Cabot Prime Pro Week Ending March 16, 2018

Cabot Weekly Review

In this week’s stock market video, Paul Goodwin talks about the general good health of the market, but especially about how the Nasdaq Index is outperforming the S&P 500 and both are stronger than the Dow. This means that growth stocks, especially tech stock, are more in favor than the broad run of stocks, and that’s a good thing for growth investors. Paul looks at information technology, the strongest sector over the past year and, after a few words about a couple of favorite Chinese stocks, looks at some favorite semiconductor and software stocks that are producing excellent charts.

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Special Report March 12: If you’re a growth investor, you need to own cloud software stocks. It’s just that simple. Cloud computing is changing the world. It’s powering massive growth in companies across sectors, empowering digital transformations, enabling new generations of connected technologies and changing how people live their lives. Tyler Laundon lays out the landscape and names his 10 best small-cap cloud computing stocks.

Cabot Growth Investor

Bi-weekly Issue March 14: The Cabot Tides are now positive, and the charts and the fundamentals of leading growth are likely pointing toward a new sustained advance. With 22% cash, we’re building our Watch List and looking to put more money to work, ideally on dips or shakeouts. PayPal (PYPL) and ProShares Ulta S&P 500 (SSO) are move to Buy.

Special Bulletin March 12: The market’s strength last week and today’s calm action was enough to turn our Cabot Tides back to a positive stance, flipping the intermediate-term trend back to bullish. We’ll start slow with one new addition tonight, Proofpoint (PFPT), and move ProShares Ultra S&P 500 Fund (SSO) back to Buy.

Other Stocks of Interest March 16: Follow ups to stocks featured October 11, 2018 (issue 1378) to March 14, 2018 (issue 1389). 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 March 16: Our intermediate-term trend following indicator remains bullish, and it’s a plus that growth-oriented indexes like the Nasdaq and S&P 600 SmallCap remain the strongest, but a drop of 2% to 3% from here would probably be enough to tell us the rally has failed. Buy ideas: Five Below (FIVE), Insulet (PODD), Okta (OKTA), Veeva Systems (VEEV) and Yandex (YNDX).

Weekly Issue March 9: The major indexes have strengthened enough to turn their intermediate-term trends back up, which, combined with the very bullish action from leading growth stocks, is a good reason to put some more cash to work. This week’s Top Ten has another very strong batch of high-potential stocks that have shown big-volume buying of late. Mike selected a good looking Bull Market stock, TD Ameritrade (AMTD), as his 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.

Position Update March 16: Our Freeport McMoRan (FCX) buy-write is in good shape with a couple of hours to go.

Stock on Watch March 14: Zendesk (ZEN) is popping to the top of Jacob’s watch list today following several waves of intriguing option activity.

Options Education March 14: Jacob has received a ton of great emails from subscribers recently about the huge profits this year. He’s thrilled that we’re making lots of money, but reminds us to remember the risks as well.

Position Update March 14: Updates on our Freeport McMoRan (FCX) and Knight Swift (KNX) positions, which will expire on Friday, plus an update on Nutanix (NTNX), which has continued its amazing run this week.

Trade Alert March 13: Sell your Cisco Systems (CSCO) March 37 Calls for $8.75 or more, and your March 44.5 Puts for $0.03 or more.

Position Update March 12: Knight-Swift Transportation (KNX) is making a new recent high at 49.75, and approaching the huge March 50/55 Bull Call Spread that expires this week.

Weekly Update March 12: Growth stocks have surged in the last several weeks while a large portion of other stocks have gone nowhere. Two of our holdings, Etsy (ETSY) and Nutanix (NTNX), have gained over 50% in the last month. What would be interesting to see, and might even be healthy for the bull market, would be for these growth stocks to temporarily cool off, and other sectors retake some leadership in the market.

Cabot Undervalued Stocks Advisor

Special Bulletin March 15: Alexion Pharmaceuticals (ALXN) reported positive clinical study results and the share price surged 9% to 134.

