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Cabot Prime Week Ending February 2, 2018

Cabot Prime Week Ending February 2, 2018

Quarterly Market Report

4Q 2017 Report January 18: (emailed to Prime members) A very strong year for the stock market closed with a flourish, as the S&P 500 surged another 6% in the fourth quarter to reach new all-time highs entering 2018.

Cabot Weekly Review

In this week’s stock market video, Paul Goodwin, chief analyst of Cabot Emerging Markets Investor talks about the market’s recent pullback, but puts it in perspective by pointing out the great year 2017 was and the great month January was. So this correction, which hasn’t even pulled the major indexes below their 25-day moving averages, doesn’t look all that dire. Earnings season is a more immediate concern, and Paul cautions you to keep a close eye on reactions to earnings. He also gives a few charts of stocks whose earnings-inspired pullback looks buyable and a few that are moving higher in good form. And lastly, he wishes everyone a happy Super Bowl LII and gives a hint about his loyalties.

Cabot Wealth Summit Registration

Register here for the August 15-17, 2018 Summit at special pricing for Cabot Prime members.

Cabot’s 10 Best Marijuana Stocks

Special Update January 31: Recent action of many of the stocks in the industry merits an update today. You received your update via email today.

Cabot Growth Investor

Other Stocks of Interest February 2: Follow ups to stocks featured August 30, 2017 (issue 1375) to January 31, 2018 (issue 1386). 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 January 31: Mike adds Splunk (SPLK) to the Model Portfolio, leaving us with 10% on the sideline, and writes about biotech stocks, which appear to be getting going (including a couple of our favorites) and discusses some other ideas he’s keeping a close eye on.

Cabot Top Ten Trader

Movers & Shakers February 2: We remain bullish overall, and you shouldn’t overreact to an overdue pullback; the major indexes are still in uptrends, and many stocks look fine. That said, given the action, you shouldn’t be complacent, either. Dump anything that cracks, tighten some stops and look for lower-risk entry points. Buy ideas: Abercrombie & Fitch (ANF), DXC Technology (DXC), Gardner Denver (GDI), NetApp (NTAP) and Steel Dynamics (STLD).
Weekly Issue January 29: This week’s Top Ten has something for everyone. Our Top Pick is AbbVie (ABBV), a liquid leader in the biotech space (which has recently come to life) that gapped up on earnings last week.

Cabot Undervalued Stocks Advisor

Special Bulletin February 2: Crista has two rating changes: Blackstone Group (BX) moves from Hold to Buy and Mattel (MAT) moves from Hold to Sell. She also has earnings updates for Alphabet (GOOGL), Apple (AAPL), ConocoPhillips (COP), WestRock (WRK) and XL Group (XL).

Special Bulletin January 31: Knight-Swift Transportation (KNX) reported earnings per share that beat analyst estimates. Revenue came in on target, expenses came in below estimates and operating income came in much higher than expected. Crista is moving the stock from Strong Buy to Buy.

Special Bulletin
January 30: CIT Group (CIT), Nucor (NUE) and PulteGroup (PHM) reported fourth-quarter 2017 results this morning.

Weekly Update
January 30: Crista gives an update on the
Section 232 investigation into the steel industry and describes what a normal stock market correction look like and how you should handle it. One rating change: Baker Hughes, a GE Co. (BHGE) moves from Buy to Strong Buy.

Monthly Issue January 2: Today’s portfolio changes: ConocoPhillips (COP) and Knight-Swift Transportation (KNX) join the Growth Portfolio, BB&T Corp. (BBT) joins the Growth & Income Portfolio and Supernus Pharmaceuticals (SUPN) joins the Buy Low Opportunities Portfolio. New sells: Boise Cascade (BCC), Johnson Controls (JCI), Legg Mason (LM), Total SA (TOT), Vertex Pharmaceuticals (VRTX), Vulcan Materials (VMC) and Weyerhaeuser (WY).

Cabot Stock of the Week

Weekly Issue January 30: Tim’s recommendation is Melco Resorts (MLCO), a high-quality Chinese growth stock that has just completed a normal pullback. In fact, while the market was down today, this stock was up! Ratings changes: Baidu (BIDU), Nucor (NUE) and Wynn Resorts (WYNN) to Sell, and Teladoc (TDOC) to Hold.

