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Cabot Prime Pro Week Ending June 23, 2017

Cabot Prime Pro Week Ending June 23, 2017

Cabot Wealth Summit

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Cabot Weekly Review

In this week’s market video, Paul Goodwin talks about the ambiguous state of the market. The major indexes are sitting above their 25- and 50-day moving averages, but the indexes have experienced some jolts in recent weeks and the number of new lows on the NYSE has been above acceptable levels for five days. Tech stocks, which have been leading the market for months, have also stubbed their collective toes. In short, while the general health of the market is positive, there are plenty of things to worry about. It’s a time to tend to the charts of the stocks you own and take new buying slow. Paul also discusses a few stocks that are holding up or setting up well.

Cabot Growth Investor

Bi-weekly Issue June 21: Our trend-following indicators are both positive, and the vast majority of leading growth stocks are holding support. Thus, we remain mostly bullish, but we’ll simply take our cues from the market going forward. Mike gives his latest thoughts on each of our stocks and takes a deep dive into the issue of handling big winners—a skill that few practice, but done right, it will make a huge difference in your portfolio.

Other Stocks of Interest June 23: Follow ups to stocks featured January 18, 2017 (issue 1359) to June 21, 2017 (issue 1370). 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 June 23: There’s still far more bullish evidence than bearish evidence, and thus, we remain mostly bullish. You should be holding your strong performers (taking the occasional partial profit on the way up) and taking swings at some new names, preferably on dips. Buy ideas: Activision Blizzard (ATVI), Alibaba (BABA), Marvell Technology (MRVL), Paycom Software (PAYC), Regeneron Pharmaceuticals (REGN) and Vertex Pharmaceuticals (VRTX).

Weekly Issue June 19: This week’s Top Ten has another batch of strong stocks with great stories, another encouraging sign. Our Top Pick is Lending Tree (TREE), a stock that just broke out in late-April and is handling its current pullback (its first since getting going) very well.

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 Update June 23: Jacob explains his decision this morning to sell half our Sprouts Farmers Market (SFM) calls for a quick profit of 27.5%.

Trade Alert June 23: Sell HALF your Sprouts Farmers Market (SFM) January 22.5 Calls for $2.40 or more.

Stocks on Watch June 22: Two stocks,Hormel (HRL) and Allscripts (MDRX), hit Jacob’s radar this morning after traders aggressively bought July calls.

Market Update June 21: Jacob discusses the lack of call/put buying and a VIX that doesn’t show panic, and explores what it means.

Trade Alert June 21: Buy Sprouts Farmers Market (SFM) January 22.5 Calls (exp. 1/19/2018) for $2.20 or less.

Stocks on Watch June 19: Sprouts Farmers Market (SFM) was one of the biggest losers on Friday following the announced merger of Amazon and Whole Foods, falling from 22.50 to a low of 19.30. However, on Friday afternoon as SFM began to rally off its lows, a trader aggressively bought upside SFM calls.

Weekly Update June 19: The stock market divergences that started two weeks ago continued last week, as growth stocks and the Nasdaq again fell, while the S&P 500 and Dow outperformed.

Position Update
June 16: Builders First Source (BLDR) is trading this morning at 15.2, $0.2 above our short calls strike price that is expiring today. Jacob is going to let the position play itself out and not adjust.
Market Update June 16: This morning, it was announced that Amazon (AMZN) would buy Whole Foods Market (WFM) for $42 a share. This sent shockwaves through the grocery world, and shares of competing companies are tanking.

Cabot Undervalued Stocks Advisor

Special Bulletin June 23: A refrigerator made by Whirlpool (WHR) is being cited as the source of the Grenfell Tower fire in London. This kind of disaster can easily punish a stock price for a prolonged period of time. Sell.

Special Bulletin June 21: Update on Chipotle (CMG) and rating change on Vertex Pharmaceuticals (VRTX). Crista also highlights PulteGroup (PHM) as her top stock to buy today.

Weekly Update June 20: Crista make two portfolio changes: Goldman Sachs (GS) moves from the Growth Portfolio to the Buy Low Opportunities Portfolio, and Invesco (IVZ) moves from Strong Buy to Hold. Crista give you some homework to prepare for a potential market correction.

