Cabot Prime Week Ending March 23, 2018
Cabot Wealth Summit Registration
What do Cabot’s most successful investors have in common? They come to the Cabot Wealth Summit!
If you haven’t yet registered for the Cabot Wealth Summit, now’s the time because the Extra Early Bird rate expires soon! The Summit is a literal breakfast, lunch and dinner with every one of Cabot’s analysts, a rich and intense program of stock picks, market analysis, investing tips and techniques and a chance for face-to-face Q&A with some of the savviest investors around. We will also have great social activities!
Register here for the August 15-17, 2018 Summit at special pricing for Cabot Prime members.
Cabot Weekly Review
In this week’s stock market video, Mike discusses a couple of scenarios for the market, but emphasizes the rash of resilient growth stocks that continue to hold up well even as the major indexes get hit. They make for a great watch list as we wait for the market to shape up. As Cabot Growth Investor’s Chief Analyst he’s pared back to respect the selling pressure, building up some more cash and cutting back on new buying. That said, he’s keeping an open mind.
Cabot’s 10 Best Small-Cap Cloud Computing Stocks to Buy Now
Special Report March 12: If you’re a growth investor, you need to own cloud software stocks. It’s just that simple. Cloud computing is changing the world. It’s powering massive growth in companies across sectors, empowering digital transformations, enabling new generations of connected technologies and changing how people live their lives. Tyler Laundon lays out the landscape and names his 10 best small-cap cloud computing stocks.
Cabot Growth Investor
Special Bulletin March 23: In the Model Portfolio today, Mike is going to sell half of our remaining shares in both Alibaba (BABA) and ProShares Ultra S&P 500 Fund (SSO), two longer-term holdings that that have been unable to get going in recent weeks. Combined with our sale of Facebook earlier this week, the portfolio’s cash position will be around 35%. He’s also putting PayPal (PYPL) back on Hold.
Bi-weekly Update March 20: The market’s slide this week has put our Cabot Tides back on the fence, but most leading growth stocks continue to act very well. Mike is selling Facebook (FB), one of our biggest winners ever, as the stock has plunged through our mental stop, and he’s going back to Hold with ProShares Ultra S&P 500 Fund (SSO). Our cash position will now be around 27%.
Bi-weekly Issue March 14: The Cabot Tides are now positive, and the charts and the fundamentals of leading growth are likely pointing toward a new sustained advance. With 22% cash, we’re building our Watch List and looking to put more money to work, ideally on dips or shakeouts. PayPal (PYPL) and ProShares Ulta S&P 500 (SSO) are move to Buy.
Other Stocks of Interest March 16: Follow ups to stocks featured October 11, 2018 (issue 1378) to March 14, 2018 (issue 1389). 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.
Cabot Top Ten Trader
Movers & Shakers Weekly Update March 23: Mike says that the job now is twofold. First, stay in sync with the market, which today means paring back, holding some cash and not trying to be a hero. But second, it means to keep your eyes peeled—when the market does get going, it looks like there will be plenty of leadership to sink our teeth into. Buy ideas: Coupa Software’s (COUP), Fortinet (FTNT), GoDaddy (GDDY), Lumentum (LITE), Netflix (NFLX) and Zendesk (ZEN).
Weekly Issue March 19: This week’s Top Ten has another group of resilient stocks, which is encouraging. Mike’s Top Pick is Nutanix (NTNX), which looks like an emerging blue chip in the tech space.
Cabot Undervalued Stocks Advisor
Special Bulletin March 23: Crista reviews the U.S.-China trade news so that you can quickly grasp the facts of the situation. She says it’s also important to understand that as much as the media might try to portray announcements about trade problems as sudden, whimsical and dangerous, they are in fact long-studied, methodical, and inclusive of a huge variety of government, industry, academic and citizen input.
Special Bulletin March 22: Crista updates us on Commercial Metals (CMC) second quarter results, which slightly missed Wall Street’s revenue and profit forecasts, and pushed the stock down about 8%. It remains a Strong Buy. Chipotle (CMG), Delek US Holdings (DK) and PBF Energy (PBF) are rising this week.
Weekly Update March 20: Crista explains how 2018 banking regulatory reform will lead to a 2019 earnings boost, benefiting four of her stocks: BB&T Corp. (BBT), Bank of America (BAC), CIT Group (CIT) and Morgan Stanley (MS). No ratings changes.
Monthly Issue March 6: Today’s featured stocks include GameStop (GME), which moves to Strong Buy, Southwest Airlines (LUV) and PBF Energy (PBF), which is joining the Buy Low Opportunities Portfolio. Crista is also selling Nucor (NUE), and Commercial Metals (CMC) moves to Strong Buy.
