Please ensure Javascript is enabled for purposes of website accessibility
Cabot Prime Pro Logo
Cabot Prime Pro

Cabot Prime Pro Week Ending July 16, 2021

Cabot Prime Pro Week Ending July 16, 2021

Stock Recommendation Tracker

The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any changes to our recommendations over the previous week. We include this table at the bottom of the Weekly Summary, and provide a link here at the top to the Stock Recommendations Tracker.

Cabot Weekly Review (Video)

In this week’s stock market video, Mike Cintolo talks about the market’s turn for the worse—while the mega-cap indexes look fine, there’s lots of damage under the surface, especially among growth titles. That’s keeping Mike cautious, though he’s not throwing in the towel, as most leaders are pulling back normally so far—the onus is on the bulls to show up, but if they do, there are still a decent number of setups as we head into earnings season. Stocks mentioned include CRWD, DOCU, NET, NVDA, MRVL, SHOP, CROX, PYPL and CVNA.

UPCOMING CABOT EVENTS:

Cabot Micro-Cap Insider Member Call

FREE WEBINAR FOR PRIME MEMBERS ONLY: July 15, 2021 Sign up now.

How Government Spending Can Turn Into Investment Gains

FREE WEBINAR FOR PRIME MEMBERS: July 22, 2021 Sign up now.

Advisory Services

Cabot Growth Investor

Bi-weekly Issue July 15: Because most of us are long-only players (focusing our time looking at what to buy, not short), we usually think of things from the perspective of buyers. There’s nothing wrong with that, per se—a lot of my commentary and analysis is focused on whether or not we’re seeing big, institutional buyers show up. Especially at key levels, such evidence is vital; when a stock is trying to break free of a multi-month range, for instance, the volume surrounding the liftoff is one of your best indicators of whether the move will hold.

Special Bulletin July 14: Growth stocks and the market have remained tricky and challenging, and so far this month we’re beginning to see the sellers show up again—while big-cap tech has held up, many glamour names (and indexes) are coming under pressure. We’ve been nearly half in cash and aren’t eager to sell wholesale, but we’re also not going to hold and hope. Tonight, we’re pulling the plug on our half-sized position in Roblox (RBLX), which cracked support today, while placing Progyny (PGNY) on Hold. That will leave us with around 53% in cash.

Bi-weekly Update July 8: The market wobbled today, which put our Cabot Tides back on the fence. As for growth stocks, there’s still wobbly action, but there’s also many names that continue to improve and set up. We’re more optimistic than not, but tonight we’ll stand pat and see how the next few sessions go—ideally, we get a controlled pullback or rest that presents some solid entry points, but if the selling accelerates, we may be forced to prune a name or two. Tonight, we have no changes (~47% in cash), but we’ll be on the horn if that changes in the days ahead.

Cabot Top Ten Trader

Movers & Shakers July 16: If all you own is the S&P 500 or the Nasdaq, this was another relatively quiet week—as of this morning, the S&P is about flat, and the Nasdaq is off less than 1%. But that action masks what was a lot of turmoil under the surface: Mid-caps (down 2%) and small caps (down 3.5%) were hit hard, and the damage was acute among growth stocks, with things like the Russell 2000 Growth Fund (IWO) down 4.7% and the Ark Innovation Fund (ARKK) off more than 7%!

Weekly Issue July 12: The news-driven environment featuring incessant rotation and crosscurrents remains in effect; throw in the fact that breadth is narrow (about half of stocks are still below their 50-day lines despite the S&P 500 and Nasdaq being near new high ground; broad market indexes are chopping sideways) and earnings season is approaching and we think it’s best to continue going slow and aim to buy on weakness. Mike’s Top Pick is Arista Networks (ANET), whose stock is in a smooth uptrend as growth picks up steam.

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.

Cabot Options Trader Basic & Pro Trade July 14: Roll Existing Position: Against CGC Stock, Buy Back the July 27.5 Call, and Sell the August 25 Call (exp. 8/20).

Cabot Options Trader Basic & Pro Stocks on Watch July 12: In late March Chubb (CB) made a takeover offer of $23 billion, or $65 a share, for peer Hartford Financial (HIG). At the time of the offer HIG was trading at 57, and its stock quickly spiked above the offer price on this news, to 68.

Cabot Options Trader Pro Weekly Review July 12: Long positions: CLF, KWEB, CSCO, GPS, CGC, BSX. Bearish Positions: SPY

Cabot Options Trader Basic Weekly Review July 12: Another week, another market advance. However, the gains didn’t come without a fight from the bears. Thursday saw one of the weakest days for the indexes in over a month, and the bears thought they might see some follow through on Friday. But the “buy the dip” mentality, that has dominated the market for months, if not years, stepped up Friday with a vengeance and pushed several of the major market indexes to record highs.

