Cabot Prime Pro Week Ending March 31, 2017
Cabot Growth Investor
Other Stocks of Interest March 31: Follow ups to stocks featured October 12, 2016 (issue 1353) to March 29, 2017 (issue 1364). 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.
Special Bulletin March 30: Tonight’s message is in regard to Shopify (SHOP), which has been a great winner for us so far this year. That said, the stock has now suffered a couple of sharp bouts of selling in recent weeks and could be ready to consolidate. Long-term, we still think Shopify could be a big winner this year, but given the evidence, we’re going to take partial profits by selling one-third of our shares tonight, and place the remaining shares on hold.
Bi-weekly Issue March 29: Mike is making two moves tonight: selling Charles Schwab (SCHW) on its bounce, and replacing it with Veeva Systems (VEEV), which will leave us with about 26% in cash. In this issue, Mike also dives into our new “7.5% Rule,” which is another in a long line of studies that show higher prices to be very likely in the months down the road.
Cabot Top Ten Trader
Movers & Shakers Weekly Update March 31: The market has acted well since its Monday morning shakeout—that dip pushed the S&P 500 and other indexes below their 50-day lines, and even had the S&P 600 SmallCap kissing 16 week lows, but buyers stepped in and have generally driven prices higher since. Buy ideas include Cavium (CAVM), Incyte (INCY), Pulte Group (PHM), Sanmina (SANM) and Square (SQ).
Weekly Issue March 27: This week’s Top Ten list is chock-full of stocks that have basically ignored the market’s recent weakness. Mike’s Top Pick, Teladoc (TDOC), isn’t well known, but it has a very unique growth story and is emerging from a long post-IPO correction and consolidation.
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.
Buy Alert March 31: Adjust Existing Position: Buy Symantec (SYMC) April 29.5 Puts (exp. 4/21) for $0.30 or less.
Market Update March 30: My daily order flow list from yesterday was the most bullish I have had in months. This could be a positive development for the bulls, as there have been very little high conviction trades in the options world for quite some time.
Stock on Watch March 29: This morning, a trader or traders have aggressively bought Yelp (YELP) calls and bull call spreads, looking for a bounce.
Buy Alert March 29: Buy ON Semiconductor (ON) July 16 Calls (exp. 7/21/2017) for $0.95 or less.
Stock on Watch March 27: Devon Energy (DVN) looks like most oil-related stocks this year, a big underperformer compared to the three major indexes, having fallen 15% year-to-date. However, with the stock trading at 38.70, a trader this afternoon is putting on an interesting longer-term bullish position.
Weekly Update March 27: The VIX closed the week at 13, after briefly breaking above 14 on Friday afternoon. The short time the VIX spent above 14 was the highest level the “fear index” had reached in all of 2017 (but it still was only 14).
Cabot Undervalued Stocks Advisor
Special Bulletin March 30: Chipotle Mexican Grill (CMG) joins the Buy Low Opportunities Portfolio, plus updates on Mattel (MAT), Vertex Pharmaceuticals (VRTX) and Vulcan Materials (VMC).
Special Bulletin March 29: Shares of Vertex Pharmaceuticals (VRTX) rose 22% this morning on reports of successful results of Phase III studies of VX-661, a cystic fibrosis combination treatment. Crista is lowering the rating on VRTX from Strong Buy to Buy.
Weekly Update March 28: There’s very little happening among our stocks right now. Crista expects Adobe Systems (ADBE) to reach new highs right away, and for Dollar Tree (DLTR) and Royal Caribbean Cruises (RCL) to continue rebounding through early April. Thermon Group (THR) might bust out of its trading range very soon. Just about every other portfolio stock is either stuck in a trading range or sitting at the bottom of its trading range.
Monthly Issue March 7: Today’s featured stocks include Dollar Tree (DLTR), a guest appearance by Assurant (AIZ) and a new addition to the Buy Low Opportunities Portfolio, Thermon Group Holdings (THR).
Cabot Stock of the Week
Weekly Issue March 28: Today’s recommendation, Adient PLC (ADNT), is a strong stock that’s undervalued and pays a decent dividend. You may not recognize its name, but you’ll certainly understand its products. One change today: JD.com (JD) moves to Hold.
