Cabot Prime Pro Week Ending April 20, 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 Pro members.
Cabot Quarterly Market Report and Conference
1Q 2018 Report April 18: The story of the first quarter of 2018 revolves around tariffs, and Tim challenges you to find a person who can analyze that situation from a politically unbiased viewpoint. You can listen to the Quarterly Analyst Conference here.
Cabot Weekly Review
In this week’s stock market video, Mike Cintolo talks about the general improvement in the market’s evidence, with the major indexes building on their gains, some stocks poking into new high ground and many setting up. It’s encouraging, but to this point, the market still has yet to confirm a new intermediate-term uptrend and few stocks are racing away on the upside. Thus, Mike thinks it’s best to stay relatively cautious—some new buying is fine, but smaller positions (and holding some cash) still makes sense as we wait for the bulls to truly take control.
Cabot’s 10 Best Covered Calls on Dividend Stocks.
Special Report April 12: With interest rates just coming off of historically low levels, income investors have been desperately searching for alternative sources of yield. Dividend stocks are the obvious answer. But there’s an even better way to create yield: by executing a covered call strategy on stocks that pay dividends.
Cabot Growth Investor
Bi-weekly Update April 18: The market’s action during the past week and a half has been encouraging and constructive, first with the successful retest of the market’s lows and positive broad market divergences, and now, with the major indexes popping back above their 50-day lines. That said, we’ve yet to get a green light from our Cabot Tides. Tonight, Mike is putting a little money to work by adding one new stock—Nutanix (NTNX), which has already lifted to new highs—but we’ll still retain about 35% in cash as we await further signs that the correction is over.
Bi-weekly Issue April 11: Mike remains cautious, but stay tuned. If the broad market’s resilience leads to a new uptrend, he’ll start putting our cash back to work, but right now he advises patience. There is one change in tonight’s issue: Proofpoint (PFPT) moves from Hold to Buy.
Other Stocks of Interest April 13: Follow ups to stocks featured November 8, 2017 (issue 1380) to April 11, 2018 (issue 1391). 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 April 20: Mike says that the market continues to add some positives to its resume, with the major indexes tacking on decent gains (the S&P 500 is up about 0.8% for the week as he writes this, with the Nasdaq up a bit more than that) and many individual stocks perking up. Buy ideas: BeiGene (BGNE), Kirby (KEX), Old Dominion (ODFL), and Qualys (QLYS). There’s just one sell this week: Kohl’s (KSS).
Weekly Issue April 16: This week’s list has many stocks that have staged breakouts (or come close) in recent days, even as the market is still iffy. Mike’s Top Pick is WPX Energy (WPX), one of many oil stocks that’s come to life as that sector sets up.
Cabot Options Trader and Cabot Options Trader Pro
Note that the current week’s Weekly Update, earnings updates, position updates and stocks on watch are posted on the website in the Market Update section, which is deleted each week.
Stock on Watch April 20: One of the earnings winners from this week is American Express (AXP), which gained 7.6% yesterday following an earnings beat. And what Jacob really likes about AXP is the very cheap price of calls.
Earnings Update April 20: Two of Jacob’s stocks reported earnings today. Schlumberger (SLB) announced earnings and revenues that beat expectations. In early pre-market trade, SLB is trading lower by $0.50. Regions Financial (RF), announced earnings that beat expectations, but missed on revenues. In early pre-market trade RF is unchanged on very light volume.
Trade Alert April 19: Adjust Existing Position: Buy Back the Regions Financial (RF) April 20 Call and Sell the August 19 Call.
Position Update April 19: Jacob says two of our holdings, Schlumberger (SLB) and Regions Financial (RF), will report earnings tomorrow before the open. Both positions are essentially at breakeven heading into their announcements.
Position Update April 18: Jacob writes that two of our positions are of interest today. Intel (INTC) is at a new 52-week high this morning following an upgrade from Bank of America/Merrill Lynch and Schlumberger (SLB) is at a multi-month high today as oil charges ahead to new recent highs. This rise in oil and SLB has brought our position back to a small profit ahead of the company’s earnings report on Friday.
