Cabot Prime Pro Week Ending January 26, 2018
Cabot Quarterly Market Report
4Q 2017 Report January 18: (emailed to Prime Pro 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, Mike Cintolo is sticking to his bullish view, though he does point out that he’s seeing more potholes below the surface—not unusual given the recent run and that we’re in the heart of earnings season. After some advice on forming a plan for your extended stocks into earnings, Mike reviews a bunch of stocks from a variety of industries, highlighting potential buy points and stop levels.
Cabot Wealth Summit Registration
Register here for the August 15-17, 2018 Summit at special pricing for Cabot Prime Pro members.
Cabot’s 10 Best Marijuana Stocks
Special Update January 8: (emailed to Prime Pro members) It’s been only 11 days since Tim’s last update, but circumstances compel him to write another.
Cabot’s 10 Best Stocks to Buy and Hold for 2018
Annual Issue January 4: Crista Huff, Chief Analyst of Cabot Undervalued Stocks Advisor, selects 10 stocks to buy in January and hold all year. You received your copy via email on January 4, 2018.
Cabot Growth Investor
Special Bulletin January 25: We’re selling the rest of our Universal Display (OLED) shares tonight, taking the rest of our profit and looking elsewhere.
Bi-weekly Update January 24: Mike has no new buys tonight but he has three ratings changes—PayPal (PYPL) and Shopify (SHOP) are going back to Buy, while Universal Display (OLED) is moving to Hold. Our cash position remains near 15%.
Other Stocks of Interest January 19: Follow ups to stocks featured August 16, 2018 (issue 1374) to January 17, 2018 (issue 1385). 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 17: Mike writes about a handful of blastoff indicators and bullish market studies that tell us the odds strongly favor higher prices down the road. He also mentions one “sector” that’s reemerged after resting for a few months, touches on a few stocks for your watch list and dives into all of our holdings. One rating change: Facebook (FB) from Buy to Hold.
Cabot Top Ten Trader
Movers & Shakers January 26: not much has changed with our outlook (short-term strong, but extended; long-term bullish) or recommended positioning (heavily invested). You should continue to ride your winners and aim to make hay while the sun shines. Buy ideas: Charles Schwab (SCHW), Freeport McMoRan (FCX), G-III Apparel (GIII), Netflix (NFLX) and SVB Financial (SIVB).
Weekly Issue January 22: This week’s Top Ten has something for everyone, but our Top Pick, ASML Holding (ASML), is a stock that just emerged from a consolidation following a great earnings report.
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.
Stocks on Watch January 26: Jacob is watching the trading on Xilinx (XLNX) and Vulcan Materials (VMC).
Trade Alert January 26: Sell Half Your Remaining Corning (GLW) May 33 Calls for $2.20 or more.
Trade Alert January 23: Sell Half your Remaining Union Pacific (UNP) January 120 Calls for $26 or more OR Sell Half your Remaining Union Pacific (UNP) January 120/145 Bull Call Spreads for $13 or more.
Cabot Undervalued Stocks Advisor
Special Bulletin January 25: Buy Baker Hughes, a GE Company (BHGE), Southwest Airlines (LUV) moves from Buy to Strong Buy, and additional stock notes on Commercial Metals (CMC), General Electric (GE), Mattel (MAT) and Valero Energy (VLO).
Weekly Update January 23: Alphabet (GOOGL), BB&T (BBT), Bank of America (BAC) and Morgan Stanley (MS) move from Strong Buy to Buy, Chipotle Mexican Grill (CMG) moves from Hold to Buy, Schlumberger (SLB) moves from Strong Buy to Hold and XL Group (XL) 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 23: Today’s recommendation is LCI Industries (LCII), a little-known but mature industrial company with great growth prospects. As to our current stocks, all is well! The only change is a downgrading of Wynn Resorts (WYNN) simply because the stock has got so far ahead of its moving average.
Cabot Emerging Markets Investor
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 January 25: Updates on Magna International (MGA), Alphabet (GOOG), Apple (AAPL) and Gentex (GNTX).
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 Small-Cap Confidential
Weekly Update January 26: It was another good week for small caps, and the S&P 600 Small Cap Index keeps grinding higher. The 1% gain over the past week has the index well above its moving average lines. One rating change: Everbridge (EVBR) to Hold.
Monthly Issue January 5: This month’s candidate is Instructure (INST)—another software stock but not a high flyer. Rather, this company is still scooting just below the radar, and trades at a big discount to most of its peers. When you value it based on growth, it’s downright cheap—but valuation isn’t why we’re buying it. One rating change: Primo Water (PRMW) moves to Hold.
Cabot Dividend Investor
Weekly Update January 24: American Express (AXP), BB&T Corp. (BBT) and Wynn Resorts (WYNN) all reported estimate-beating results this week.
Monthly Issue December 20: Chloe adds American Express (AXP) to the Dividend Growth Tier. She also reviews the buys and sells of 2017, and provides updates on all our holdings.