Cabot Stock of the Week
Weekly Issue March 20: The market’s main trend remains up, Facebook’s recent action notwithstanding, and thus I remain bullish. In fact, I believe the recent pullback presents a fine opportunity to get on board a real Bull Market stock, today’s recommendation, TD Ameritrade (AMTD). Tim also has two sell recommendations: Facebook (FB) and Discovery Communications (DISCA).
Cabot Emerging Markets Investor
Bi-weekly Issue March 22: Today, Paul is making several changes to the portfolio: Fibria Celulose (FBR) Buy a Half to Sell, Tencent (TCEHY) Buy a Half to Hold a Half and Weibo (WB) Buy to Hold. His new recommendation is a Brazilian company, PagSeguro (PAGS) (which translates roughly to “secure pay”), has been quietly and quickly gaining an advantage on both its international and Brazilian competition, producing wildly rapid growth in the process.
Bi-weekly Update March 15: The iShares EM Fund (EEM) bounced strongly in early March, which returns the Emerging Markets Timer to a positive reading. Granted, it’s not the strongest signal we’ve ever seen, but it counts. Quarterly reports are winding up, and we’ll take the Timer’s advice and return one stock, Alibaba (BABA), to a Buy rating.
Cabot Benjamin Graham Value Investor
Weekly Update March 22: Crista’s only rating change today is to hold Alphabet Class C (GOOG) and sell when it’s nearing 1180.
Monthly Issue March 8: Azmath is consciously changing the portfolio into more defensive stocks to guard against inflationary fears. He introduces two new stocks, STORE Capital (STOR) andMcKesson (MKS), recommends selling Blackstone (BX) and Malibu Boats (MBUU), and changes Hanesbrands (HBI) from Buy to Hold.
Cabot Dividend Investor
Weekly Update March 21: Chloe has one change today. She’s replacing Pembina Pipeline (PBA) with STAG Industrial (STAG), which provides a similar income stream but has better capital gains prospects.
Monthly IssueFebruary 28: Chloe clears one underperforming stock, ExxonMobil (XOM), from the portfolio today, puts dividend stalwart 3M (MMM) back on Buy, and adds very high-yielding AllianceBernstein (AB). She also recaps her sell strategy and gives updates on all our stocks.
Cabot’s 10 Best Marijuana Stocks
Update February 27: Cronos Group is expected to be elevated today from the Nasdaq International Designation program (where it has traded as PRMCF) to the Nasdaq Global Market, where it will trade under the ticker symbol CRON. In Canada, it will continue to trade under the symbol MJM.
Spring Issue February 15: Tim gives updates on the 10 stocks we’ve been following and two new stocks. The market’s recent correction has brought most of them down to what look like good buying areas.
Wall Street’s Best Investments
Daily Alert March 23: Phibro Animal Health (PAHC) from Positive Patterns
Daily Alert March 22: HEICO (HEI) from Canaccord Genuity Research
Monthly Issue March 21: Our Spotlight Stock, a business in the very fragmented maintenance, repair and operations (MRO) industry—is a company that has consistently rewarded its shareholders with stock repurchases and rising dividends. Nancy’s Feature article further explores the company’s opportunities, especially in light of recent tax reforms.
Daily Alert March 21: ProShares UltraPro Short QQQ (SQQQ)from The National Investor
Daily Alert March 20: Ionis Pharmaceuticals (IONS) from The Medical Technology Stock Letter
Daily Alert March 19: American Express (AXP) from Jack Adamo’s Insiders Plus
Wall Streets Best Dividend Stocks
Daily Alert March 23: Lockheed Martin Corporation (LMT) from Pivotal Point Trader
Daily Alert March 22: XL Group (XL) from Cabot Undervalued Stocks Advisor
Daily Alert March 22: GameStop (GME) from Cabot Undervalued Stocks Advisor
Daily Alert March 21: Apartment Investment and Management Company (AIV) from Barclays Capital Equity Research
Daily Alert March 20: Chatham Lodging Trust (CLDT) from Forbes Dividend Investor
Daily Alert March 19: Honda Motor (HMC) from The Prudent Speculator
Monthly Issue March 14: The Spotlight Stock is Gramercy Property Trust (GPT), an Industrial Real Estate Investment Trust that pays a high yield and is growing internally and by acquisition. Nancy’s Feature explores Wall Street’s misunderstanding of the effect of rising rates on the REIT industry and discusses the opportunities for Industrial REITs as the economy continues its expansion phase.