Cabot Small-Cap Confidential
Weekly Update March 31: During last week’s retreat the S&P 600 Small Cap Index held above 810. That means we’re holding on to the majority of the post-election rally, and now have a trading range in the 810 to 860 zone that’s becoming more established. There are no ratings changes today.
Monthly Issue March 3: This month’s stock is Asure (ASUR), a micro-cap company poised to grow on the back of strong employment trends in the U.S. and select international markets. Four of our positions reporting results over the last five days. Three of them, Everbridge, LogMeIn and U.S. Concrete, went well. The fourth, NanoString, was disappointing, and the company’s outlook has caused Tyler to recommend selling your remaining stake in NanoString (NSTR). Everbridge (EVBG) moves to Hold.
Cabot Emerging Markets Investor
Bi-Weekly Update March 30: The Emerging Markets Timer is in good shape, with iShares EM Fund sitting well above its 25-day moving average. Many of our stocks are acting great, and our only action today will be to fill out our position in Momo Inc. (MOMO).
Special Bulletin March 28: The recent rough patch in the market has taken a toll on two of our stocks. And while the Cabot Emerging Markets Timer is still positive, the iShares MSCI Emerging Markets ETF on which it is based experienced a reversal on March 21, and has been trading flat and tight for more than a week. Accordingly, Paul will sell Banco Santander Brasil (BSBR), which has buckled under selling pressure, and put BeiGene (BGNE) on Hold.
Bi-weekly Issue March 23: We have one sell today, Banco Santander Brazil (BSBR) but we’re adding a hot South American airline, LATAM Airlines Group (LFL) to the portfolio. Paul also offers some thoughts on how North Korea might bring the U.S. and China together on one issue.
Cabot Benjamin Graham Value Investor
Weekly Update March 31: The U.S. stock market is beginning to show signs of gaining momentum to the upside, as evidenced by the Nasdaq’s new all-time high set yesterday. The weakness in value stocks during the past couple of weeks has created some excellent buying opportunities. This Weekly Update includes only one of my Benjamin Graham companies which reported quarterly financial results during the past week.
Monthly Enterprising Issue March 9: Roy introduces two new stocks this month that hold great promise: Eastman Chemicals (EMN) and Western Digital (WDC). Blackstone Group (BX), LKQ Corp. (LKQ) and Toll Brothers (TOL) are also featured, and there are six new ratings changes.
Monthly Value Issue March 2: No one knows when this stock market rally will end. According to Roy’s evaluation models, stocks are overvalued and due for an extended rest, but now that they’re “free-wheeling” in uncharted territory, it’s also possible that stocks will considerably higher.. Four new stocks are added this month: Danaher (DHR), Nike (NKE), Schlumberger (SLB) and Williams-Sonoma (WSM), and four stocks transition out of the Model and now rated Hold: Alliance Data Systems (ADS), Celgene (CELG), Walt Disney (DIS) and Johnson Controls (JCI).
Cabot Dividend Investor
Weekly Update April 5:
Chloe is still cautiously bullish, and focused on the action of individual holdings. Sell any stocks that break down, prune your laggards, and focus new buying on outperformers. There are no rating changes today.
Special Bulletin April 3: General Motors (GM) is trading nearly 4% lower today after March auto sales data fell short of estimates. The stock found support around this level after selling off two weeks ago, so we’ll keep it rated Hold for now. HOLD.Monthly Issue March 29: Chloe is adding 100-year dividend payer 3M (MMM) to the Safe Income Tier, and selling J.M. Smucker (SJM). Also, in the educational section, Chloe takes a look at the incredible power of dividend reinvestment.
Wall Street’s Best Investments
Daily Alert March 31: Zoetis Inc (ZTS) From Argus Weekly Staff Report
Daily Alert March 30: Weatherford International (WFT) From The Turnaround Letter
Daily Alert March 29: Alphabet (GOOG) from Cabot Benjamin Graham Value Investor
Daily Alert March 28: Teck Resources (TECK) from Blue Chip Growth
Daily Alert March 27: iShares MSCI Canada ETF (EWC) and SELL Gilead Sciences (GILD) from The Complete Investor
Monthly Issue March 15: Our Spotlight Stock, John Bean Technologies (JBT), is a company that is a hybrid of two interesting sectors—both in the high-growth stage. My Feature expands on the company’s winning technologies, focusing on the catalysts that are propelling its progress.