Weekly Market Update April 16: Jacob gave a lot of thought to the VIX not rising this past week on down days. One theory he has is that at this point traders are already hedged. Why? Traders know the Syria/Washington trade war risk, and have already bought puts and market volatility to hedge. As a result, there is potentially less demand for hedges and the VIX.
Cabot Undervalued Stocks Advisor
Special Bulletin April 20: Skechers USA (SKX) reported first quarter results yesterday afternoon, with both earnings per share (EPS) and revenue coming in slightly above analysts’ estimates. Crista encourages investors to hold SKX, and consider adding to positions today. If you are intent on selling, you will very likely get a better price early next week, because there are no fundamental problems at the company that warrant today’s exaggerated drop in the share price.
Special Bulletin April 19: Crista reports that BB&T Corp. (BBT) and Blackstone Group LP (BX) both reported strong earnings beats. Also she’s recommending that we Sell ConocoPhillips (COP). She will wait for a pullback in energy stocks, then add another E&P company to the portfolio that has a much stronger earnings growth outlook.
Special Bulletin April 18: Crista updates us on Morgan Stanley (MS), who reported record first quarter profits of $1.45 per share this morning, when analysts were expecting $1.25. Also, news on Southwest Airlines (LUV), Baker Hughes, a GE Company (BHGE), Chipotle Mexican Grill (CMG), Commercial Metals (CMC) and Supernus Pharmaceuticals (SUPN).
Special Bulletin April 17: Crista writes that Comerica (CMA) reported first quarter adjusted earnings per share (EPS) of $1.54 this morning when the market was expecting $1.53. Also, Alphabet (GOOGL) moves from Strong Buy to Hold as it nears our price target of 1,190.
Weekly Update April 17: It’s the beginning of earnings season. Crista will send out Special Bulletins as any noteworthy news or price action develops. Also, to help understand the trade issues between the U.S. and China, Crista gives you a link to an article by David P. Goldman, a senior fellow of the London Institute for Policy Studies. There are no new rating changes today.
Special Bulletin April 16: Crista reports that Bank of America (BAC) posted great first quarter results; and Comerica (CMA) and Morgan Stanley (MS) are set to report first quarter results on April 17 and 18.
Monthly Issue April 3: Today, Comerica (CMA) joins the Growth & Income Portfolio as a Buy, Molina Healthcare (MOH) joins the Growth Portfolio as a Strong Buy and Skechers USA (SKX) joins the Buy Low Opportunities Portfolio as a Strong Buy.
Cabot Stock of the Week
Weekly Issue April 17: Tonight’s recommendation is Everbridge (EVBG), a $1 billion market cap company with cloud-based solutions that help keep people safe and businesses running during critical events . Tim has one rating change: Baker Hughes, a GE Company (BHGE) moves from Buy to Hold.
Cabot Emerging Markets Investor
Bi-weekly Issue April 19: Today, Paul is making two changes to the portfolio: Tencent Holdings (TCEHY) goes from Hold a Half to Sell and Weibo (WB) moves from Hold to Sell a Half. Also, Paul spotlights a recent IPO for your Watch List, iQIYI, Inc. (IQ).
Bi-weekly Update April 12: The iShares EM Fund (EEM) has firmed up over the last few days, but has yet to actually kick out to the upside. Paul has no rating changes tonight.
Cabot Benjamin Graham Value Investor
Weekly Update April 19: Crista has three portfolio changes today: Alphabet Cl. C (GOOG) moves from Buy to Hold, Sell Nautilus (NLS) as it rose to its target sale price of 14 and Ross Stores (ROST) moves from Hold to Sell at 84.
Cabot Small-Cap Confidential
Weekly Update April 20: Tyler has one rating change today, AppFolio (APPF) is upgraded from Hold to Buy. Also, he has additional information on MiX Telematix (MIXT) regarding its base of operations in South Africa.
