Cabot Prime Pro Week Ending April 6, 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 Weekly Review
In this week’s stock market video, Mike Cintolo still sees an overall intermediate-term downtrend in the market, but he’s beginning to spot the first signs of a thaw—the broad market is showing some resilience, the major indexes are finding support and a decent amount of new leadership is popping up. It’s still too early to begin buying—Mike’s in a cautious stance with nearly half his portfolio in cash—but it’s time to sit up and pay attention should the bulls retake control.
Cabot Growth Investor
Bi-weekly Update April 4: Remain cautious. Our Cabot Tides and Two-Second Indicator remain negative, but the market’s longer-term trend is still up and, encouragingly, many stocks are holding support. In the Model Portfolio, we have 45% in cash and are standing pat tonight.
Bi-weekly Issue March 28: Mike says that he’s not eager to raise more cash, but he’ll continue to listen to the market and our stocks. He’s also keeping our Watch List up to date — despite the downer of the past week, many growth stocks actually remain in relatively good shape. There is one change in tonight’s issue: Sell one-half of Shopify (SHOP) and hold the rest.
Other Stocks of Interest March 30: Follow ups to stocks featured October 25, 2018 (issue 1379) to March 28, 2018 (issue 1390). 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 6: Mike writes that the market remains extremely volatile and news-driven on a daily basis, with tariff shenanigans repeatedly in the headlines. That said, nothing much has changed with our market timing indicators. The intermediate-term trend is still pointed down and the broad market remains unhealthy, so he continues to advise a cautious stance, with only small new buys and plenty of cash on the sideline. Buy ideas: Axon Enterprises (AAXN), BOFI Holdings (BOFI),Continental Resources (CLR), Michael Kors (KORS), Palo Alto Networks (PANW) and Veeva Systems (VEEV).
Weekly Issue April 2: This week’s list does contain a bunch of solid charts despite the market’s carnage, which is an encouraging sign. Mike’s Top Pick is Lululemon (LULU), which is one of many resilient retail names and has just gapped up on earnings.
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.
Market Update April 6: Jacob discusses his decision to sell half the Microsoft (MSFT) position yesterday. On the one hand, he thinks MSFT can make a run to 100 if the market pulls itself together. On the other hand, he doesn’t trust this market just yet. So he made the decision to lock in a 25% profit on half, and will let the balance run. Also, one stock that’s on his radar for a new position is KKR (KKR).
Trade Alert April 5: Sell Half of Existing Position: Sell Half your Microsoft (MSFT) July 92.5 Calls for $5.70 or more.
Introducing my Options Barometer April 4: Jacob is going to add a new feature to his daily order flow list that graphically shows his interpretation of order flow from the previous day. He’ll refer to this as the Options Barometer.
Stocks on Watch April 3: Jacob is not classifying the current environment as a bear market. Instead, he would call it extremely treacherous and volatile. Monday was the sixth 1% or greater move and fourth 2% or greater move in the past seven sessions. Jacob is keeping his eye on D.R. Horton which has seen repeated call buying in the past several days.
Weekly Market Update April 2: Extreme volatility continues to be the major theme for the market, as the S&P 500 made big moves on three of four days last week (rise of 2.74%, drop of 1.7% and another rise of 1.41%). For the week, the S&P 500 gained 2.08%, the Dow rose 0.61% and the Nasdaq added 1.12%. So Jacob is not yet ready to really ramp our portfolio full of bullish positions. However, if he sees another day or two of such activity, he will be adding more positions from his watch list.
Cabot Undervalued Stocks Advisor
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.
Weekly Update March 27: Crista writes about the stock market correction and takeover target USG Corp. (USG). Here are today’s rating changes: Alphabet (GOOGL) moves from Hold to Strong Buy, BB&T Corp. (BBT) moves from Buy to Strong Buy, Delek US Holdings (DK) moves from the Buy Low Opportunities Portfolio to the Growth Portfolio, GameStop (GME) moves from Strong Buy to Hold and Interpublic Group (IPG) moves from Buy to Strong Buy.
Cabot Stock of the Week
Weekly Issue April 3: Tonight’s recommendation is Stag Ind (STAG), a high-yielding REIT that was recently recommended by Chloe Lutts Jensen in Cabot Dividend Investor. Tim has two sell recommendations: BioTelemetry (BEAT) and Cronos Group (CRON). Also, PayPal (PYPL) moves to Hold and Planet Fitness (PLNT) moves to Buy.
