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Sell Some of a Stock You Own If Lots of Analysts Upgrade It, Jim Cramer Says

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Jim Cramer says that sometimes it pays to go against the grain. When Wall Street analysts are all headed in a bullish direction on a stock that you own, it's wise to go the other way and sell part of your position to lock in some profits -- one of Cramer's "5 Rules for Trimming Your Winning Stock Positions."

"When you get an upgrade cluster of a number of analysts all going 'Hold' to 'Buy' at once, you have to sell something even if you love the stock. Cluster upgrades are made to be sold, not bought," Cramer said in unveiling his rules during an exclusive video-conference call with members of his Action Alerts PLUS club for investors.

For example, Cramer's charitable trust sold some of its stake in Walt Disney Co. (DIS) - Get Free Report  for $131 a share last month after several analysts upgraded the stock in the wake of CEO Bob Iger's upbeat comments at Disney's annual investors' day. The trust had been adding Disney shares in the weeks leading up to the session for as little as $108 in what he called "somewhat of a leap of faith, but it was made easier by the fact that so many analysts wanted to wait and see what he would say and do. I thought that approach would just be too late.

"Sure enough, we got [to the] meeting and Iger was in rare form," Cramer said. "We got a cluster of cowardly lion analysts going from 'Hold' to 'Buy' all at once, and it sent the stock to the mid $130s in a straight line. We told you to sell because of all of these johnny-come-lately analysts recommending it all at once. ... We [took] advantage of the cluster of buy recommendations and booked a nice profit on some of our holdings."

Check Out All of Cramer's '5 Rules for Trimming Your Winning Stock Positions'

Click here for a free 14-day trial of Jim's Action Alerts PLUS club for investors and get instant access to a complete replay of his entire video-conference call, including all five rules for trimming your winning stock positions.

Club membership includes exclusive access to a private video conference each month with Jim, during which he also gives his latest views on the market and answers e-mailed questions from members. Membership also includes lot of other exclusive benefits, including:

  • A complete rundown of all of stocks that Jim himself holds in a trust that he runs for charity;
  • E-mail alerts that give you a chance to buy or sell any stock before Jim makes the trade for the trust;
  • Custom research throughout every trading day from Jim and his team of stock-market analysts. You get to see in real time what they're watching each market day as they make investment decisions.

Click here to sign up for Action Alerts PLUS and watch a full replay of the video-conference call today!

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