Cabot Stock of the Week 338
My quest to add some growthy stocks with a cyclical dimension and downside protection brings us to our latest recommendation.
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Growth investing typically involves investing in less established, but fast-growing companies. In searching for growth stocks, you generally want to invest in companies that are growing – or projected to grow – earnings at a faster rate than the overall market. Companies growing at triple-digit rates, 100% or better, are among our favorites. (In fact, triple-digit growth has been a factor in most big winning stocks over the years).
That kind of rapid growth can overcome a number of smaller deficiencies: inexperienced management, competition, weak patent positions, etc. Furthermore, fast growth typically attracts the attention of institutional investors, who push share prices higher as they buy their way in.
Of course, the risk in growth investing is that you’re buying less mature companies that usually don’t pay a dividend. If the share price declines, you don’t have a quarterly dividend payment to cushion the fall. And these stocks can very volatile, especially during earnings season.
While fast-growing companies have a good chance to outpace the market—sometimes by a considerable amount—they also have the potential to fall flat. Some high-growth companies are so under the radar or so misunderstood that the share price appreciation doesn’t match the financial growth.
The key to successful growth investing is identifying fast-growing companies before the masses do. That can be tricky, since some of the best growth-stock candidates are relatively obscure. There’s a reason, after all, that the market hasn’t fully discovered them yet.
But keep things simple. Look for companies with accelerating sales, better-than-average earnings growth, and healthy profit margins. More often than not, the combination of those three characteristics eventually grabs the market’s attention. When it does, the rewards can be astonishing.
To learn more and get everything you need to know about investing in growth stocks, download our FREE Special Report, 10 Forever Stocks to Buy Now—and How to Find the Best Growth Stocks.
My quest to add some growthy stocks with a cyclical dimension and downside protection brings us to our latest recommendation.
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The market is hitting a little turbulence, which is natural as it feels its way across the timing of the pandemic economic recovery, concern over debt, interest rates, and inflation.
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I’m tempted—I really am—to take some of our 46% cash position and move it back into marijuana stocks. Since the sector peaked three weeks ago, most of the stocks have had a decent pullback and now the best are moving up again, heading those...
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While some segments of the broad market have experienced a sharp correction over the past month (growth stocks in particular), the broad market has not fallen apart; in fact, many indexes hit new highs just last week. And, of course, today’s big jump rather...
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This list of the best investment sites to research stocks aims to help individual investors navigate the sea of stock-related information on the web.
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More Cracks Appear
At the start of November we saw a couple of blastoff-type indicators flash green (like the Three Day Thrust rule), and that turned out to be the start of a powerful intermediate-term advance. During the next two-plus months, progress was relative there...
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The stock market is clearly accelerating the “reopening” trade. Small cap and cyclical stocks as well as commodity prices are surging, interest rates continue to tick up (the 10-year Treasury yield is now 1.38%, up from 0.92% at year-end), and novel financial vehicles SPACs,...
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With the shares continuing to surge past our recently raised 65 price target, and now being priced at a premium to even our upgraded valuation metrics
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With this week’s recommendation, I’m swinging back to the more conservative side with a solid technology company poised for big gains from the 5G communications rollout.
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Some investors are bracing for the possibility that all this will lead to a surge in the cruelest tax of all – inflation.
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With the stock market regularly surging to record highs, it may seem like an unusual time to focus on valuation. After all, many stocks are remarkably expensive on traditional measures, and even somewhat lofty on non-traditional measures. But valuation still matters, especially if market...
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This week’s recommendation is a small company with no earnings, minimal revenues and a lot of competition.
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Simply Put: Very Impressive Action
Two weeks ago, the major indexes and some individual stocks began to flash abnormal action, a couple of key leaders were threatening to break down and some late-in-the-advance type of action (heavily shorted stocks going nuts) was occurring. Importantly, the...
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As I’ve explained previously, I’ve become increasingly concerned that the blistering advance of the marijuana sector had progressed so far so fast that it was getting increasingly ripe for a correction. But as long as the stocks were advancing, I was happy to fully...
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Last week, we outlined four ingredients of a market bubble that were usefully outlined in a recently published book1”and briefly described how it clearly appears that our stock market is in a bubble. These ingredients include easy trading of assets, cheap and easy rising...
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The Market Just Keeps on Going
The bull market keeps raging. All three major indexes just made still new all-time highs. The S&P 500 is up about 20% since the end of October and 78% since the low of last March. How long can keep...
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Benjamin Graham was the father of value investing, and these were his seven primary criteria for selecting winning value stocks.
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Today I’m swinging back to pure growth with a very interesting stock that has a great story—and no direct competition.
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Today, I have a new recommendation that links three high profile growth trends: SPACs, e-commerce and internet gaming, and mobile payments.
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The GameStop Affair last week offered great entertainment for those of us neither long nor short the stock, but in the end what does it mean? In my opinion, the market worked; I don’t see any real problems revealed (aside from naivety of of...
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