Wall Streets Best Dividend Stocks
Daily Alert March 31: Genuine Parts Co. (GPC) From Dividend Advisor
Daily Alert March 30: Vanguard Short-Term Corporate Bond (VCSH) From Dow Theory Forecasts
Daily Alert March 29: Bank of Nova Scotia (BNS) from The Internet Wealth Builder
Daily Alert March 28: Waste Management (WM) from The Personal Capitalist
Daily Alert March 27: Blackstone Group LP (BX) from Cabot Benjamin Graham Value Investor
Monthly Issue March 8: Sentiment remains bullish, as you’ll see in our Market Views, although advisors are turning a bit more cautious. Our contributors continue to find good dividend payers with a long history particularly attractive. And that includes our Spotlight Stock, Xerox (XRX).
This Week’s Q&As
Cabot Emerging Markets Investor
Question: ZYC has disappeared from my watchlist and it says there is no information available for it. What happened to it? It is the Chinese coal company that you said to put on the watchlist. I think there were a couple more letters in the symbol because it is an OTC stock.
Paul Goodwin: The company is Yanzhou Coal Mining (YZCAY). Even though it has just about doubled since early January, I can’t say that I think much of it. If you look at a longer-term chart, you can see that it was trading near 40 back in 2011 and has had a long, bumpy correction. There are stronger Chinese ADRs out there.
Question: LN looking good last 30+ days back on your radar?
Paul Goodwin: Line Corporation (LN) Yes. That’s a nice bottoming process, gap up, re-base and follow through to the upside. And the story is as good as ever. Just be sure to start small, given the testy state of the market.
Cabot Growth Investor
Question: Hi Mike, I recently subscribed to your newsletter and wondered how much money do you put in to each new stock? I’ve heard you write that most are near 10%, but I’ve also seen some recent recommendations come in a bit lower.
Mike Cintolo: It’s a good question. And I’ll answer it in two parts—the exact technical formula we use, and the back-of-the-envelope method.
For the exact calculation, we take the cash available and divide it by the number of “open slots” in the portfolio. How do you determine the number of open slots? Well, we have 10 total slots in the portfolio -- we won’t own more than 10 at a time. Thus, the open slots are simple 10 minus the number of stocks we own.
Hence, if we have 6 stocks, we have 4 open slots. And so we’d take one-quarter of the cash (1/4) on the sideline and invest it in each new position.
However, to be honest, it’s simpler to just use 10% or thereabouts (say 9% to 11%) as that is what it’s most likely to be. We follow the strict rules for the Model Portfolio’s returns, but the back-of-the-envelope approach is much easier and nearly as good.
As a final note, remember that I’m talking about DOLLARS invested here -- in the above example, we’d use one-fourth of the dollars we have on the sideline and invest them in a new recommendation. The number of shares isn’t important.
Cabot Options Trader
Question: I wanted to know if there is any advantage (other than the cost) in buying an in the money call for ON for July expiration.
Jacob Mintz: The advantage to buying an IN-the-money option is that if you are right on the direction of the stock, it will move at a greater pace than an OUT-of-the-money option. For example, July 15 calls will move $0.58 for every 1 dollar the stock moves higher. While the July 16 calls will move $0.45 for every $1 move in the stock.
However, the downside to in-the-money options is they cost more. The July 15 Calls cost $1.30, while the July 16 Calls cost $0.90. Also, if your wrong about the stocks direction, they in-the-money Calls will lose more value to the downside, than the out-of-the-money options. So for every $1 the stock falls, the in-the-money option will lose $0.58.
Cabot Small-Cap Confidential
Question: Is USCR still a buy with the CFO resignation and this price drop?
Tyler Landon: A special bulletin will be out soon saying to hold. I don’t think it’s worth the risk of buying in until we know a little more. At the same time, from what I see this isn’t yet a cut and run-type situation. Buyers stepped in around 11:00 this a.m. and supported the stock above 58 support, which is a positive. I’m going to keep a close eye on it and will send updates.