Weekly Update March 13: Many of our stocks appear to be advancing this week. There are a few that I’ll be selling soon due to either valuation or upside price resistance, yet they remain excellent longer-term investments, including Alphabet (GOOGL). Today’s Portfolio Changes: BB&T Corp. (BBT) and Supernus Pharmaceuticals (SUPN) move to Buy, and Schlumberger (SLB) moves to Strong Buy.

Monthly Issue March 6: Today’s featured stocks include GameStop (GME), which moves to Strong Buy, Southwest Airlines (LUV) and PBF Energy (PBF), which is joining the Buy Low Opportunities Portfolio. Crista is also selling Nucor (NUE), and Commercial Metals (CMC) moves to Strong Buy.

Cabot Stock of the Week

Weekly Issue March 13: The market is strong, and the strongest sector of all is growth stocks; we have bunch hitting new highs. In fact, they’ve been so strong that Tim is downgrading Broadridge (BR) and Planet Fitness (PLNT), to Hold, and moves Cronos Group (CRON) to Buy. Today’s recommendation is Autohome (ATHM), a stock we owned successfully last year and looks good to enter again.

Cabot Emerging Markets Investor

Bi-weekly Update March 15: The iShares EM Fund (EEM) bounced strongly in early March, which returns the Emerging Markets Timer to a positive reading. Granted, it’s not the strongest signal we’ve ever seen, but it counts. Quarterly reports are winding up, and we’ll take the Timer’s advice and return one stock, Alibaba (BABA), to a Buy rating.

Special Bulletin March 14: GDS Holdings (GDS) and China Lodging (HTHT) reported their latest quarterly results yesterday and both disappointed; HTHT is now rated Sell.
Bi-weekly Issue March 8: With a bumpy market to work with and a few stocks still to report earnings, Paul takes a look at the political risks to the portfolio. He also shifts his focus to Brazil, where he finds Fibria Celulose (FBR), an unusual commodity company, and Azul (AZUL), a fresh airline stock.

Cabot Benjamin Graham Value Investor

Weekly Update March 15: Crista Huff begins transitioning Cabot Benjamin Graham Value Investor holdings to her undervalued investing strategy with updates on all stocks and several ratings changes.

Special Bulletin March 14: Signet Jewelers (SIG) fell dramatically on news surrounding its fourth-quarter earnings release, and is now a Sell.

Monthly Issue March 8: Azmath is consciously changing the portfolio into more defensive stocks to guard against inflationary fears. He introduces two new stocks, STORE Capital (STOR) and McKesson (MKS), recommends selling Blackstone (BX) and Malibu Boats (MBUU), and changes Hanesbrands (HBI) from Buy to Hold.

Cabot Small-Cap Confidential

Weekly Update March 16: This week’s update is a detailed review of Arena Pharmaceuticals’ (ARNA) quarterly results.

Special Bulletin March 15: Asure Software (ASUR) reported this morning and results came in just shy of expectations, but the stock is selling off hard and is back down to its 200-day line, and in the zone of support that’s held for the last four months. Tyler moves ASUR to Sell.

Monthly Issue March 2: We’re adding Rapid7 (RPD), a pure-play security solutions provider to Cabot Small-Cap Confidential. The company is growing revenue well over 20% and expanding its portfolio of solutions to address large and rapidly growing markets. AppFolio (APPF), AxoGen (AXGN), BioTelemetry (BEAT) and Q2 Holdings (QTWO) move to Hold, and US Concrete (USCR) moves to Sell.

Cabot Dividend Investor

Weekly Update March 14: Chloe is seeing some underperformance in the portfolio—some holdings are simply moving sideways—which is troubling given the healthy market. She may try to replace some of the laggards with stronger stocks from healthier sectors over the next few weeks.
Monthly Issue February 28: Chloe clears one underperforming stock, ExxonMobil (XOM), from the portfolio today, puts dividend stalwart 3M (MMM) back on Buy, and adds very high-yielding AllianceBernstein (AB). She also recaps her sell strategy and gives updates on all our stocks.

