Analysis: HON AMZN PLNT JNJ KSS

After you receive this Alert, we will be selling 50 shares of Honeywell (HON) at roughly $157.11. In addition, we will be selling 75 shares of Johnson and Johnson (JNJ) at roughly $138.58. Also, we will be selling 100 shares of Kohl's (KSS) at roughly $70.41. Following the trades, HON, JNJ, KSS will represent 4.30%, 3.25%, and 2.20% of the portfolio, respectively.

We are making a few more sales this morning, continuing the theme of our Alert here of raising cash and improving our flexibility ahead of the upcoming IPO flurry. By raising cash now, we will be tactical against the market's potentially inability to handle the new stock supply coming to market. As we said earlier, our concern at this moment isn't about the yield curve, corporate earnings, or even trade with China. Instead it is about how the law of supply and demand will affect prices, and no one ever got hurt taking a profit.

So we will be lightening up in our position in Honeywell, locking in a gain of about 7%. This is just a small trim in our favorite industrial stock which even after this sale will still be one of the larger positions in the portfolio. We still view Honeywell as a great long-term story with more secular end markets and reduced cyclicality thanks to last year's portfolio activity, however, our only concern in the stock right now is how much good news is already priced in. Many analysts are now beginning to call attention to management's previous commentary of how first quarter organic growth is trending towards the high end of guidance (we pointed this out in our Weekly Roundup here, so it is no surprise to see the stock trading right around its year-to-date highs. That's a good time as ever to take a little off the table, especially when we want the cash. This position will still be one of our larger ones to capture future upside to earnings.

We will also lighten up on our Johnson and Johnson position and downgrade our rating to a TWO, realizing a small loss of about 1% with this trim. Shares have made a solid recovery since Reuters published their report on Talc, but we don't see this issue going away any time soon and we want to free up some room in the portfolio to buy in the event of future weakness. Outside of this one lingering overhang, the company has one of the best balance sheets out of any public U.S. company, a strong pharmaceutical franchise, a solid consumer business, and a medical device franchise management recently beefed up through the Auris Health acquisition. We would be buyers on a pullback from these levels.

We will also be trimming Kohl's at a price slightly above our sale prices from January (see our Alert here). The stock is having a very strong week, up about 5% compared to the S&P 500's current gain of about 0.50% at the time this was written; this is relative outperformance we want to capture. Although we are taking some stock off the table here, we reiterate our belief in this terrific management team led by CEO Michelle Gass and what they're doing to drive sales. The partnership arrangements Kohl's has with Amazon (AMZN) and Planet Fitness (PLNT) are unique in the industry, helping the company differentiate itself from peers and drive foot traffic. We also see Kohl's as a market-share gainer, benefiting from the shortfalls of others like Bon-Ton. While we believe in the company's terrific long-term story, we also know from the recent quarter that first quarter comps will be at the low end of the full year range due to a soft February. So we will lock in a double-digit gain of about 13% and provide additional room to buy back what we sold in the event the stock gets hit off that transitory issue.

Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long HON, KSS, AMZN, JNJ.