Cabot Undervalued Stocks Advisor

Weekly Update July 14: In the Boston area, we’ve had nearly 8 inches of rain so far this month. This 0.7 inches-per-day average compares to the 0.6 inches-per-day average for a monsoon rainforest, the type found in the tropics along the equator. Sounds a lot like the dampened mood of the stock market. Compared to the crisp 19% return for the average stock in the first half of the year, the 1% return so far this month seems soggy. Part of the reason is that there are too many mixed macro signals – rising inflation but falling bond yields, murkiness over whether the Biden administration’s large spending proposals will be passed, surging Covid cases despite what appeared to be the end of the pandemic, incredibly strong economic and profit growth which may be rolling over.

Monthly Issue July 7: At the mid-point in the year, the investing environment seems to be exceptionally favorable. The U.S. economy is recovering robustly with promises of ongoing strength as the jobs market recovery accelerates and as international economies more fully reopen. Earnings growth for the S&P 500 this year is estimated to be 35%, followed by 21% growth in 2022. Not only are these growth rates exceptionally healthy, but analysts seem to be underestimating the strength. S&P 500 earnings estimates typically decline as a year progresses, but over the past three months, the consensus estimate for 2021 earnings of $191 has been increasing – and by a record amount (+9%).

Cabot Stock of the Week

Weekly Issue July 12: Tim’s featured stock Floor & Décor (FND), is currently one of our favorite retail cookie-cutter stories out there, and it has all the characteristics of a stock that should do very well over time. Fundamentally, the big idea is that the company is upending the hard-flooring retail industry; at the end of Q1, Floor & Décor operated 140 warehouse-style stores that have everything professionals and DIYers need. Whereas the typical competitor might have a couple hundred different products available in-house, Floor & Décor has 1,400 or so, allowing customers to see/touch/feel/buy whatever they want right away.

Cabot Explorer

Bi-weekly Update July 15: After last weekend’s successful space flight of Sir Richard Branson, one would have expected Virgin Galactic (SPCE) stock to soar on Monday. Instead, it lost altitude. Sure, the announcement of a $500 million secondary offering leading to dilution was not welcome news, but part of the reason the stock fell is that investors asked, “what next?” and sold some shares. What comes next is indeed the right question since markets always look forward.

Bi-weekly Issue July 8: The Uber of China, DiDi (DIDI) has been in the headlines and is caught up in a power play over data security and defying authorities in Beijing. All this highlights the fact that Chinese stocks listed in the U.S. should be considered speculative as they are caught between American and Chinese regulators. Carl’s new recommendation Porsche Automobile Holding (POAHY), has a controlling interest in Volkswagen. And with typical Teutonic complexity, Porsche, in turn, is one of the many divisions of this auto giant, along with VW and Audi, and owns prestigious names including Bentley, Lamborghini and Bugatti. Porsche owns 31.4% of Volkswagen equity, but has 53.3% voting control of the company.

Cabot Small-Cap Confidential

Weekly Update July 15:

Clear

The big picture this week is much the same as last week. In fact, the S&P 600 Small Cap Index closed today just a fraction off where it closed last Thursday. The same applies to the Nasdaq, while the S&P 500 is up modestly. Investors continue to be focused on the inflation picture, the Delta variant, the current administration’s economic policies and, of course, earnings season. Given that earnings reports are a single event in time this is where attention will be focused in the coming weeks.

Monthly Issue July 1: Tyler’s new recommendation On24 (ONTF), is a $1.6 billion market cap company that offers a cloud-based digital experience platform to facilitate business-to-business (B2B) sales. Despite its small size, On24 is the leading provider of purpose-built solutions for this market, which is worth roughly $40 billion. Organizations use the platform to deliver interactive webinar experiences, virtual event experiences and multimedia content experiences in either live or on-demand formats.

Cabot Dividend Investor

Monthly Issue July 14: Remember income? It used to be so easy. But good yields from traditional investments have gone the way of the eight-track tape. A 10-year Treasury bond pays just 1.4%. A three-year CD pays less than 1%. A 20-year AAA-rated municipal bond pays 1.2%. After taxes and inflation, you don’t even break even. And that’s not to mention the fact that bond prices can plummet if interest rates rise. Tom’s featured stock is Blackrock Enhanced Capital and Income Fund (CII).

