Cabot Prime Pro Week Ending February 23, 2018
Cabot Weekly Review
In this week’s stock market video, Mike Cintolo talks about his cautiously optimistic stance—his Watch List is overflowing with resilient growth stocks and the longer-term trend remains positive. But so far, the one key thing Mike is looking at when he examines the major indexes hasn’t happened, so he advises patience and keeping your eyes open for the leaders of the next leg up.
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Cabot Marijuana Investor
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.
Cabot Growth Investor
Bi-weekly Update February 21: It’s likely that markets will need a while to catch their breath, and we don’t want to get ahead of them. In the Model Portfolio, while Mike is close to recommending new buys, he wants to have the Cabot Tides at our back when we do so. No ratings changes tonight.
Other Stocks of Interest February 16: Follow ups to stocks featured September 13, 2017 (issue 1376) to February 14, 2018 (issue 1387). 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 February 14: Mike is moving three stocks from Hold to Buy: Grubhub (GRUB), PayPal (PYPL) and ProShares Ultra S&P 500 Fund (SSO).
Cabot Top Ten Trader
Movers & Shakers Weekly Update February 23: We’re relatively cautious (though not outright defensive) and stepping lightly as we wait for the market to confirm a new uptrend for leadership to take shape. Buy ideas: Autohome (ATHM), Commercial Metals (CMC), Kohl’s (KSS) and LPL Financial (LPLA). Sell ideas: Wayfair (W) and Wingstop (WING).
Weekly Issue February 19: The major market indexes have made up a good chunk of their recent losses and are close to their 50-day moving averages. That sign of strength has led us to bump the Market Monitor up to neutral as we wait for the market’s next move. If the market keeps improving, we’ll get more aggressive. Of course if we get renewed weakness, we’ll dial back our enthusiasm. We have a bunch of resilient growth stocks in this week’s issue, including Chinese social media giant Weibo (WB) as our Top Pick.
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.
Trade Alert February 23: Buy-Write: Buy Regions Financial (RF) Stock and Sell the April 20 Calls (exp. 4/20) for a net of $18.75 or less.
Market Update February 22: Jacob believes the odds favor the market chopping around, so he’s looking for short volatility trades. One stock that has caught his attention following an earnings miss is Boyd Gaming (BYD).
Earning Update February 22: Yesterday after the close, Wendy’s (WEN) reported earnings that were in line with estimates, but missed on revenues.
Stock on Watch February 21: Option activity in General Motors (GM) was aggressively bullish this morning, including three large call buys.
Trade Alert February 21: Sell Half of Existing Position: Sell HALF your Wendy’s (WEN) May 18 Calls for $0.35 or more.
Position Update February 21: Etsy (ETSY) gained approximately 19% in the past two weeks, and this morning, in a research note, DA Davidson raised its price target from 20 to 26. For now, Jacob will continue to hold the position, however, because it’s a March option, and Etsy earnings are coming next week, he wants to bring the position to your attention should you want to take profits.
Market Update February 20: The indexes are mixed today as the Dow and S&P are trading lower by 0.8% and 0.3%, while the Nasdaq is higher by 0.7%. And interestingly, along with that Nasdaq strength, Jacob’s daily option order flow list is full of big growth stocks.
Weekly Update February 19: Last week was interesting in the options world. While the market surged higher, option activity was mixed/quiet. Typically, if the indexes are shooting higher, I would expect options activity to be overwhelmingly bullish. Jacob attributes this lack of bullish activity to two potential issues.
Cabot Undervalued Stocks Advisor
Special Bulletin February 23: Quanta Services (PWR) and Universal Electronics (UEIC) reported fourth-quarter earnings yesterday morning. Both stocks are rated Strong Buy.
Weekly Update February 20: Now that the stock market correction finally arrived, Crista sketches out what investors can expect in the near future. No ratings changes.
Monthly Issue February 6: Today’s portfolio changes: Blackstone Group (BX) moves from Buy to Strong Buy, Delek US Holdings (DK) joins the Buy Low Opportunities Portfolio as a Strong Buy, Martin Marietta Materials (MLM) moves from Hold to Buy and Schlumberger (SLB) moves from Hold to Buy.
