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Cabot Top Ten Report Explained
I’ve taken a few weeks off from the series I’m writing to help explain Cabot’s publications, but today I’m going to discuss Cabot Top Ten Report. To read the other issues in the series, go to our Archives and click on Elyse Andrews.
Cabot Top Ten Report started in 2002 and is edited by Michael Cintolo. You may recognize Mike’s name from his writings here in Cabot Wealth Advisory or the other publication that he edits, Cabot Market
Letter. Mike is also the Vice President of Investments for Cabot and a growth stock and market timing expert.
Mike discovered his passion–following and analyzing the stock market–more than a decade ago through his father, who subscribed to the Cabot Market Letter. Mike joined the Cabot team as an analyst two
weeks after his college graduation.
Since then, he’s been part of one of the greatest bull markets in history, one of the greatest bear markets in history, and the multi-year recovery since.
Cabot Top Ten Report is designed for experienced investors who are able to handle stocks that go up, and down, very quickly. This newsletter is made for investors who enjoy watching their stocks closely
and are able to act quickly when a stock makes a move.
But don’t let that scare you. Subscribers tell us Cabot Top Ten Report is a great source of new ideas and an excellent research tool. It offers the 10 stocks in the market with the most momentum each
week. The stocks are chosen by our proprietary stock picking system, OptiMo, and Mike does the technical and fundamental analysis included with each stock.
OptiMo screens 8,000 charts each week to select the hottest stocks in the market. A stock’s price at any moment reflects all the facts, rumors, earnings (real and anticipated), hopes and expectations
that investors have about that particular company. As soon as a significant change in perception (for the better or worse) takes place, it is bound to be reflected in the price of the stock.
So why not just look at price charts to gauge the stock’s performance? Because a rising tide floats all boats. Relative performance, however, corrects automatically for the effect of the broad market.
Relative performance (RP) is simply a measurement of how a stock is acting relative to the market as a whole. This can be measured mathematically, but we prefer a visual representation because we have
found it easier to analyze.
The RP line, when moving upward, shows a stock to be performing better than the general market. When it drifts downward, worse. And when the line is virtually level, it is informing you the stock is
performing about the same as the averages.
As you examine the relative performance of various stocks, there are many special characteristics you can be on the lookout for. Most stocks, like most businesses, are mediocre in their performance. Then
there are those stocks that are consistently performing worse than the averages. They just seem to go from bad to worse, month after month. The stocks chosen for Cabot Top Ten Report are those whose RP
lines continually and persistently move ahead on a positive steep slope with a minimum of corrections.
Stock-Picking Criteria You Shouldn’t Ignore
Question: What would you say is your most successful fundamental stock-picking criteria?
Answer: If I had to pick just one, it would be triple-digit revenue growth. Companies that are growing that fast, especially if it’s because of a new product or service, often turn into big market
winners. It’s important to make sure the 100%+ revenue growth is happening because of internal growth, not because of acquisitions.
If I had to pick one other, it would be a new revolutionary product, like Apple’s iPod, Crocs’ croslite shoes, Google’s paid search, and First Solar’s silicon-free solar panels–all of which were
Cabot winners in recent years.
That’s Michael Cintolo, editor of Cabot Market Letter. While most investors are panicking, he’s currently readying the Market Letter’s Model Portfolio for a big buying spree. He just added two new
growth stocks, and anticipates buying many more once this bottoming process is finished. To learn more abut Mike and Cabot Market Letter, visit the link below:
After the stocks are chosen, Mike analyzes the technical and fundamental aspects of each one. He also gives a buy range so subscribers get into the stock at just the right time. The stocks in the
newsletter are not a portfolio and it’s not necessary, or even advised, to buy all of them.
The last page of each issue of Cabot Top Ten Report has a list of previously recommended stocks. The chart lists stocks that should be held, sold, haven’t traded into the buy range yet or didn’t trade
into the buy range within two weeks of being recommended.
Cabot Top Ten Report issues are published in PDF or text online and each one is delivered to subscribers via email on Monday after the market’s close. Each issue contains market commentary as
well as market-timing indicator on the front page. Each Friday, subscribers also get an update on that week’s stocks along with market commentary. In addition, subscribers get VIP access to the Cabot
Top Ten Report Web site and the opportunity to email Mike with specific questions.
I hope this gives you a better understanding of Cabot Top Ten Report and how it can help you become a better investor. As always, please feel free to contact us via email or check out our blog,
www.iconoclast-investor.com, where you’ll find some excellent lessons in reading charts from Mike and lots of other great information from all the Cabot editors.
In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, we have links below to each issue.
Cabot Wealth Advisory 8/25/08 – The Market is Not the Economy and a Hot Little Energy Stock
On Monday, Timothy Lutts responded to a reader who asked if the most lucrative time for an astute investor might be in times of recession. Tim replied that while the best time to invest is when
people feel worst, he made the point that the stock market is not the economy and the economy is not the stock market. In the same vein, Tim explains why investors should not confuse the stock with the
company-especially growth stocks that can soar and crash while the company remains healthy and growing-and he used Crocs (CROX) and Taser (TASR) as examples of stocks that delivered tipple digit
profits before their growth expired. For his featured stock, Tim selected Fuel Systems Solutions (FSYS). The company sells equipment and controls that allow regular engines to run on alternative
gases. Like CROX and TASR, Tim thinks its stock could be propelled by a wave of buying as investors
chase the hot alternative energy trend.
Cabot Wealth Advisory 8/28/08 – On the Brink of Greatness
On Thursday, Paul Goodwin told us the fascinating story of the rise and fall of Bernard Cornfeld, founder of Investors Overseas Services, the mutual fund selling company that rose in the go-go 1960s
only to collapse in scandal in 1970. Paul used Cornfeld’s story to illustrate the failure of get-rich-quick schemes and made the case for hard work as the only way to really gain long lasting
wealth. Paul also offered his views on what China’s dominance in the Beijing Olympics really means. Lastly, with pharmaceutical stocks doing well as a group, Paul chose clinical research organization
Kendle International (KNDL) as his featured stock. Kendle partners with big pharmaceutical companies to organize all the phases of clinical trials. In today’s volatile market, Paul thinks this support
services company provides exposure to the pharma sector with lower risk.
Editor’s Note: While Cabot Top Ten Report doesn’t have a strict track record because it doesn’t have a portfolio, the stocks it selects are those consistently outperforming the market. That means that
subscribers are consistently outperforming the market when they buy them. Click the link below if you’re ready to see big gains with the hottest stocks in the market.