Cabot Prime Pro Week Ending January 5, 2018
Cabot Weekly Review
In this week’s stock market video, Paul Goodwin, chief analyst of Cabot Emerging Markets Investor, takes a look at the market and mentions a few indicators, like the 7.5% rule, that point to the market strengths in weeks and months to come. Paul also discusses a few stocks that he keeps on his watch list.
Cabot’s 10 Favorite Low Priced Stocks for 2018
Annual Report December 14: The report was sent to you via email on December 14. The goal with these stocks is generally to capture a shorter-term rally during the next two to eight weeks. Historically, most of these types of stocks enjoy something of a pop higher, and there are usually one or two that continue to trend for a few months (assuming the market remains in good shape).
Cabot’s 10 Best Marijuana Stocks
Special Update December 28: (emailed to Prime Pro members) Tim’s general advice is this: traders should take profits now—especially in the most extended stocks—and plan to get back on board when heads are cooler and risks much lower. Investors, assuming you invested no more than 10% of your assets in the sector, as he originally recommended, can take partial profits in the biggest gainers and then sit tight.
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
Other Stocks of Interest January 5: Follow ups to stocks featured August 2, 2018 (issue 1373) to January 3, 2018 (issue 1384). 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 3: Mike remains bullish. The Model Portfolio is more than 90% invested and off to a good start this year. Mike write about our newest addition, Diamondback Energy (FANG) and the excellent relative strength it’s shown in recent months; he thinks it’s a liquid leader of the new energy rally. He also writes about some recent IPOs, other stocks we’re watching and, of course, all our recommended names.
Cabot Top Ten Trader
Movers & Shakers Weekly Update January 5: We’re in a bull market, but there are signs that stocks are a bit overheated right now. Buy ideas: DXC Technology (DXC), Grubhub (GRUB), Neurocrine Biosciences (NBIX) and Splunk (SPLK). On the partial profit side, Mike thinks it’s a good idea to let go of a few shares of some stocks that have kited higher in recent weeks, including any of the refiners like PBF Energy (PBF 37) and Valero (VLO 94), or a coal stock like Peabody Energy (BTU 40).
Weekly Issue January 2: This week’s Top Ten has a nice mix of stocks and stories. Our Top Pick is FreeportMcMoRan (FCX), a huge commodity play that, while short-term extended, looks as if it’s just begun a major new advance after forming a very long, proper launching pad.
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.
Position Updates January 5: Several of our positions have exploded higher this week, so Jacob is again raising his stops on them. Updates on Cisco (CSCO), Fiat Chrysler (FCAU) and Union Pacific (UNP).
Trade Alert January 4: Sell Half of Remaining Etsy (ETSY) March 20 Calls for $1.85 or more.
Trade Alert January 4: Sell Half of Existing Position: Sell HALF your Corning (GLW) May 33 Calls for $2.10 or more.
Trade Alert January 4: Sell Half of Existing Position: Sell HALF your Fiat (FCAU) June 20 Calls for $2.20 or more.
Trade Alert January 3: Buy Fiat Chrysler (FCAU) June 20 Calls (exp. 6/15/2018) for $1.50 or less.
Position Update January 3: While hot money is rotating into technology, some retail stocks are falling out of favor to start the year. Etsy (ETSY) falls into that category, and is nearing Jacob’s mental stop again today.
Stock on Watch January 2: General Electric (GE) was a massive underperformer in 2017, falling from 31.65, to a low of 17.45 on Friday—in a year in which the Dow gained 25%. However, in the last two weeks and again this morning, traders have been accumulating calls, looking for a 2018 turnaround.
Weekly Update January 2: The VIX closed the week at 11, higher by 11.52%. I was somewhat surprised that the VIX stayed above 10 last week, even as the S&P 500 was near new all-time highs and ahead of a long weekend. This is a very faint red flag going into the New Year. That said, there was virtually zero big put buying all week.
Cabot Undervalued Stocks Advisor
Special Bulletin January 5: Delek US Holdings (DK ) is up 30% since joining the Buy Low Opportunities Portfolio on November 7, and it has achieved Crista’s full price goal.