Special Bulletin June 19: As shares of financial services company Legg Mason (LM – yield 2.8%) approach long-term price resistance at 44, Crista is moving the stock from Strong Buy to Hold, simply because there’s less capital gain potential in the near-term.
Monthly Issue June 6: The market seems to be lending itself to more bullish price action in June, and Crista is looking forward to making money this month. Today’s issue features Cavium (CAVM), Schnitzer Steel (SCHN) and Invesco (Ltd), which is a new addition to the Growth & Income Portfolio. There’s also one rating change: Thermon Group Holdings (THR) moves from Hold to Sell.

Cabot Stock of the Week

Weekly Issue June 20: This week’s stock is Sherwin-Williams (SHW), whose earnings have nearly doubled during the past five years while margins have expanded thanks to cost controls, price hikes and good management. With mortgage rates remaining low and construction activity steadily advancing, demand for its products should continue to step higher in the quarters and years ahead. Three ratings changes: Alliance Data Systems (ADS) to Hold, China Lodging Group (HTHT) to Buy and Jabil (JBL) to Sell.

Cabot Small-Cap Confidential

Weekly Update June 23: Tyler moves U.S. Concrete (USCR) to Hold after a 10% surge. He now has just four stocks rated Buy, which is indicative of a more conservative stance than we’ve had year-to-date.

Monthly Issue June 2: This month’s stock, AppFolio (APPF), has a cloud-based software solution tailor-made for property managers. It’s growing revenue by more than 30%, has no debt, is on track to become profitable this year, and the chart is solid. Tyler believes the company will ultimately be sold, hopefully at a nice premium to where shares trade today.

Cabot Emerging Markets Investor

Bi-weekly Update June 22: The iShares EM Fund has been trading effectively sideways since the middle of May, and that has kept the Emerging Markets Timer above its moving averages. Paul has one portfolio move tonight, which is moving Weibo (WB) to a Hold rating after its overnight decline.

Special Bulletin June 22: Weibo (WB) shares are down around 10% in pre-market trading after news out of China that a regulator had ordered Weibo to shut down its audio and video services. This is presumably a punishment for the company’s failure to control “objectionable” content of some kind. We may find out more about the specifics as the day wears on.

Bi-weekly Issue June 15: Paul gives some tips on how to handle your portfolio when markets are kicking up a fuss. His new stock pick, HDFC Bank (HDB) takes us outside China and the tech sector, and Paul makes portfolio moves to lower our exposure a little, selling Baozun (BZUN) and moving JD.com (JD) to Hold.

Cabot Benjamin Graham Value Investor

Special Bulletin June 23: Roy issued a sell alert on Whirlpool (WHR), which is falling today after London investigators concluded that the Grenfell Tower fire started in a Hotpoint fridge freezer, manufactured by a subsidiary of Whirlpool.

Weekly Update June 23: Roy reiterates his sell recommendation on Kroger (KR) and Oracle (ORCL), and summarizes the latest news for four companies.

Special Bulletin June 22: Oracle (ORCL) has reached its Minimum Sell Price and should be sold. Kroger (KR) is expected to flounder in the 21.5 to 23 area for an extended period of time so it’s a Sell too.

Special Bulletin June 19: Celanese Corp. (CE) reached its Minimum Sell Price of 96.66 today, Celanese was first recommended in April 2014 at 55.03. CE has advanced 75.65% in the past 38 months compared to a gain of 34.34 % for the Standard & Poor’s 500 Index during the same time period. Roy recommends selling CE now.

Enterprising Model Issue June 15: Roy initiates coverage on Thor Industries (THO), which is thriving in the recreation vehicle sector. Demand far exceeds supply in this industry, and Thor is adding two new manufacturing facilities to meet record new orders which have nearly doubled from a year ago.

Monthly Value Model Issue June 8: This month’s Cabot Value Model contains a wide variety of stocks, with a slight focus on companies in the technology and financial sectors. Roy features four companies and one ETF (exchange traded fund): Walt Disney (DIS), Facebook (FB), T. Rowe Price (TROW), UnitedHealth (UNH) and WisdomTree International Hedged Quality Dividend Growth ETF (IHDG).