Weekly Update July 7: There is a Fed meeting today. The ultimate oracle of wisdom will bestow their current thinking upon anxious traders. The ground-breaking event may determine the market trend for the next couple of days. Last time the central bankers met, they blind-sided traders with the shocking revelation that they might start raising rates in two years. Wall Street people are on the edge of their seats, waiting to see if there is another tectonic-plate-moving declaration this month. We’ll see.

Cabot Marijuana Investor

Weekly Update July 7: Green Thumb (GTBIF) announced the closing of its acquisition of Dharma Pharmaceuticals, which gets it one of the five licenses in Virginia as well as an operating production facility. The first medical marijuana dispensary opened in Virginia last August, and home growing and possession of marijuana for adult use became legal in Virginia on July 1, but over-the-counter adult-use sales won’t begin until January 2024!

Monthly Issue June 30: In the early years of marijuana legalization in the U.S., when the main action was in Colorado and the three West Coast states, there were no major multistate operators (MSOs). Instead, hundreds of small-time businesses sprang up, and in the competitive environment that followed, many found it difficult to compete with the established illegal market, which didn’t pay taxes. But many survived, and because of that, those early states still have a very fragmented industry. Today, as the country is perhaps halfway (a very rough guess) toward national legalization, the state of Michigan, where legal adult-use sales began in December 2019, provides some interesting data.

Cabot Early Opportunities

Special Bulletin July 6: Today we’re going to part ways with two positions that we added in May and which we’ll make a little more than 10% on. Both positions were trading higher a couple weeks ago but have lost some momentum recently. Sell WHD and APP.

Monthly Issue June 16: The Nasdaq, which fell 9% in the first half of May, has recovered and hit an all-time closing high early this week. Even the ARK Innovation ETF (ARKK), which felt immense pain from February through March, has begun to look better and is up 18% over the last four weeks, though it is still 26% below the all-time high from February. Tyler’s Top Pick Telus International (TIXT) is a customer care company that serves enterprise clients and their digital customer experiences by designing, building and managing engagement and HR tools that reach end consumers. Examples of services it provides on behalf of clients are sales, after sales support, transaction processing and complaint management.

Cabot Profit Booster

July Expiration July 15: Investors are being challenged with some of the strangest stretches in market history. On the surface, the market looks to be in great position. Stock indexes are hitting or are near record highs, but there is a lot of commotion below the surface. As it stands, roughly 40% of all stocks within the S&P 500 are below their 200-day moving average, which typically indicates bear market action. However, technology has been incredibly strong, especially the mega-cap stocks like AAPL, MSFT, AMZN, etc. And 40% of the S&P 500 is comprised of technology stocks, hence the current 17.6% return in 2021.

Weekly Issue July 13: This Friday marks the expiration of July options, and if everything holds steady, our calls in MRO, GPRO and SGMS will expire worthless. As a result, we will maximize the call premium on each position. Per usual, on Monday Jacob plans to sell his shares in each position and start the search for more opportunities. However, we still have a few trading days left in the week, so expect to hear from him Thursday. Jacob’s new stock recommendation is Limited Brands (LB).

Cabot Micro-Cap Insider

Special Bulletin July 15: MamaMancini’s (MMMB) began trading on the Nasdaq this morning, and the stock has skyrocketed with good volume. Since the stock has reached my price target of 3.80 and has good volume, let’s take this opportunity to sell and book a profit of ~116%.

Special Bulletin July 15: As the Cabot Micro-cap Insider recommendation list has swelled in size, Rich is realizing that he has too much capital allocated to previously disclosed ideas. As such, he is going to trim his exposure to Hopto (HPTO), Greystone (GLGI), and FlexShopper (FPAY) in order to make room for new ideas.

Monthly Issue July 14: Rich’s new recommendation Performant Financial (PFMT) has a fast-growing healthcare business which is being obscured by its declining legacy student loan recovery business. The healthcare business is poised to grow 30%+ for the foreseeable future. Despite its fast growth, the company is trading at a big discount to a competitor which was recently acquired. My price target implies ~61% upside, but longer term, this could be a multi-bagger.

Weekly Update July 7: Just last week, one of Rich’s favorite follows on twitter, Connor Haley, disclosed a new, high conviction idea: IDT Corporation (IDT). That’s the reason IDT jumped into the mid-40s last week. Here’s a link to IDT presentation. His base case price target is $88, double our $44 price target. After reviewing his detailed work, especially his analysis of IDT’s point of sale segment, NRS, Rich believes our price target is far too conservative. NRS has the ability to increase penetration considerably while also increasing average revenue per user. This should result in continued explosive revenue growth over time. As such, he is increasing our buy limit for IDT to 45.