Cabot’s 10 Best Marijuana Stocks

Update February 27: Cronos Group is expected to be elevated today from the Nasdaq International Designation program (where it has traded as PRMCF) to the Nasdaq Global Market, where it will trade under the ticker symbol CRON. In Canada, it will continue to trade under the symbol MJM.

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.

Wall Street’s Best Investments

Daily Alert March 16: Vanguard Balanced Index Inv (VBINX) from Moneyletter
Daily Alert March 15: Fidelity Contrafund (FCNTX) and Fidelity Growth Strategies (FDEGX) from Fidelity Monitor & Insight
Daily Alert March 14: Blue Apron Holdings (APRN) from IPO Authority
Daily Alert March 13: KLX Inc. (KLXI) from Cabot Undervalued Stocks Advisor
Daily Alert March 13: Sell Westinghouse Air Brake (WAB) from Hendershot Investments
Daily Alert March 13: Sell MasterCard (MA) from Hendershot Investments
Daily Alert March 12: First Choice Healthcare Solutions (FCHS) from The Quiet Investor
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.

Wall Streets Best Dividend Stocks

Daily Alert March 16: MB Financial (MBFIO) from Forbes/Lehmann Income Securities Investor
Daily Alert March 15: Mondelez International (MDLZ) from DirectInvesting.com

Monthly Issue March 14: The Spotlight Stock is Gramercy Property Trust (GPT), an Industrial Real Estate Investment Trust that pays a high yield and is growing internally and by acquisition. Nancy’s Feature explores Wall Street’s misunderstanding of the effect of rising rates on the REIT industry and discusses the opportunities for Industrial REITs as the economy continues its expansion phase.

Daily Alert March 14: Western Gas Partners LP (WES) from Energy & Income Advisor
Daily Alert March 13: Westwood Holding Groups (WHG) from Hendershot Investments
Daily Alert March 12: iShares US Telecommunications ETF (IYZ) from Bob Carlson’s Retirement Watch

This Week’s Q&As

Cabot Growth Investor and Cabot Top Ten Trader

Question: I was re-reading your piece on 6 Ways to Pick Monster Growth stocks and was again reminded of your first rule: Find stocks with a rising relative performance (RP) line. In today’s market it seems like those that are hitting new high ground are the real winners of late. Then I turned to this week’s Growth Investor issue and looked at both Alibaba (BABA) and Facebook (FB). Both of these RP lines have done basically nothing since August (sans brief periods of up/down activity). There doesn’t appear to be enough demand for the stocks to drive them higher.
Doesn’t it make more since to cut bait on these two and deploy the money to those stocks showing strong RP lines like GRUB, SHOP, MU, NFLX, etc. Why continue to hold?

Mike: When I buy, I almost always look for a strong RP line (among other considerations). However, once I have a good profit and the stock is a liquid leader (as I would argue for BABA and, say, PayPal (PYPL)), I will often take partial profits and then use a trailing stop. Basically, every stock is going to have some multi-month rest periods along its way to larger gains. That’s why I’ve had BABA on Hold (not Buy) for most of the past 3-4 months (though it’s perking up today on some news).
FB may be a bit different. Yes, I am more apprehensive about that one, partially because it’s growth profile has faded somewhat and the stock’s obviously had a much larger run. I am gradually tightening my stop and could even sell some to reinvest elsewhere if it keeps going sideways (even if it doesn’t stop me out).
We used to have sell rules based on RP lines but I found that a bit wanting—don’t get me wrong, it still definitely factors in, but I tend to take more cues from portfolio management (trimming positions), market timing and price/volume action. I would say if you have a modest/no profit and the RP line is down for 6+ weeks, that is a red flag. With profits, I tend to give things more rope because the big money is in the longer-term trend.

Cabot Options Trader and Cabot Options Trader Pro

Question: Please explain a little bit more about if Freeport McMoRan (FCX) stays above 18, it created an yield of 4.59%, which I wasn’t aware of it until you mention it again today; I was focusing on how to execute buy-write.