Cabot Dividend Investor

Weekly Update June 21: Our total return in Wynn (WYNN) hit 50% this week, but Chloe still thinks the stock is buyable—the future is very bright. Other good buys today include 3M (MMM), Cummins (CMI) and Carnival (CCL), all hitting new all-time highs, and recent addition Broadridge Financial (BR). Home Depot (HD) is probably about to earn back its Buy rating as well. On the problem side, GameStop (GME) needs to find support this week if it’s going to keep its place in the portfolio.
Monthly Issue May 31: Chloe adds mid-cap tech stock Broadridge Financial Solutions (BR) to the Dividend Growth tier, provides updates on all our holdings, and shares some of her favorite investment resources. Guggenheim 2017 Corp Bond (BSCH) and Home Depot (HD) move to Hold.

Wall Street’s Best Investments

Daily Alert June 23: Arista Networks (ANET) from Cabot Top Ten Trader
Daily Alert June 23: Comcast (CMCSA) from DRIP Investor
Daily Alert
June 22: Direxion Daily 20 Plus Year Bear 3 Shares (TMV 19), Proshares UltraShort Lehman 20 Plus Year Treasury (TBT 35), and Proshares Short 20 Plus Year Treasury (TBF) from Sound AdviceMonthly Issue June 21: While the Dow Jones Industrial Average has gained some 700 points since our last issue, our contributors and advisors, in general, remain bullish. Our Spotlight Stock is Extreme Networks (EXTR) and Nancy’s feature further examines the networking industry and the phenomenal potential of the company as applications continue to expand for its products and services.
Daily Alert June 21: Panasonic (PCRFY) from Internet Wealth Builder
Daily Alert
June 20: Hawkins (HWKN) from Positive Patterns
Daily Alert
June 19: ABM Industries (ABM) from The Periscope Report
Daily Alert June 19: Sell Mesa Labs (MLAB) from The Periscope Report

Wall Streets Best Dividend Stocks

Daily Alert June 23: AbbVie (ABBV) from Hendershot Investments
Daily Alert
June 22: Ares Capital (ARCC) from Adrian Day’s Global Analyst
Daily Alert
June 21: Aegon (AEG) from Contra the Heard Investment Letter
Daily Alert
June 20: Nuveen Quality Muni Income (NAD) from Brinker Fixed Income Advisor
Daily Alert
June 19: Ameriprise Financial (AMP) from AlphaProfit Sector Investors’ Newsletter
Monthly Issue June 14: Our issue this month is packed with a variety of great investing ideas, beginning with our Spotlight Stock, Western Digital (WDC), a company that is helping to manage Big Data requirements around the world. My Feature examines the opportunities ahead for this industry and company in more detail.

This Week’s Q&As

Cabot Growth Investor

Question: Biotech stocks have had a big move this week—are you looking to buy any? Do you think the group move is real or not?

Mike: I am very intrigued and increasingly optimistic about biotechs. First, the sector, which had a HUGE run from 2011-2015, has been out of favor for a while, so the hot money is basically gone. Most stocks have built huge bottoming patterns in recent years, too.
Most important, the group itself (via ETFs like IBB or XBI) and many individual stocks have moved powerfully, on huge volume, for many days in a row. The combination of all those leads me to believe the move is for real, assuming, of course, that the market doesn’t completely fall apart.
The trick is finding merchandise to buy—so many stocks in the group are either still in the toilet or are super speculative. But we’re definitely looking and, if the right setup occurs in a fundamentally strong stock, we could jump in.

Cabot Undervalued Stocks Advisor

Question: Can you offer me some guidance on Micron Technology (MU)? I am up 32% and unsure how much longer to hold on to it after your comments on the technology sector and the tug of war going on with the Nasdaq these days.

Crista: At the end of 2014, Micron (MU) traded just over 36, so that’s your maximum near-term upside (barring unusual circumstances such as takeover offers). I love the fundamentals and the price chart. The only thing that worries me is the generally overvalued nature of most tech stocks. You can protect against that with a stop-loss order. (That’s the approach I would personally take.) I think we’re more likely to see a prolonged sector rotation out of tech, rather than a big market downturn.