Special Bulletin January 3: Nucor (NUE) moves from Hold to Buy, and moves from the Buy Low Opportunities Portfolio into the Growth & Income Portfolio; and Commercial Metals (CMC) moves from Strong Buy to 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 2: The bull market remains alive and well, with most stocks and sectors in good shape, so we’re generally letting our winners run and staying heavily invested. That said, January is often a tricky month, so with the potential for potholes and volatility, tonight’s Cabot Stock of the Week is Alphabet (GOOGL), a mega-cap growth stock that, by some measures, is undervalued. Tim thinks it has the chance to do well in the months ahead.
Cabot Emerging Markets Investor
Bi-weekly Update January 5: The iShares EM Fund (EEM) has raced past its 25-day (upper) moving average, giving us a solid buy signal from the Cabot Emerging Markets Timer that is supported by similarly strong performance from the Golden Dragon ETF. Paul has no changes to the portfolio tonight.
Bi-weekly Issue December 28: Today’s recommendation is an old friend, Melco Resorts (MLCO), which is doing a thriving business running casinos in Hong Kong and Macau. As to the current portfolio, the stocks are generally acting well, though an interesting divergence has developed; the Chinese internet giants are lagging while younger stocks are racing ahead. There are no rating changes tonight.
Cabot Benjamin Graham Value Investor
Weekly Update January 4: There were again no significant movements among our stocks in the past week, but many of our stocks went up to their fair values. Updates on Walt Disney (DIS) and Signet Jewelers (SIG), which are both rated Hold.
Monthly Issue December 14: Since the last issue, five stocks have declined and 10 gained more than 10%. Many are now at or near fair value, and eight are rated Sell or Sell a Portion. Also in this issue, Azmath recommend two new stocks, Hanesbrands (HBI) and LCI Industries (LCI) and profiles a new small-cap stock, Malibu Boats (MBUU), that’s on his watch list.
Cabot Small-Cap Confidential
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 3: Trading remained muted this week, with markets closed Monday for New Year’s Day. Wall Street began to return to work yesterday, and got the New Year off to a good start with solid gains in all the major indexes. On the flip side, some conservative high yield investments, like utilities and preferred shares, declined. Chloe has no rating changes today, but updates all her holdings.
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
Top Picks Daily Alert January 5: The Priceline Group (PCLN) from Hendershot Investments
Top Picks Daily Alert January 4: Solaris Oilfield Infrastructure (SOI) from BI Research
Top Picks Daily Alert January 3: MannKind Corporation (MNKD) from Nate’s Notes
Top Picks Daily Alert January 2: Rite Aid (RAD) from The Cheap Investor
Monthly Issue December 20: Bullish sentiment remains high, both for investors and advisors. This month’s Spotlight Stock, Texas Pacific Land Trust (TPL), is a two-pronged recommendation, as the company is benefiting from owning and selling off its land holdings, which also happen to be in one of the most profitable oil regions in the country. As Nancy explains in her Feature article, this oil basin is nowhere near depletion, so the profits should continue to roll in for many years.
Wall Streets Best Dividend Stocks
Top Picks Daily Alert January 5: Altria Group (MO) from Positive Patterns
Top Picks Daily Alert January 4: Ares Capital (ARCC) from Adrian Day’s Global Analyst
Top Picks Daily Alert January 3: Quarterhill (QTRH.TO) from Contra the Heard Investment Newsletter
Top Picks Daily Alert January 2: Signet Jewelers (SIG) from Cabot Benjamin Graham Value Investor
Monthly Issue December 13: Nancy’s Market Views contributors remain bullish, as do the Advisor and Investor Surveys she follows, and contributors continue to find investing ideas with which to stuff your stocking—in just about every sector.
This Week’s Q&As
Cabot Growth Investor and Cabot Top Ten Trader
Question: I own a few stocks that I bought during December, but none have really moved up at all. Is it a good idea to sell these laggards and buy stronger stocks?
Mike: I often get these “switching” questions—switching from one stock to another—when the market is strong, as inevitably some stocks are left behind. I personally am not a huge fan of switching, as investors end up chasing their tails, often selling stuff that’s about to take off and buying stuff that’s already had a run.