Cabot Emerging Markets Investor
Bi-weekly Issue April 5: Today, Paul is making one change to the portfolio: Tal Education (TAL) goes from Buy a Half to Hold a Half. His new recommendation is 51Job, Inc (JOBS), a Chinese stock that’s been ignoring the market’s wobbles and etching a great rally.
Bi-weekly Update March 29: Our Emerging Markets Timer has turned negative, but its action of the past two months looks more like a trading range than a downtrend. Tonight, despite the yellow light, Paul is going to add a half position in Azul S.A. (AZUL) but will return two stocks, Alibaba (BABA) and Vipshop Holdings (VIPS) to Hold ratings.
Cabot Benjamin Graham Value Investor
Weekly Update April 5: Crista has two portfolio changes today: Stifel Financial (SF) moves from Hold to Buy and Target (TGT) moves from Hold to Sell at 78. Also, STORE Capital (STOR) and Nautilus (NLS) might reach their suggested sell prices this week.
Cabot Small-Cap Confidential
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.
Weekly Update March 30: Over the past few weeks Tyler has been advocating keeping new positions small and trimming the fat. He did just that this week as he sold three underperforming positions. There are no rating changes today.
Cabot Dividend Investor
Special Bulletin April 5: Given the shakiness of the broad market, we want to be reducing our exposure to weak stocks today. So Chloe is selling 1/3 of our 3M (MMM) shares at today’s average price.
Weekly Update April 4: Chloe is moving Broadridge Financial (BR) and Carnival (CCL) to Hold today, and looking for an opportunity to bank some profits in 3M (MMM).
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 4: Tim’s practice to date has been to make no portfolio changes between quarterly issues, and he see’s no reason to change that policy now. But it is good to keep informed about how the stocks are doing, so this update does just this.
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 6: Domino’s Pizza Inc (DPZ) from Argus Weekly Staff Report
Daily Alert April 5: Stepan Company (SCL) from DRIP Investor
Daily Alert April 4: AutoCanada Inc. (ACQ.TO) from Internet Wealth Builder
Daily Alert April 3: WCM Focused International Growth Inv (WCMRX) from Bob Carlson’s Retirement Watch
Daily Alert April 2: Stamps.com Inc. (STMP) from Validea Hot List Newsletter
Monthly Issue March 21: Our Spotlight Stock, MSC Industrial Direct (MSM), is a business in the very fragmented maintenance, repair and operations (MRO) industry—it’s 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.
Wall Streets Best Dividend Stocks
Daily Alert April 6: Omega Healthcare Investors, Inc. (OHI) from The Wealth Advisory
Daily Alert April 5: Boston Properties, Inc. (BXP) from Dow Theory Forecasts
Daily Alert April 4: Pfizer Inc. (PFE) from Dividend Advisor
Daily Alert April 3: Nestle (NESN.VX) from Adrian Day’s Global Analyst
Daily Alert April 2: Buy: Kraft Heinz Co. (KHC) from High Yield Wealth
Daily Alert April 2: Sell: BGC Partners (BGCP) from High Yield Wealth
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.
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.
This Week’s Q&As
Cabot Dividend Investor
Question: Could you recommend a medical equity REIT? I’m entertaining investing in a 1031 exchange.
Chloe: It’s a little thinly traded, but of the health care REITs that I track, Community Healthcare Trust looks the most compelling today. It’s newish, but FFO has been higher every quarter since they came public (in 2015) and their debt load is the lowest in the sector. The yield is 6.2%. You could also look at Physicians Realty Trust (DOC), which also has a yield of about 6%, a reasonable debt load and strong FFO trends.
Question: Mike said I can ask you what you and/or Crista think of JPM at this price?
Chloe: JPM looks like a pretty good bet today. Technically the stock is healthy as long as it stays above the February lows (it has so far); it’s well above its 200-day. The tax cut had a nice effect on earnings estimates, EPS are now expected to rise 29% this year, although growth is expected to decelerate to 9% in 2019. The EPS trend is good (higher every year since 2013) and they’ve beaten estimates in each of the last four quarters. And the dividend payout ratio is reasonable at 25%.
