We’re scaling back our position in a stock that’s riding the market rally
We sell 150 shares of Texas Roadhouse at approximately $183. Following the trade, Jim Cramer’s Charitable Trust will own 400 shares of TXRH, reducing its weight from approximately 2.5% to approximately 1.85%. We are reducing our position in the restaurant chain, which was up about 2% on Monday. This will be our second Texas Roadhouse sale in 2026. We previously sold 50 shares on January 12 at approximately $187 per share. Our trims are not due to a slowdown in the company’s business. When Texas Roadhouse reports earnings on February 19, we expect to see another quarter of strong mid-single-digit same-store sales growth. As consumers increasingly focus on costs, Texas Roadhouse’s value proposition of providing quality food at an affordable price has come to the fore. Our only concern is beef price inflation, and the timing of any relief remains uncertain. We read Monday’s earnings announcement from America’s largest meat producer, Tyson Foods, to shape our expectations for beef prices and get an idea of when prices will drop. Tyson said it expects cattle supply to remain tight through 2026 and 2027, and we view this as an increasing downside for our Texas Roadhouse thesis. The restaurateur calls for commodity inflation to be around 7% in 2026, with inflation higher in the first half of the year than in the second half. But if Tyson is right and cattle supplies remain tight until 2027, that could push back estimates of when beef price pressures will ease. Cattle supplies are likely to hit rock bottom, and there are other ways beyond cattle supply to reduce beef prices. For example, beef prices may decline due to increased cattle imports from Mexico and Brazil. Yet Tyson has such a broad view of the meat market that it would be imprudent for us to ignore it. From this sale we will realize a small average gain of about 1% over the stock purchased last February. (Jim Cramer’s Charitable Trust is long TXRH. See here for a full list of stocks.) When you subscribe 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 trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.