Now, if a stock has tripped your stop or loss limit, then by all means sell. But when you have some laggards (which is a good thing to be on the lookout for), I prefer just tightening your stops on all of them and then letting the stocks make the decisions for you. What you’ll often find is that one or two out of five laggards (to use an example) will hold up and get going, while the others you’ll sell for modest losses.
Cabot Options Trader and Cabot Options Trader Pro
Question: Good call on Fiat Chrysler (FCAU)—thank you! I have 20 contracts on CSCO with a profit of 55%, over $2,000, should I sell half?
Jacob: If it were me, yes, I would sell half and let the rest run for the big home run! Note: CSCO is bid higher by approximately $1 this morning, following another upgrade. You can sell your calls for a profit of 110% right now.
Question: Brilliant call on Chrysler (FCAU)! I learned something about myself. I was tracking on the 5' chart yesterday and hesitated before selling. My gut said to stay in, which I have learned to trust for some time. Well, never mind that, still beautiful all the way around.
2 Questions: When you send out the alert to sell half, are you using any other indicators? Also, what software do you use to determine Break Even Point?
Jacob: As to FCAU, my gut said don’t sell as well. But I stick to my rules and sell half and go for the home run on the balance—that way, I will never second guess myself and have found this strategy lets me trade super aggressively.
Break even is just math. If we bought the call for $1.42, and sold half for $2.20, we have a profit of $0.78. Therefore, if I wanted to figure out breakeven, I subtract $0.78 from $1.42, which equals $0.64. Our breakeven on the position is at $0.64. You will soon get an update on the position, which is now up around 110%.
Cabot Undervalued Stocks Advisor
Question: I have a good gain in Bank of America (BAC). Could you advise me on when you might take the profit?
Crista: The earnings estimates for Bank of America (BAC) continue to rise, and the price/earnings ratio (P/E) remains quite low. There’s no way that I plan to sell this stock any time soon. I’ll stay on top of the continued changes and report those in my weekly updates.
Question: My wife and I each have a 401k and have been doing well but moving into 2018, do you suggest moving into cash until a correction occurs? Are you able to suggest a few funds we could move our money into if I provide you a list of what is available in our accounts?
Crista: As you can imagine, I’m legally restricted from giving personal investment advice. However, it’s probably okay for me to reiterate the same thing I’ve been saying within my weekly update about my approach to preparation for the next stock market correction. I’ve been raising cash for several months, and I’m currently at a 31% cash position within my stock portfolio. How that works is that when I sell a stock, I reinvest some of the capital into attractive stock opportunities, and leave some of the capital in the money market fund. So it’s a gradual process, and I still get to participate in the current bull market.
Cabot Emerging Markets Investor
Question: Under Rating, when you have Hold a Half, does this mean if you own $20,000 worth of stock in that company you are saying to us consider selling ½ of your position.
Paul: I’m not sure which stock you’re referring to, but the answer depends on the stock’s portfolio history. If it’s one that we bought just a half share in to begin with, like ZTO Express (ZTO), then you should just hold that half position. If it’s a stock like China Lodging Group (HTHT), in which we bought a full position but recommended selling half in the November 30 issue, then you should indeed sell half and hold the rest.
Question: I was trying to decide whether to hold or sell Baozun (BZUN) at this point and use it as a tax write-off. It has been MOSTLY a looser for me. I am down ~7% for 4-month purchase. The company has been a mystery for me but many say to hold longer for a turnaround. Perplexed ...
Paul: I sold BZUN back in June, taking a small loss and missing the July-September rally that doubled the price. Since that rally, BZUN has been a sleeper; it’s now trading sideways for its fifth straight month.
Baozun’s business model should be able to thrive even as Alibaba and JD.com dominate the sales volume side of the equation. By promoting and marketing brands, the company helps manufacturers rather than retailers or e-tailers. But right now, I’m not all that enthusiastic until I see signs that investors are ready to support BZUN.
If you wound up holding on to BZUN, there’s no big objection to holding on to see if it can achieve a breakout. But keep a tight stop in place (maximum 10% loss limit, for example) and don’t let the stock keep you out of more profitable positions.
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