Cabot Undervalued Stocks Advisor
Question: Do you think there will ever be a time to consider buying General Electric (GE) or are there too many problems, issues and debt for this to be a large cap value investment, irrespective of the rumors of Buffett investing in GE?
Crista: Let’s say that we really wanted to own General Electric (GE) stock, and didn’t care that it’s not a “growth stock” or even a great “value stock”. So we’re just looking for something that moderately resembles a value stock, with the goal of buying low and reaping capital gains when it eventually rises. We’re on the same page with that?
So here are the three things that would postpone my purchase:
1. Are the debt levels very high? If so, that could lead the company toward bankruptcy, or cause them to make desperate business decisions.
2. Are earnings per share (EPS) falling a lot, or are there projected to be net losses this year and/or next year? If so, that could lead the company toward bankruptcy, or cause them to make desperate business decisions.
3. Is the price chart bearish, neutral or bullish? If the chart is bearish, there’s no point in buying today, because the stock’s going to be cheaper in the near future.
In the case of GE, the debt levels are okay (not great; not bad) and the EPS projections reflect an 8.6% drop in 2018 and a 10.4% increase in 2019. Those numbers are fine (not attractive, and not disastrous).
So all that’s left is the price chart, which in GE’s case is bearish. It’s still reaching new lows. Once it bottoms out, it will likely trade sideways for many months while the market waits to see if the financial situation improves. You will have PLENTY OF TIME to make a buying decision after the share price stabilizes.
Cabot Growth Investor
Question: With the market’s long run up last year and break down in recent weeks, should we be looking at some inverse ETFs to hedge our portfolios? Or even short sales for that matter?
Mike: Well, at this point, we’re still thinking this is a correction in an overall bull market, so our main focus is really not doing too much of anything, while building our Watch List of potential leaders of the next advance.
That said, if you want to play the short side, remember that downmoves happen (and end) quicker than upmoves, because fear is a more intense emotion than greed. What that means is that your timing has to be more precise -- better to try to short or hedge after a few days of bouncing, possibly back up into a resistance area like the 50-day line. And it’s probably best to cover those shorts if you develop modest profits, too.
Long story short, the big money is in the big swing of owning a stock early in its multi-month upmove. But there can be money to be made (or saved) in shorting, but it’s best to pick your spots.
Cabot Options Trader
Question: Thanks for the great job you do. I’ve been very pleased with the results from your service. Another service that I subscribe to for my pension plan mutual funds put us into cash yesterday. Only mentioning it for informational purposes. I did put my pension plan into money market funds yesterday.
Jacob: Thanks for the kind words and the info. I am not so concerned that I’m going to all cash. I’m just basically sitting with a handful positions, many of which we have sold pieces of. However, if the VIX shoots higher and options activity swings bearish, I will sell more. I am NOT seeing that yet.
Question: We are new to your option services with Cabot Prime Pro. How do you suggest we start educating ourselves and where should we begin, in this crazy ass market, laying on positions.
“It was the best of times; It was the worst of times” Hoping to work with options under both scenarios....
Jacob: Welcome to Cabot Options Trader! And yes this market is crazy. But with crazy comes opportunity ... and risk. I had my first buy in weeks last Wednesday. I had been reading the market correctly that a decline was coming, so we had stayed on the sidelines. My recommendation is to keep money at risk to each trade at 2%-5% of options capital. Not every trade will work. I promise that. However, if we keep allocation in that range, no one trade will hurt too bad if it goes bad. I like my Call buy in MSFT from last Wednesday if you want to add a position
Cabot Emerging Markets Investor
Question: IQ—$11.4B company. Dubbed the “Netflix” of China. Brand new IPO. It hardly went down at all with all the FXI/EEM, FANG stocks. Would you take a look. I don’t know, is Netflix even in China? I bought a 1/4 position. It has relations with BIDU. Thanks, Paul.
Paul: I think it’s fine to take a quarter position in this kind of stock, but probably not much more than that. The main trouble is that, despite rapid revenue growth in 2016 (104%) and 2017 (56%), Iqiyi hasn’t made a dime in three years and losses are increasing. That’s not a problem for a company like Baidu, which has cash to burn and can afford to take a chance on a Netflix wannabe. But right now, the stock is too young (just five days of trading history) and too financially shaky for me to consider it for the portfolio. I’ll certainly keep an eye on it, though, and if it can deliver on its promise with some solid numbers, I’ll be happy to feature it.
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.