This Week’s Q&As
Cabot Emerging Markets Investor
Question:Stay warm! What is going on with TCEHY? Looks Ugly. Hope all is well.
Paul: I think Tencent Holdings (TCEHY) action reflects more of a recoil from Chinese stocks in general than a negative response to the company’s quarterly results. Objectively, the results were good. But the prospect of a trade war with China is giving investors the wobbles.
Question: Stock may be taking a slight hit today because of earnings and/or subscribers. Are you holding? thanks
Paul: Here’s what I will be saying about TCEHY in this evenings’ issue. Tencent Holdings (TCEHY) reported a good fourth quarter on Wednesday, with local currency revenues rising 51% from a year ago, which included a 32% gain in its online game business, a 49% hike in online advertising sales and a triple-digit boom in payment-related services. That said, the company made it clear that it would continue to spend heavily, which will likely constrain margins. Combined with the stock’s big run during the past 15 months and today’s crummy market, the shares took a hit. It’s not a disaster, but TCEHY has stalled out with resistance near 60 for a few weeks, and today’s selling is enough for us to move to Hold. If you have a loss, be careful not to let the loss grow. If you have a partial position with a big profit (like us), we advise holding on and seeing whether shares can etch a new base. HOLD A HALF.
Question: I must have really pissed you off as I have not heard back from you on two emails. If you chose not to give me your opinion, I can accept that. You guys have a lot of stocks and you likewise yourself have several to pick from and I was just trying to see what you personally like the most.
Paul: Sorry. No offense taken here at all. I think I just look at your messages, which have a single period in the “from” box and assume it’s spam. Now that I know it’s you, I’ll pay better attention. As you know, whittling down the stocks in the portfolio and watch list isn’t my preferred way to work. I think running a portfolio with ten stocks is about as concentrated as I like to get. That’s a very aggressive portfolio, but there’s still a little cushion if one stock goes down the toilet and a single outperforming stock can make a material contribution to results. With all that said, I’m also a little leery because I don’t know your general portfolio strategy, risk tolerance and investing horizon.
But, with all that said, and one last apology for being so late getting back to you, here are three stocks that I’m actually enthusiastic about.
1) Autohome (ATHM) is right at the heart of automobile sales in China. The company’s website has competition (Bitauto, for instance) but is still the first stop for car buyers and a main focus for car manufacturers, dealers, insurers, repairers and financers. ATHM has been holding up well in a challenging market (while BITA has been sinking) and has great prospects.
2) Weibo (WB) has a dominant position in Chinese messaging, which means it gets a ton of money for its advertising services. The company has been very active in forming joint ventures and making strategic investments. Revenue and earnings growth has been solid and WB has been trading under resistance at 140 since the middle of February. That base could be very useful when the stock breaks out above that resistance.
3) PagSeguro (PAGS) is a very young stock, but I’m just putting it into the portfolio in today’s issue. Revenue and earnings growth have been crazy strong, and the fact that the stock is so young means there are few institutional investors in on the story. I think the whales will be interested, so institutional buying should keep things hopping for a while. There will be big volatility as a result, but the story—the Square/PayPal of Brazil—is a good one.
Those are my three picks for right now. The traditional Chinese big names (Alibaba, Baidu and Tencent Holdings) are all taking significant hits as investors go risk-off for a while. They will do fine in the long run, but my portfolio is aimed more at sprinters than marathoners.
Cabot Undervalued Stocks Advisor
Question: Johnson & Johnson is my biggest position and I’ve had this stock on dividend re-invest for several years now. It has been weak lately and is below its 200 day moving average. I was curious if you were me, would you continue to hold JNJ or look for a stronger performer?
Crista: Johnson & Johnson (JNJ) is your classic big blue chip consumer stock. Most such stocks tend to have slow-to-moderate earnings growth, decent dividend yields, and they’re rarely undervalued, except during big stock market corrections.
Right now JNJ is ratcheting upward, in synch with the stock market’s recovery from the recent correction. I see nothing particularly worrisome about the share price.
If somebody gave me JNJ shares as a gift today, I would hold the shares in the short-term, expecting the stock to continue to rise toward 147, where it recently peaked in January. Once it reached about 145, if I were itching for a more aggressive growth stock, I would pare back my holdings in JNJ and buy something that further diversifies my portfolio.
I try to keep all of my stock positions at similar approximate values, and I diversify across most sectors and market cap sizes. Growth stocks can be risky, and the diversification helps to lower the portfolio risk.
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.