Cabot Stock of the Week is a great way to build a diversified portfolio of the top growth, undervalued, momentum, dividend, international and small-cap stocks. Chief Analyst Tim Lutts makes his selection from seven Cabot investment advisories, and chooses the single best stock each week for the current investing conditions. We recommend that you buy stocks from each investment discipline, and then hold until each stock is rated sell. You’ll receive sell advice first in an email update and then see it repeated in the next issue of Cabot Stock of the Week.
For growth stocks, which are selected from the Cabot Growth Investor, a sell decision will usually be triggered by a breakdown of a chart. The average growth stock is held for four months; some are held for years, others last only a few weeks. The key concept to keep in mind with these stocks is that investors’ perceptions are usually ahead of the news. So even though we have high hopes for all these stocks, because their fundamental growth stories offer the potential of great future earnings growth, you take any news about your stock with a grain of salt. But you pay particular attention to what the chart is telling you, and when the chart tells you that investors are no longer supporting the stock, you sell the stock and move on.
For undervalued stocks, the converse is true. These stocks are selected from Cabot Undervalued Stocks Advisor, which seek to buy stocks when they’re dirt cheap, and sell when they’ve reached full valuation. These are great stocks to own if you’re heading off on a long cruise.
Momentum stocks are the hottest stocks in the market. They’re selected from Cabot Top Ten Trader, which every week profiles the market’s strongest stocks, regardless of their fundamentals. For Cabot Stock of the Week, we select those that have the most attractive fundamentals, as well as stock price momentum. When you buy one of these, you’ve got to watch it like a hawk—and not go on that cruise. If it rolls over, you sell it fast, recognizing that any stock that climbed fast can fall fast. But if one of these stocks brings you a nice profit, you can often do very well by averaging up on pullbacks, building a strong performer into a major part of your portfolio.
Dividend stocks are selected from Cabot Dividend Investor, which offers investments focused on high yield, safe income and dividend growth for retirement. Cabot Dividend Investor stocks generate some income from their investments, whether they need maximum yield now, or are anticipating their needs decades down the road. Cabot Dividend Investor uses IRIS, Cabot’s proprietary investment rating system, to select stocks for the portfolio.
International stocks can provide great diversification for all investors, and ours are selected from Cabot Emerging Markets Investor, which focuses on China and other high-growth developing countries including India, Russia and Brazil. All Cabot Emerging Markets Investor stocks are traded on U.S. exchanges. They’re selected for both their fundamental and technical characteristics, but sold mainly for technical reasons.
Small-cap stocks selected for Cabot Stock of the Week are typically outstanding small-companies that are pioneer in their fields and undiscovered by institutional analysts. Selected from the limited-circulation Cabot Small-Cap Confidential, these stocks are often high-risk, but their potential is enormous.
As marijuana becomes increasingly legal in both the U.S. and Canada, it makes sense for growth-oriented investors to pay attention to marijuana stocks. The opportunities are much bigger than most investors realize! Cabot’s Top 10 Marijuana Stocks is where you can find these stocks before they become household names.
All these systems have their strengths and weaknesses; none is inherently better than another. Collectively, these stocks will help you build a diversified portfolio of the best stocks in the market.