Cabot Emerging Markets Investor

Bi-weekly Update February 1: The iShares EM Fund (EEM) is still well on top of its moving averages, which keeps the Emerging Markets Timer firmly positive. Paul has no changes to the portfolio.

Bi-weekly Issue January 25: Paul has some good news about the portfolio’s performance in 2017 and great news about TAL Education (TAL). There’s also a new recommendation for Petrobas (PBR), a big energy company that’s emerging from the cloud of an enormous national scandal.

Cabot Benjamin Graham Value Investor

Weekly Update February 1: Updates on Thor Industries (THO), LCI Industries (LCII), Target (TGT) Starbucks (SBUX), Alliance Resource (ARLP) and Gentex (GNTX) Two ratings changes: LCII and SBUX to Sell.

Monthly Issue January 11: Azmath reviews his recommendations and market performance in the past year, introduces new Buy Target (TGT), and moves Discovery Communications (DISCA) to Hold and FedEx (FDX) to Sell.

Cabot Dividend Investor

Monthly Issue January 31: The title of today’s issue is “Don’t Overreact”—the major trend of the market is still up, and there are many signs pointing to higher prices in the months ahead. Chloe adds ExxonMobil (XOM) to the Safe Income Tier and presents her view on the forces affecting interest rates and income investments today. No ratings changes.

Special Bulletin
January 30: Chloe sold half our Wynn (WYNN) shares in August for a 36% gain, and have an unrealized profit of 76% on our remaining position. She will sell another half of our shares today to protect some of our remaining profit.

Weekly Update January 24: American Express (AXP), BB&T Corp. (BBT) and Wynn Resorts (WYNN) all reported estimate-beating results this week.

Wall Street’s Best Investments

Daily Alert February 2: Petróleo Brasileiro S.A. – Petrobras (PBR) from Cabot Emerging Markets Investor
Daily Alert February 1: Tyson Foods (TSN) from Positive Patterns
Daily Alert
January 31: Intuitive Surgical (ISRG) from Shortex Market Letter
Daily Alert
January 30: Weight Watchers International (WTW) from Stock Pickers Digest
Daily Alert
January 29: Horizons Marijuana Life Sciences ETF (HMMJ.TO) from Internet Wealth Builder

Annual Top Picks Issue January 17: While the broad market returns were fantastic in 2017, there was no stopping our contributors, whose Top 5 Picks—Arista Networks ANET), YY Inc. (YY), Vertex Pharmaceuticals (VRTX), Crocs (CROX) and NMI Holdings (NMIH)—gained an average of 72.83%! And in today’s 2018 Top Picks issue, you’ll find a great selection of investments, distributed among almost every sector and investing style.

Wall Streets Best Dividend Stocks

Daily Alert February 2: Noble Midstream Partners LP? (NBLX) from Energy & Income Advisor
Daily Alert February 1: TerraForm Power (TERP) from Conrad’s Utility Investor
Daily Alert
January 31: AMC Entertainment’s (AMC) from The Turnaround Letter
Daily Alert January 31: Sell Time, Inc. (TIME) from The Turnaround Letter
Daily Alert
January 30: Target (TGT) from Cabot Benjamin Graham Value Investor
Daily Alert
January 29: Annaly 6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred (NLY-PG) from Jack Adamo’s Insiders Plus

Annual Top Picks Issue January 10: Our first place 2017 Top Pick, Lam Research (LCRX) gained a very healthy 71.39% for the year, second-place pick Caterpillar (CAT) delivered a return of 71.23%, and capturing third place was AbbVie (ABBV) for a 54.92% gain. This Top Picks 2018 issue is packed full of exciting opportunities among very diversified sectors and investing styles.

This Week’s Q&As

Cabot Undervalued Stocks Advisor

Question: I’m wondering how you deploy stop-loss orders? Do you just do an across the board 10%-15% or do you use some other formula?