Monthly Issue April 6: Tyler is adding MiX Telematics (MIXT), a global provider of fleet management, driver safety and vehicle tracking solutions that are accessed via a Software-as-a-Service (SaaS) delivery model to Cabot Small-Cap Confidential. In the portfolio Tyler is moving AxoGen (AXGN), Everbridge (EVBG) and Q2 Holdings (QTWO) from Hold to Buy.
Cabot Dividend Investor
Weekly Update April 18: Chloe is putting Ecolab (ECL) back on Buy today after an impressive surge from the stock over the past two weeks. And also looking much healthier are Cummins (CMI), 3M (MMM) and UnitedHealth (UNH). In addition, Intel (INTC) and Broadridge (BR) remain exceptionally strong, both hitting new highs this week. And high-yield holdings ONEOK (OKE) and STAG Industrial (STAG) are both seeing renewed strength.
Monthly IssueMarch 28: Chloe is selling another half of our General Motors (GM) shares and placing UnitedHealth Group (UNH) on Hold. This month’s featured buy is Intel (INTC), which will join the Dividend Growth Tier.
Cabot’s 10 Best Marijuana Stocks
Update April 18: Tim remains long-term bullish on the marijuana sector, aiming to build a diversified portfolio of the best U.S. and Canadian stocks, and he’s looking forward to delivering your next quarterly issue of Cabot’s 10 Best Marijuana Stocks in the middle of May.
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 April 20: QVIA Holdings Inc (IQV) from Argus Weekly Staff Report
Daily Alert April 19: NCR Corporation (NCR) from Sound Advice
Monthly Issue April 18: Our Spotlight Stock is, Cintas Corporation (CTAS), the leading uniform company in that space, with 25% of the very fragmented market. Nancy’s Feature article discusses her thoughts on this company from a personal perspective, after having visited it several years ago.
Daily Alert April 18: Radware Ltd (RDWR) from The Cutting Edge
Daily Alert April 17: Zoom Telephonics, Inc. (ZMTP) from S.A. Advisory
Daily Alert April 16: Facebook (FB) from Ian Wyatt’s Million Dollar Portfolio
Wall Streets Best Dividend Stocks
Daily Alert April 20: PBF Energy Inc. (PBF) from Cabot Undervalued Stocks Advisor
Daily Alert April 19: Cineplex (CGX.TO) from Income Investor
Daily Alert April 18: LafargeHolcim (HCMLY) from The Turnaround Letter
Daily Alert April 17: Senior Housing Properties Trust (SNH) from Sure Dividend
Daily Alert April 16: International Paper (IP) from The Prudent Speculator
Monthly Issue April 11: The Spotlight Stock is Southern Company (SO), now the highest-yielding stock in the Dow Jones Utility Average, after dropping 17% from its November 2017 high. Nancy’s Feature explores low beta stocks—companies whose shares are less volatile than the overall market. And this month’s Spotlight Stock, fits that criteria, boasting a beta of 0.3.
This Week’s Q&As
Cabot Emerging Markets Investor
Question: I bought PAGS, VIPS and WB too high and now have losses: PADS about 13%, VIPS about 17%, and WB -13%. Would you suggest hold all of them, or sell somebody or everyone?
Paul: All three are tough calls. VIPS is probably the weakest of the three, and I think it would be a good idea to sell that one since your loss is the largest. But PAGS doesn’t look too bad, especially because it’s such a recent IPO and we expected some volatility. WB is bouncing back a bit today, which is hopeful. Keep an eye on the 110 level as a mental stop.
Cabot Dividend Investor
Question: Enjoy your emails and advice; why do I never see Cabot or others recommend NEE or FPL, Florida Power and Light. Over the years they have tremendous growth and decent dividend.
