From this sale, we will realize a gain of about 11% on our remaining shares. Although we are raising some funds by selling into strength, we don't want to take too much money out of the market because it remains oversold. Following Thursday's sell-off, the S & P Short Range Oscillator, our trusted momentum indicator, moved deeper into oversold territory with a reading of minus 6.5%. Anything below minus 4% is considered oversold. That's why we're taking some of these cash proceeds to make another small buy in Capital One Financial , lowering our average cost basis. As we explained on Thursday's Monthly Meeting , in a market struggling to account for multiple uncertainties like tariffs and a consumer slowdown, we added Capital One to the portfolio on weakness because it has a catalyst that will significantly improve its business. Capital One is buying Discover Financial Services in an all-stock transaction that valued Discover at $35.3 billion. The deal was announced in February 2024 and is expected to close in early 2025, pending approval by the Federal Reserve and the Office of the Comptroller of the Currency. The main strategic advantage is that Capital One will own the Discover Global Network, which will scale up and become a vertically integrated global payments platform. By owning a network, Capital One will decrease its reliance on Mastercard and Visa, lowering what it pays out in fees. And by having a direct relationship instead of dealing with intermediaries, Capital One can create more value for merchants, small businesses and consumers. For example, Capital One will be able to provide merchants with better fraud management and transaction data, which they can use to drive more sales. The deal is also expected to generate $2.7 billion in expense and network synergies. (Jim Cramer's Charitable Trust is long COF. See here for a full list of the stocks.) 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.

People walk along Wall Street outside of the New York Stock Exchange (NYSE) on August 05, 2024, in New York City.

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