Wall Street’s Best Investments
Daily Alert January 26: Adient (ADNT) from AlphaProfit Sector Investors’ Newsletter
Daily Alert January 25: Biogen (BIIB) from Canaccord Genuity Research
Daily Alert January 24: D.R. Horton International (DHI) from Dow Theory Forecasts
Daily Alert January 23: PRIMECAP Odyssey Growth (POGRX) from The Chartist Mutual Fund/ETF Letter
Daily Alert January 22: Stryker Corporation (SYK) from Sound Advice
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 January 26: KKR Real Estate Finance Trust (KREF) from Barclays Capital Equity Research
Daily Alert January 25: Williams Company (WMB) from The Personal Capitalist
Daily Alert January 24: Xinyuan Real Estate (XIN) from The Wealth Advisory
Daily Alert January 23: The Interpublic Group of Companies (IPG) from Cabot Undervalued Stocks Advisor
Daily Alert January 22: DoubleLine Floating Rate (DBFRX) from Bob Carlson’s Retirement Watch
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 Growth Investor and Cabot Top Ten Trader
Question: This morning I saw a Lam Research (LRCX) and some other chip stocks gap up on earnings but quickly sell off. Is this type of action a sell signal? A one-day thing? Or not meaningful at all?
Mike: Any one-day move (barring a giant, 15%-plus advance or drop) usually shouldn’t be read too much into—sometimes a day is just a day. That said, it’s really all about the overall chart—whether the stock is strong or weak before the move, whether it’s early stage or late stage, how volatile the stock is—all of that plays into the interpretation.
In LRCX’s case, it’s had a HUGE run, advancing from a breakout level of 82 or so in mid-2016 to 219 around Thanksgiving of last year, which was followed by a huge-volume dip. Now, as the stock made its way back to that high, it reversed on earnings. That big picture provides some (more bearish) context to the one-day action.
All that said, I’m not overly bearish on LRCX here—I’m more neutral than anything. If you own some with a good profit, you could probably hang on with a either a tight (near 194) or loose (175) stop. But the overall picture probably would have me searching for better-looking buying opportunities.
Cabot Stock of the Week
Question: I’m a brand new subscriber, concerned that 12 of the 13 “Buys” have earnings in the next 10-15 days. How does a new subscriber mitigate the inherent risk of “buying” from this list? Even the new addition has earnings due.
Tim: The simplest course is simply to defer buying any stock until after it has reported earnings. How long you make the “don’t buy” period is up to you. For me it’s very short—maybe 2 or 3 days.
In other words, for me there are more important factors than earnings announcements. Plus, I believe that in the long run, the positive and negative surprises from earnings announcements even out (at worst). If you’re buying better-than-average stocks, as we are, the balance should shift to the positive.
Still, as a brand new subscriber, you should not jump in and buy all the Buy-rated stocks immediately. In any market, at any time, it’s always wise to practice time-diversification as well as industry diversification and style diversification. So start slowly, buying one or two stocks. As profits accrue, buy some more. Investing is a marathon, not a sprint.
Question: Well, GDS Holdings (GDS) is up 30% since your 1/16/18 “Sell” recommendation. Ouch! Also, how long should I wait to buy TDOC. The graph doesn’t make it look real promising.
Tim: I love your first question (it’s really a statement), so I’m going to spend a lot of time on it.
One of the signs of a mature bull market is when people begin to confuse lost opportunity with lost money.
For the record, I recommended GDS on December 12 and recommended selling it on January 16. If you acted on both recommendations on the following day and got the average price, you earned a profit of 7%—in a little more than a month. In an average year, that’s more than pretty good.
Obviously, if I had simply held on—maybe you did—I’d have done much better. As you say, I could have been up 30% in a few days!
But missing out on a 30% return is definitely not “Ouch!” It’s simply what happens when you follow a group of time-tested rules—rules that in the long run will bring success, and can provide great comfort in all markets.
You may look at my sell recommendation and say, “Man, he was wrong,” but that’s not the point. The goal is not to be right or wrong. The goal is to make money while controlling risk and that is what I did.
You may have heard of an investor named Ned Davis. In 1991 he wrote a book titled “Being Right or Making Money.” You can buy the third edition on Amazon. I highly recommend it.
As to TDOC, it’s a slower mover than GDS (and nothing may happen in the short term), but I like the setup here a lot. It’s been trading in a range between 28 and 38 for seven months, and is now in the low end of the range (thus lower-risk), but ripe to break out to new highs.
Cabot Small-Cap Confidential
Question: Sell or hold Bioverativ (BIVV) on the news of acquisition?
Tyler: I actually don’t follow BIVV so I’m not sure I’m the man to answer your question. That said, with SNY buying it, I’d say the answer is relatively simple. It comes down to 1) do you want to own SNY (I’m assuming BIVV shares will convert to SNY, but you should double check this)? and 2) do you think a higher bid from somebody else is coming? SNY will start a tender offer (after certain conditions are met), which sounds like it will begin in February. While both boards have approved it, it’s not a done deal.
Hope this little bit of guidance helps. And either way, wow, what a nice day for BIVV shareholders!
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