Cabot Prime Week Ending May 26, 2017
Cabot Wealth Summit
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Cabot Weekly Review
In this week’s stock market video review, In this week’s video, Mike Cintolo, chief analyst of Cabot Growth Investor and Cabot Top Ten Trader talks about the bullish market snapback from last Wednesday’s major market decline, with the Nasdaq and growth stocks remaining in their leadership role. There are still some flies in the ointment, as most indexes have yet to join the party and some defensive areas have recently perked up. But Mike is putting most of his emphasis on the bullish action of individual stocks and the leading index (Nasdaq) and is remaining mostly bullish.
Cabot Growth Investor
Other Stocks of Interest May 26: Follow ups to stocks featured December 21, 2016 (issue 1357) to May 24, 2017 (issue 1368). Since they’re not in the Model Portfolio, you don’t see them followed on a regular basis. However, we are monitoring these stocks, and this listing gives their current momentum status.
Bi-weekly Issue May 24: Mike dives into all our stocks and highlights his current batch of ideas (including an intriguing recent IPO, Floor & Decor (FND), with a great cookie-cutter story) and discusses the good and bad of mental versus in-the-market stops. Mike has no changes in the portfolio tonight, but will continue to take his cue from the market.
Cabot Top Ten Trader
Movers & Shakers Weekly Update May 26: Last week, we said that Wednesday’s huge distribution day was a shot across the market’s bow—while it didn’t break the overall bull market, we thought the next few days (or couple of weeks) would tell us whether that was more of a shakeout or the start of a topping phase. Buy ideas: Chipotle Mexican Grill (CMG), CoStar Group (CSGP), Tesla (TSLA), LendingTree (TREE) and Restoration Hardware (RH).
Weekly Issue May 22: Because of last Wednesday’s big decline, we’re nudging our Market Monitor down a notch. But we’re still more bullish than not because few leading stocks have broken down and the leading Nasdaq is still in good shape. This week’s Top Ten Trader has another strong batch of growth-oriented stocks. Mike’s Top Pick is Global Payments (GPN), a steady grower whose stock just lifted from a 13-month base.
Cabot Undervalued Stocks Advisor
Special Bulletin May 26: Today’s bulletin has earnings reports on Dollar Tree (DLTR) and GameStop (GME); a management change at TiVo (TIVO) and Quanta Services (PWR) has authorized a $300MM share repurchase.
Special Bulletin May 25: Today’s bulletin has a rating change on Thermon Group Holdings (THR) from Strong Buy to Hold and reiterates a Buy on Schnitzer Steel (SCHN).
Weekly Update May 23: No portfolio changes. Buy-Rated Stocks Most Likely to Rise More Than 5% Near-Term: Blackstone Group (BX), Boise Cascade (BCC), Cavium (CAVM), ExxonMobil (XOM), Legg Mason (LM), Schnitzer Steel (SCHN), Tesoro (TSO), Thermon Group (THR), Vertex Pharmaceuticals (VRTX) and Vulcan Materials (VMC).
Special Bulletin May 22: Update on Blackstone Group (BX), and Ratings Changes on Vertex (VRTX) and Total (TOT).
Monthly Issue May 2: Today’s featured stocks include ExxonMobil (XOM), Legg Mason (LM), and a new addition to the Growth Portfolio, Cavium (CAVM). Crista also compares the featured stocks and their peers in the integrated oil, asset management and semiconductor industries.
Cabot Stock of the Week
Weekly Issue May 23: Tim’s selection, Alliance Data Systems (ADS), is not only undervalued but also at a low-risk entry point, technically. It’s a good story. As to the current portfolio, most of our stocks still look great, but Tim’s recommending taking profits in two, Martin Marietta Materials (MLM) and Total (TOT).
Cabot Emerging Markets Investor
Bi-weekly Update May 25: The Emerging Markets Timer is doing just fine, as the iShares EM Fund has rebounded from its May 17–18 dip. Our only portfolio move tonight is to sell half of our position in Momo Inc. (MOMO) and hold the rest.
Bi-weekly Issue May 18: Investors’ jitters about the dog fight in Washington, D.C. caused a sharp market correction that included emerging market stocks. Our portfolio also sustained a little damage, but, so far at least, it’s under control. In this issue, Paul look at the performance of emerging vs. developed market stocks, and his new buy is Baozun (BZUN), which will give us a different take on Chinese retail.
Cabot Benjamin Graham Value Investor
Weekly Update May 19: Roy includes summaries for three Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or other noteworthy news during the past week—Avigilon AVO.TO), Cisco Systems (CSCO) and Home Depot (HD).
Monthly Enterprising Model Issue May 11: This month, Roy introduces a new stock that has out-shined most stocks in the retail sector. Five Below (FIVE) will add 100 new stores in 2017, which will surely add significant growth, but there’s much more to the story. Today’s issue describes how this specialty retailer has thrived in a difficult sector.
Monthly Value Model Issue May 4: This month’s Cabot Value Model contains a diversified list of buy recommendations, with a bias toward high quality companies in the Technology and Financial sectors. Roy adds Alliance Data Systems (ADS) to the model and moves Schlumberger (SLB) out of the model.
Cabot Dividend Investor
Special Bulletin May 26: GameStop reported first-quarter earnings that beat expectations last night. However, the stock declined in after-hours trading.