Cabot Stock of the Week
Weekly Issue February 20: This week’s stock is Vipshop Holdings (VIPS) from one of the hottest sectors of the market, China, and it’s got a big growth story—as well as the beginnings of a move to expand outside of China. As for our current stocks, in general, all is well, not least because of the market’s recent rebound. In fact, we’ve got several stocks hitting new highs!
Cabot Emerging Markets Investor
Bi-weekly Issue February 22: Emerging market stocks have followed the lead of the major U.S. indexes by executing a V-shaped bounce from their January/February slump and most of our stocks are in good shape. Paul adds high-flying Chinese biopharmaceutical company BeiGene (BGNE) to the portfolio, and is selling Melco Resorts (MLCO).
Cabot Benjamin Graham Value Investor
Weekly Update February 22: Home Depot (HD) and Magna International (MGA) released earnings in the past week.
Monthly Issue February 8: Azmath reviews recent market volatility, introduces a new Buy Nautilus (NLS) and moves Alphabet (GOOG) to Hold.
Cabot Small-Cap Confidential
Weekly Update February 23: Tyler has no rating changes, but gives two earnings-related updates, for Everbridge (EVBG) and BioTelemetry (BEAT).
Special Bulletin February 21: Materialise (MTLS) hasn’t been particularly strong lately, and yesterday the stock dipped down and closed just below 11.5. There should be considerable support here as the stock was at the same level last summer. But just to be safe, Tyler is moving it to Hold today.
Monthly Issue February 2: This month’s stock is Arena Pharmaceuticals (ARNA), a promising small-cap biotech with two high-potential drug candidates, each of which could develop into a billion-dollar asset.
Cabot Dividend Investor
Weekly Update February 21: Chloe’s is taking the rest of her profits in Wynn Resorts (WYNN) today, after buyers didn’t show up even during last week’s broad market rally. We’ll replace it with a new, healthier stock in next week’s issue. Until then, if you have dry powder you’re looking to put to work, Chloe thinks BB&T Corp (BBT), Broadridge (BR), Carnival (CCL), CME Group (CME) and UnitedHealth Group (UNH) all look ready to get going again as soon as the market lets them.
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.
Wall Street’s Best Investments
Daily Alert February 23: National Presto Industries (NPK) from Dividend Confidential
Daily Alert February 22: Zillow (ZG) from Canaccord Genuity Research
Monthly Issue February 21: While the market’s volatility increases the need for selective stock picking, it also presents some fantastic opportunities to buy stocks whose shares have been discounted through no fault of their own. Our contributors are pouncing on those ideas.
Daily Alert February 21: RSP Permian (RSPP) from Energy & Income Advisor
Daily Alert February 20: Ollie’s Bargain Outlet (OLLI) from Capitalist Times
Daily Alert February 20: Sell PTC Inc. (PTC) from Capitalist Times
Daily Alert February 19: Nautilus (NLS) from Cabot Benjamin Graham Value Investor
Wall Streets Best Dividend Stocks
Daily Alert February 23: Boston Properties (BXP) from Barclays Capital Equity Research
Daily Alert February 22: Corus Entertainment (CJR-B.TO) from Income Investor
Daily Alert February 21: Wheaton Precious Metals (WPM) from Adrian Day’s Global Analyst
Daily Alert February 20: Preferred Apartment Communities (APTS) from The National Investor
Daily Alert February 19: Hi-Crush Partners LP (HCLP) from Jack Adamo’s Insiders Plus
Daily Alert February 19: Sell ConocoPhillips (COP) from Jack Adamo’s Insiders Plus
Monthly Issue February 14: Nancy’s featured stock today is Foot Locker (FL). Boosting the positive feelings for the stock is the outlook for retail, in general, due to tax cuts, a growing economy, and an improved job market—all of which contribute to optimism on the part of consumers.
This Week’s Q&As
Cabot’s Best Marijuana Stocks
Question: I’m pretty well invested in marijuana stocks across the U.S. and Canada. I understand why the U.S. is down, but not why also Canada? What are your thoughts, please? Thanks as always. Am so grateful for your personal responses.
Tim: I have two answers to your question.
1. The stock market is global.
2. Recreational legalization in Canada has just been delayed at least a month (August) and possibly longer
However, knowing this information won’t really make you a better investor, because there are so may other factors that move the stocks, many of them unquantifiable human emotions like fear and greed. The only way to judge the effects of ALL the information is to watch the stock charts (which you are already doing) and then you need to trust the charts more than any other factor.