Jacob: Here were the levels I was filled on this trade: Bought FCX at 18.56; Sold the March 18 Call for $1.35; Total of 17.21.
So if the stock closes above 18, here is the profit and loss: I make $135 on the sale of the call; however, because I sold the 18 call, I have to sell the stock at 18. So I lose $56 (18.56–18).
$135 profit – $56 loss = $79 profit (Take profit and divide by breakeven: 79/1721 = 4.59% profit).

Cabot Undervalued Stocks Advisor

Question: I have specific concerns about the effects of NAFTA and U.S. steel tariffs on Canadian companies.

Crista: My recent comments about the steel tariffs can be found in the introduction to the March issue of Cabot Undervalued Stocks Advisor.
On March 15, Inside U.S. Trade (a subscription-only international trade publication) wrote this about the steel tariffs: “Canada and Mexico [were] already granted exemptions as a carrot for getting on with negotiations to redo the North American Free Trade Agreement.”
I know that most of the “new NAFTA” has already been agreed upon, after six or seven ministerial negotiations, and I therefore have confidence that the various countries’ leaders will follow through on solving the remaining problems and implementing a modernized trade deal. I currently believe that the aforesaid exemption from steel tariffs will be included in the new NAFTA.

Question: I took your advice and bought shares of XL Group (XL) several weeks ago hoping for a buyout, which occurred on March 5. I’m curious as to why the share price has stayed close to 2 dollars less than the agreed upon $57.60 ever since the announcement. I’d like to get the full price for my shares but I saw in your latest email that you sold yours. How long (if at all) should I hold out for the full amount? BTW, I bought shares of TiVO (TIVO) and KLX (KLX) hoping for similar results. Thanks.

Crista: I almost always sell promptly when an agreed-upon buyout offer is accepted. (If it’s a surprise offer, and the targeted company hasn’t yet agreed to be purchased, I will take a somewhat different course of action.) It could take many months for XL to rise those last two dollars, and during that time frame, there’s always the risk that the merger does not receive regulatory approval. (We just saw a merger deal fall apart between Broadcom and Qualcomm!) In addition, I prefer to promptly free up the money for newer capital gain opportunities.

Cabot Small-Cap Confidential

Question: Curious of what your take is on the Asure Software (ASUR) earnings report—it appears the stock is aggressively manipulated with such a low float (9mil.).
Tyler: Yes, I agree. The action is horrible (and odd). As you’ve just seen, I’ve decided it’s time to move on. I like the story and growth profile, but the bottom line is there are other stocks we will probably be better off owning over the next 12-24 months.

Question: Any thoughts on Arena Pharmaceuticals’ (ARNA) or will you cover in tomorrow’s update?

Tyler: I’ll cover ARNA tomorrow. Don’t like the stock’s action today (and yesterday), but there’s a lot there to think about/discuss. ASUR has been dogging us for a while, so time to just cut that one loose.

Reply: No problem on ASUR—bought at 1,080 so made money, and I just sold a third at 1,650.

Cabot’s 10 Best Marijuana Stocks

Question: I just acquired Cabot’s 10 Best Marijuana Stocks. I’m new to this. I would like to know if we start purchasing some of these marijuana stocks or do we stand on the sidelines and wait for the right moment when you advise us to purchase shares?

Tim: As I wrote in the introduction to the February report, your goal should be to buy these stocks once they have established bottoms—and a careful look at the charts shows that that is exactly what the group has been working on since pulling back from its early January high. Thus, selective buying is acceptable now. But don’t jump in all at once! Take your time.
For starters, Cronos Group (CRON) looks ripe for entry now, and the three biggest players (Aphria Inc. (APHQF), Aurora Cannibis (ACBFF) and Canopy Growth (TWMJF)) all have fairly solid charts, with TWMJF slightly stronger. As to the others, the lower-priced stocks in particular should be approached more warily because they tend to be more volatile.
If your initial purchases yield profits, and the group improves, you can buy more. But if the group weakens, and the broad market weakens, you may need to cut losses short. In any case, you will be early in a very long trend.

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