Cabot Emerging Market Investor

Question: Should we sell WB this morning?

Paul: I plan to wait to see what happens during the afternoon session. There will be a massive research and analysis effort on the part of institutional investors who will be gauging the severity and longevity of the damage, and I want to see how the results of their efforts affect the stock’s price during the day.
On a more practical level, the portfolio bought WB at 54, so we have some profit cushion to work with. If you are really worried, I’d suggest taking profits in half of your position and holding the rest.
I will be writing the weekly update for Cabot Emerging Markets Investor today, so you will get my take on the day’s action when that comes out after the close.

Cabot Benjamin Graham Value Investor

Question: Yesterday, Disney stock fell briefly below its 200-day moving average (104.28) to 103.54 mid-morning, but closed at 104.80. The stock opened today at 104.71, and again dropped briefly to 104.11 today about 11:00 am. It has recovered to 104.40. Do you still have a BUY recommendation on Disney?

Roy: I continue to like Disney (DIS 104.22) and am maintaining my Buy rating. The company produced solid numbers for the quarter ended March 31 despite further problems at ESPN. Sales advanced 3% and EPS added 15% after declines of 3% and 10% in the prior quarter. Disney’s movie studios and theme parks and resorts produced profit gains of 21% and 20% respectively.
Sports cable network ESPN suffered weak results again. Consumers prefer video streaming which takes market share from traditional cable TV. Disney will introduce an ESPN-branded subscription streaming service soon. The company is also cutting costs and laying off 100 journalists and on-air commentators at ESPN.
The opening of Shanghai Disney recreation park plus five new Disney movies slated to be released before the end of 2017, including Star Wars Episode VIII, will provide continued growth during the remainder of 2017. Analysts are holding their revenue and EPS estimates steady, which I like.
Disney’s stock price has been volatile during the past year, but a recovery is underway. DIS is now very attractively priced at 16.6 times current EPS. I expect DIS to climb 19% to reach my Min Sell Price of 124.15 within one year. Buy at 107.24 or below.

Question: Do you think buying MGA on this pullback is a good idea?

Roy: The auto industry in the U.S. may have peaked and car sales in China are weak, but Europe is coming to life. Global car and light truck sales will likely be flat this year, but Magna International (MGA 44.99) is taking market share. The company is also gearing up to become the leading maker of parts and assemblies for electric and self-driving vehicles.
Management is upbeat about the near-term and long-term outlook for the company.
MGA is currently selling below my Max Buy Price of 45.49 with a P/E of 7.9 and dividend yield of 2.5%. This high quality leading auto supplier is a good buy. The only reason I moved MGA to Hold is because of the peaking auto business in the U.S. Hold.

Cabot Dividend Investor

Question: Time to sell WYNN since yield now low and good profit? What’s your opinion?

Chloe: As I wrote in today’s update, I expect a lot more from Wynn Resorts (WYNN), so I wouldn’t sell now. The yield is getting low, but the company raises the dividend quickly when cash flow increases. Here’s my explanation from the original recommendation:

“Wynn wasn’t a top-ranked dividend payer even before the Macau meltdown—the company only came public in 2002 and has only paid dividends regularly since 2010. And the troubles over the past year haven’t helped—the company slashed its dividend by two-thirds in May 2015 in response to the steep drop in net income. However, Wynn has always been clear that its dividend is not guaranteed, but is reconsidered quarterly based on free cash flow after the company has paid its obligations. This policy is designed to make it possible for Wynn to pay high dividends despite its highly cyclical industry. But it also makes the stock less appealing to some investors. Buy and hold investors should stay away, since hard times will return eventually, and dividend cuts and price declines with them. (And they won’t always be easy to see coming—in February 2015, only three months before the dividend cut, Wynn said the dividend was safe for “the near future.”) The upside of this policy is that the dividend can increase in good times as quickly as it declines in bad ones— so investors can look forward to higher payouts as cash flow swells. Between 2010 and 2013, for example, Wynn doubled its dividend twice, and also paid large special dividends every January.”

Of course, take some profits if you like, and/or set a trailing stop loss. But I don’t see any reason to sell yet.