Question: If you could only afford to buy 5 of the 10 best marijuana stocks in your report do you have a top 5 that you would recommend?
Tim: Five is an absolutely fine number of marijuana stocks to buy; you don’t need all 10. But I can’t choose the five “best,” that’s up to you. As you choose five, you should diversify among business models. Don’t choose five growers—maybe three growers and two others. And then look at the charts carefully. By my measurement, the current correction remains in force and still has the potential to take these stocks lower. So take your time. Maybe buy one now, and then see how it goes, adding more only when the risk of decline is lower.
Cabot Undervalued Stocks Advisor
Question: What should I do with my Qualcomm (QCOM) shares?
Crista: Last November, Broadcom (AVGO) offered to buy Qualcomm (QCOM) for the equivalent of $70 per share. Then the bid was lowered this week! Upon the original merger announcement, QCOM shares immediately shot up toward $70. That’s the moment that I would have sold my shares of QCOM, and moved on to another potential capital gain opportunity. (The logic there is that you already achieved the goal with QCOM—you maximized all reasonably-expected capital gains, so there was no more upside in the coming months.)
I would personally sell those shares today and never look back.
As a stock analyst, the next thing that I will do is wait for the companies to finally combine and begin reporting quarterly results. IF the future earnings growth projections reveal attractive numbers, THEN I will stare at the rest of the numbers, ratios and price charts to determine whether AVGO is an undervalued stock worth purchasing. That will, of course, be many months from now -- perhaps a year or more.
Question: Is Stericycle (SRCL) a “falling knife” or a steal in the making? My firm works with dozens of hospitals, and Stericycle is everywhere. Their free cash flow is good, too.
Crista: Stericycle disappointed the market with its fourth quarter results and 2018 outlook. The company is apparently in the midst of a turnaround plan, and the market is not liking the progress, thus far. The basic numbers (EPS, debt, etc.) are not horrendous, but not enticing, either.
I would personally pass on SRCL. There are plenty of energy and biotech stocks with strong fundamentals that offer huge upside as they travel back to their January highs, so that’s where I would look for near-term capital gains.
Cabot Small-Cap Confidential
Question: At the moment, Materialise (MTLS) is below 11.5. What do you think?
Tyler: I think hold on. Hopefully you saw my Special Bulletin this morning moving the stock to Hold. I think it should walk higher into earnings, then will trade depending on how the report goes. But in the meantime, even though the stock is doing OK today, I think best to be a little conservative here. At least until the chart looks more constructive.
Cabot Dividend Investor
Question: I constantly hear as interest rates rise bonds prices fall. Yet you are recommending the purchase of the Guggenheim BulletShares for 2018 rule 2021 at what appears to be generous yields 4.8 to 1.8%. My question is why are these bonds being recommended if interest rates are expected to rise?
Chloe: The BulletShares are unique because they have defined maturity dates like individual bonds. The 2018 fund, for example, holds debt that is maturing this year (or that is likely to be called this year). When the holdings mature, Guggenheim collects the par value of the bond, regardless of what price the bond was trading at before maturity. That’s why these funds will preserve their value even in a rising rate environment. (The longer-dated ETFs may decline temporarily when maturity is still a few years away, but if you’re holding them as part of a bond ladder and don’t need to sell them prematurely it won’t affect you.)
Question: It seems as many of the individual stocks have had nice increases in value. Purchasing now would put me at the top of the market. Your thoughts.
Chloe: As for whether it’s too late to buy some of our holdings, we always say that the best way to find a stock that’s likely to go up is to buy a stock that’s already going up. For example, we have a 25% profit in CME group, but it’s still rated Buy. If you’re hesitant to buy it now because you feel like you’ve already missed out, consider that when we bought CME in October, it was already up 150% over the past five years. No one can spot a top until it’s in the rear view mirror.
Wall Street’s Best Investments and Wall Street’s Best Dividend Stocks
Question: Thanks Nancy for your great recommendations—I have enjoyed reading your newsletters and daily alerts. A question on this pick on Zillow: there are two symbols actively traded for Zillow: Z and ZG. What is the difference between them? Which one is better to invest?
Nancy: In August, 2015, Zillow split its stock to create a non-voting C share. That now trades under the old Z symbol, and the A (voting) shares trade under ZG. Most investors generally go for the voting shares, so that you have some say in the direction of the company.
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