Chloe: NEE is a solid choice for long-term appreciation and safe income (FPL is a subsidiary, not listed separately). I don’t have it in the Dividend Investor Portfolio right now because we already own ConEd (ED) and Xcel Energy (XEL) and I don’t want to get too heavily overweight utilities. Revenue declined in 2016 but net income still rose slightly and the payout ratio remained under 70%, so it’s not a big red flag. Net income and EPS both grew unusually quickly in 2017, and forward estimates are good (low single-digit revenue growth, high single digit EPS growth). The dividend history is strong (10+ years of dividend increases) and the payout ratio is nice and low (35%). So if you’re looking for a reliable long-term holding with a nice dividend, I think you’ve made a good choice.
Cabot Options Trader
Question: I have MU call option that is going to expire on this Friday. If I decided to hold on to it by not selling it, is that possible? If yes, what action do I need to do?
Jacob: If the call is in-the-money tomorrow afternoon, and if you have the capital to buy the stock, the call will be exercised and you will buy the stock at the strike price you own. For example, MU is trading at 52 today. Let’s assume you own the 49 call. If you have the capital in your account, you would buy the stock at 49 on Monday morning. If you don’t have the capital in your account, your broker will simply sell out the call ahead of expiration. This is the typical broker/client options set-up. However, if you are unsure if that is the agreement you have with your broker, it may be worth the call to confirm.
Question: First off what a fantastic call on Nutanix, Inc! I had a 9 bagger on that trade!! Now for my ? I use Ameritrade and I notice that there is someone out there that has (3) April 20 2018 (15) calls remaining on the Open Interest column. With the stock around 55 (WOW) he has made himself a nice profit depending on when and how much he paid for them. If he exercises the calls does that mean he can purchase those (3) calls (300) shares of Nutanix for the cost at $15.00 per share? Does he/she also receive any Premium for those calls if they in fact can purchase them? Explain to me what happens at he close of the market today in this particular instance. Just trying to expand on my knowledge about options!
Jacob: Awesome trade! I love hearing of these big profits. The owner of the 15 strike calls has two choices. He can sell his calls out before the close of trade today, and he will be without a position. Or, he can let those calls expire, and Monday morning he will own 300 shares with a purchase price of 15. Of note, if the trader does not have the capital in his account to buy the stock, the broker will sell his calls out for him before the close of trade.
Question: I want to thank you for the great service you provide. I wanted to get your thoughts on Sketchers. I also subscribe to Crista Huff’s service, and here’s her write up on the company’s earning report. I was just wondering if there might be an opportunity in a longer dated option play, since she still rates the stock a strong buy. Your thoughts and commentary are always appreciated.
Jacob: Keep up the great work! Personally SKX is not for me. But I do think Crista does a great job and if I wanted bullish exposure I might look at: October 33 calls for $2.85 seem reasonable and gives you time. And even longer term, the January 32 calls for $4 seems like a nice risk/reward.
Both trades will pay off huge if the stock can regain some of the lost ground in the next 6-9 months.
Cabot’s 10 Best Marijuana Stocks
Question: It is my understanding that Canada will approve marijuana for recreational use in June, country-wide. Assuming I am correct, do you foresee a breakout and when is the time to buy?
Tim: Thanks for asking.
One of the principles of the market is that it is a very efficient discounting mechanism. Thus, everything that is known, or perceived to be known, by all interested investors, is already reflected in the price of the relevant stocks. Which means that the likelihood of Canadian legalization in June (or July) is already reflected in all the Canadian stocks!
Thus this is a piece of information is not particularly relevant to you and me. What is more valuable to me is the action of individual stocks, because each one of those charts reflects the net judgment of all concerned investors on not only the national legalization issue but also a multitude of factors that are beyond the ability of any one investor to consider.
What these charts say to me today is that while the sector is still in consolidation mode, the best stocks are holding at or above their 50-day moving average. These are CannaRoyalty (CNNRF), Canopy Growth (TWMJF), Cronos (CRON), Innovative Industrial Properties (IIPR), Kush Bottles (KSHB) and Turning Point Brands (TPB) (if you can tolerate the tobacco component).
Guide to Cabot Prime Pro
This Guide to Cabot Prime Pro will help you make the best use of your Prime membership to create a strong personal portfolio.