Cabot Income Advisor

Weekly Update July 14: It’s another week of more of the same. The three major indexes are very near the all-time highs, but still not really going anywhere. The market is boring for a couple reasons. One reason is the summer malaise. The same lackluster attitude investors have about life in the summer, they have about the market. Activity tends to dry up, at least relative to the rest of the year. The other reason is earnings. Reports will start coming in and investors are waiting to see what earnings bring.

Monthly Issue June 23: The sideways market finally got some action. It went the wrong way. But it showed signs of life nonetheless. Last week, the Dow Jones Industrial Average posted its worst week since last August, down more than 3.4%. The main culprit was the Fed. At last Wednesday’s meeting, the central bank announced its intention to start hiking the federal funds rate – in two years. That is sooner than the market had anticipated. And investors freaked.

Cabot Turnaround Letter

Weekly Update July 16: Covering recent news and analysis for our portfolio companies and other topics relevant to value investors.

Monthly Issue June 30: Major pharmaceutical stocks are clearly not “the place to be” in today’s market. Investors much prefer fast-growing yet expensive technology (including biotech) and cyclical re-opening stocks. After years of stagnant share prices while the S&P 500 surged, the group now sells at about a 40% price/earnings discount to the market, its largest in decades and well below the historical premium valuation. Bruce’s has one buy recommendation: Organon & Co. (OGN).

Ask the Experts

Cabot Profit Booster

Question: In setting up a Covered Call, I have the following questions: (1) Do you use “Market Order” or “Limit Order”. If you recommend the latter, what is the criteria to select one. (2) Do you use “GTC” or “Day”. (3) Do you use “Delayed” or subscribed to “Market Data Manager”.

Jacob: (1) I typically use a limit order when selling calls, especially if a wide bid-ask spread exists in the call strike I’m interested in selling. Not really the case with F, but for future situations. (2) It depends on your time horizon for getting into the trade. I prefer to use a day order and reestablish my entry the following day if I’m not filled. (3) I always use live quotes...always. Delayed quotes don’t really help me since they are often delayed by 15 minutes...and when trading options that can make a huge difference in the price of my call options. And to pay an extra $15 a month for live quotes (approximately) this may save you some money in the long run.

Quarterly Cabot Analyst Meeting

The recording of the Cabot Prime Members Meeting with the Analysts from April 21, 2021 is now available for you to listen to at your convenience—click here for access. This private call with our analysts is one of your exclusive Cabot Prime Pro member benefits.

Stock Recommendations Tracker

The table below lists all of the stocks held in any Cabot portfolio.
Updated or revised recommendations from the past week are in purple text.
Stocks added to a portfolio are highlighted in green text.
Closed stock positions in the past week are highlighted in red text.

StockCabot Small-Cap ConfidentialCabot ExplorerCabot Growth InvestorCabot Marijuana InvestorCabot Stock of the WeekCabot Undervalued Stocks AdvisorCabot Dividend Investor
ABBVBuy
ACCDBuy
AGCBuy
AGNCBuy
ARCOBuy
ARNABuy
ASMLBuy
AVGOBuyBuy
AVLRBuy
AVVIYBuy
BIPBuyBuy
BMYStrong Buy
BSCLHold
CBTHold
CCHWFSold
CGCSee Advisory
CIIBuy
CRLBFSee Advisory
CRNCBuy
CSCOBuy
CURLFSee Advisory
CVXHold
DLRHold
DOCUBuy
DOWHold
DVNHold
EPDBuy
EVBGBuy
FIVEHoldHold
FNDBuyBuy
FNKOSell
FSRBuy
FVRRHold
GMHoldHold
GOLDBuy
GRWGSee Advisory
GTBIFSee Advisory
HTHTSell
HUBSBuy
IIPRSee Advisory
IBMBuy
INSPHold
JUSHFSee AdvisoryHold 2/3
KOBuy
KRNTBuy
LLYHold 2/3
MRKBuy
MRVIHold
MRVLBuy
NEEBuyBuy
NETHold 1/2Buy
NVCRBuy
NVDABuy
OBuy
OGNBuy
OKEBuy
ONTFBuy
OTTRBuy
PDDHold 1/2Hold
PGNYHoldBuy
PGXHold 1/2
PLTRBuyBuy
POAHYBuy
PRCHBuy
QCOMBuy
QTWOBuy
RBLXSellHold
RGENBuy
RVLVHold
SEBuy 1/2Buy
SLBBuy
SPCEHold 1/2
SPTHold
SSOBuy
STBuyBuy
STAGHold
TAPHoldBuy
TCNNFSee AdvisoryBuy
THBRFBuy
TPBSee Advisory
TRSSFSee Advisory
TSLABuy
TSMBuy 1/2
USBBuy
VLOBuy
VZHold
XELBuy
XPSold