Crista: I use stop-loss orders based on price chart movements (technical analysis), rather than using percents. I don’t use stops on all of the stocks that I personally own, but usually on the ones that have gone straight up relentlessly, figuring they’re overdue for a correction.
I don’t recommend specific stop-loss prices within Cabot Undervalued Stocks Advisor because the audience is so broad, with so many different investment goals and levels of expertise. I know from experience that many investors get emotional about their stocks being stopped out. While the ideal strategy is to redeploy the capital into a stock with a more bullish price chart, the reality is that there are an awful lot of investors who instead leave the money in cash and keep staring at the price chart of the stock that just sold. That’s not productive, and I don’t want to encourage that behavior by telling people to use stop-loss orders. However, if somebody wants to ask me questions on the topic, they’re always welcome to send me an email.

Cabot Emerging Markets Investor

Question: I recently renewed my subscription for another year. Do you think it is the time to sell China Lodging (HTHT) (small profit) and YY Inc. (YY) (serious profit)? Or just hold?

Paul: I know it’s scary to have the market bleeding a little red ink, but I don’t see any real reason to sell either stock. They haven’t shown any deterioration or signs of a reversal. I will let the profits in each stock keep us in the positions until we get a definite signal—maybe from earnings or from the stock dropping on big volume.

Question: I was watching and guessing what your new pick for Cabot Emerging Markets Investor would be. Petrobas (PBR) surprised me as I was looking at Chinese stocks. Was part of you reasoning to diversify the portfolio away from Chinese stocks?
I was guessing Vipshop Holdings (VIPS) or JD.com (JD) as they both appear to have waken up. Certainly VIPS is a momentum play of the same character as PBR. Both are waking up after very long sleeps with institutions building new positions.

Paul: PBR was a long, hard process. Diversification played a part, as I’m a little nervous about having so much China in the portfolio. But I’m also wary of having so much Chinese retail specifically, and VIPS and JD would have been more of the same.
It may be that I will either have to make a hard decision about letting one of our profitable positions go despite its performance in order to add a stronger performer. That’s what I did with the sale of half of our position in SUPV to make room for PBR.
This kind of calculation is a good problem to have, since it only happens when stocks are storming higher as they are now.
And always remember that you can certainly add a position in VIPS or JD on your own.

Cabot Dividend Investor

Question: In your updates, you suggest that we take partial profits on our extended stocks. For those of us who are depended upon an income of dividends, wouldn’t this dilute the number of shares and income which, in turn, would defeat our purpose of greater dividend income? Please help clarify our dilemma and how we would proceed.

Chloe: Yes, if you sell some of your shares, your income stream will decline.
But it often makes sense in positions that you hold at least partially for capital gains reasons, like Carnival (CCL) or Wynn (WYNN). The income stream there isn’t that large, but the profits we’ve racked up are. It doesn’t make sense to watch a 50% profit disappear because you want to maintain a 1% or 2% income stream.
But if you’ve bought something purely with income in mind, like one of our Safe Income Tier holdings, you should be more willing to sit through corrections, even if it means seeing some of your paper profits evaporate. That’s why we’re still holding most of our Consolidated Edison (ED) and Xcel Energy (XEL) shares, even though both are in intermediate-term downtrends. We have double-digit profits, but are enjoying a yield on cost of about 5% in both, which makes them worth holding long-term.
In short, it depends on your goals and the situation.

Question: I have a question about PGX. You typically list this as a ‘Buy’ when it drops below $15, and then move it to ‘Hold’ when it rises above $15. I’m just curious, if you believe it continues to keep in line with your criteria, why not recommend a ‘buy’ instead of ‘hold’ right now?

Chloe: I switched PGX to Hold a few weeks ago because a pullback seemed likely short-term, and people tend not to be happy when they buy things and then they immediately go down. Once the interest rate panic subsides and PGX stabilizes I’ll put it back on Buy.
Of course if you’re truly a long term investor looking for monthly income and don’t really care what happens short term, there’s nothing wrong with buying it here. But you might be able to get a lower price in a week or two.

Guide to Cabot Prime

This Guide to Cabot Prime will help you make the best use of your Prime membership to create a strong personal portfolio.