Weekly Update May 24: Oil prices have firmed thanks to increasing confidence that OPEC will extend production cuts, and the odds of a June rate hike have fallen somewhat—although it’s still more likely than not. Utilities have been rallying, while financials and industrials have stumbled. Chloe is putting GameStop (GME) on Hold today after the stock suffered a sharp drop yesterday. She has no other rating changes, although Home Depot (HD) has weakened due to a sector selloff.
Monthly Issue April 26: Chloe adds large-cap industrial stock Cummins (CMI) to the Dividend Growth Tier, reviews her sales from the past week, and explains how to write covered calls.
Wall Street’s Best Investments
Daily Alert May 26: Chicago Bridge & Iron (CBI) from Sound Advice
Daily Alert May 25: ON Semiconductor (ON) from Dow Theory Forecasts
Daily Alert May 24: Darling Ingredients (DAR) from Technology & Opportunity
Daily Alert May 23: Fitbit (FIT) from The Lancz Letter
Daily Alert May 22: Triumph Group (TGI) from Cabot Benjamin Graham Value Investor
Monthly Issue May 17: We’re still bullish, and as you can see from our Advisor Sentiment Barometer and Market Views section, so are most investment pros. And that’s great news, as it means our contributors continue to find an array of stocks with excellent potential. Our Spotlight Stock this month is Cavium (CAVN).
Wall Streets Best Dividend Stocks
Daily Alert May 26: Bemis Co Inc. (BMS) from IQ Trends
Daily Alert May 25: DoubleLine Emerging Markets Income (DBLEX) from Bob Carlson’s Retirement Watch
Daily Alert May 24: STORE Capital Corporation (STOR) from The Intelligent REIT Investor
Daily Alert May 23: Essex Property Trust (ESS) from Barclays Capital Equity Research
Daily Alert May 22: UGI Corporation (UGI) from Dow Theory Forecasts
Daily Alert May 22: Sell Union Pacific (UNP) from 2 for 1 Stock Split Newsletter
Daily Alert May 22: Sell Chimera Investment (CIM) from Validea Hot List Newsletter
Monthly Issue May 10: Our Spotlight Stock, Qualcomm (QCOM) became a common household name to many investors during the tech revolution. The Internet/mobile chip provider not only managed to survive the boom and bust, but has come out on top of the growing semiconductor sector for low-cost chips for the exploding biometrics identification industry.
This Week’s Q&As
Cabot Growth Investor
Question: I’ve seen you advise taking partial profits on the way up on certain stocks in Top Ten Trader, but not on others. Can you explain your reasoning a bit more on when to ring the register?
Mike: There’s no set way to take partial profits, but what usually catches my eye is when a stock is extended to the upside both in the short-term (well above its 25-day and 50-day moving averages, etc.) and long-term (has been running higher for at least three months, if not longer, without much of a correction). Plus, maybe the market is acting funky, or the company has earnings coming out soon. Some combination of these often has me pulling the trigger on SOME of our position.
However, if you’re newer to charts, partial profits are usually best handled with a plan. You could take some off the table when your profit is, say, 1.5 times your initial risk. So if you bought at 50 with a stop near 45, maybe you sell when you have a 7 to 8 point profit, and then hold the rest for larger gains.
Another idea is to sell some if you’re holding a stock into earnings with a loss on your position; that way you’re holding positions that you have some cushion in.
All told, there’s no one perfect way to take partial profits, but I’ve found doing so not only puts some profit in your pocket, but also can help you hold your remaining shares through tough pullbacks, which can aid in developing a longer-term winner.
Question: I see your Two-Second Indicator has flared up again, yet you haven’t taken much action. What, then, should we read into the fact that new lows are picking up?
Mike: Because the number of stocks hitting new lows is something of a secondary indicator (i.e., it’s not the actual price action of the market and leading stocks), we consider the Two-Second Indicator as more of a risk measure than anything else—if it turns negative while the indexes are at/near new high ground, it tells us the situation bears watching.
Indeed, if we were fully invested (or on margin), we would have taken that as a sign to back off a bit; however, in the Model Portfolio, we were already 13% in cash, so selling a piece of ProShares Ultra S&P 500 Fund last week got us up to 21%, which seems reasonable.
Thus, we don’t use the Two-Second Indicator as a sign to do a ton of buying/selling when it turns positive/negative. But it does do a great job of telling us when any market divergence is beginning to eat away at the broad market, thus raising the chance of a larger decline.
Cabot Undervalued Stocks Advisor
Question: What’s happening with integrated oil stocks?
Answer: There’s been a recent rapid rebound in oil prices. West Texas Intermediate crude oil is up over 13% from its low price in early May. In terms of stock prices, foreign oil majors like BP plc (BP) and Total (TOT) reacted promptly, and had run-ups in May. However, U.S. oil majors, such as ExxonMobil (XOM) and Chevron (CVX), were stuck in trading ranges. It looks like the U.S. oil majors are now ready to react to the upswing in crude oil pricing. This is an excellent time to buy XOM and CVX. And remember, all of the aforementioned stocks are slated for strong multi-year earnings growth, with big dividends and low P/Es. They’re great investments!
By the way, the only reason that CVX is not part of my Cabot Undervalued Stocks Advisor portfolios is because I’m already heavily weighted in energy stocks. I would certainly buy CVX in a heartbeat.