Cabot Prime Pro Week Ending March 9, 2018

Cabot Prime Pro Week Ending March 9, 2018

Cabot Weekly Review

In this week’s stock market video, Mike Cintolo discusses the unusual market activity, with the major indexes mostly neutral (though more good action next week could produce an all-clear signal), but a ton of growth-oriented stocks showing powerful, persistent and big-volume upmoves. It’s best not to get too aggressive until the market confirms a new uptrend and we see some halfway decent entry points. But new leadership is already taking shape and Mike is optimistic that the market’s next big move is up.

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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.

Cabot Growth Investor

Bi-weekly Update March 7: The overall market is still in a corrective phase, but the action of growth stocks has been extremely encouraging, with many pushing higher on big volume during the past couple of weeks. Mike has no changes to the Model Portfolio, which has nine stocks and a cash position of 35%.

Other Stocks of Interest March 2: Follow ups to stocks featured September 27, 2017 (issue 1377) to February 28, 2018 (issue 1388). 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 February 28: Mike is honing his Watch List for more buying if the tenor of the market continues to improve. He writes about some of the clues to identifying abnormal action, which earlier this year led us to sell a couple of stocks that have since been hit hard, while holding onto some leaders that are beginning to re-emerge. The discussion will help you hold your highest-potential holdings through tough corrections.

Cabot Top Ten Trader

Movers & Shakers Weekly Update March 9: We’re optimistic, with the unusual buying pressures on a wide swath of growth stocks boding well. Buy ideas: Abercrombie & Fitch (ANF), Knight-Swift Transportation (KNX), Ligand Pharmaceuticals (LGND), SVB Financial (SIVB), Twilio (TWLO) and Workday (WDAY).

Weekly Issue March 5: This week’s Top Ten is chock-full of strong ideas. Our top pick is Proofpoint (PFPT), one of our favorite mid-cap plays in the cybersecurity space.

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.

Trade Alert March 9: Buy Schlumberger (SLB) September 72.5/82.5 Bull Call Spreads (exp. 9/21) for $2.65 or less or buy Schlumberger (SLB) September 72.5 Calls (exp. 9/21) for $3.60 or less.

Position Update March 9: Jacob is raising his mental stop on Nutanix (NTNX) because the stock is trading higher by another $2.75 today on several analyst upgrades.

Trade Alert March 8: Sell your Etsy (ETSY) March 20 Calls for $6.30 or more. If filled at this price, we will lock in a profit of 284% on the balance of our position.

Options Education March 7: As the market has heated up, Jacob has received many great questions from subscribers. Here are three.

Trade Alert March 6: Sell Half your Intel (INTC) January 52.5 Calls or Half your Intel (INTC) January 52.5/60 Bull Call Spreads.

Position Update Match 6: Nutanix (NTNX) is trading higher by another $1.75 today. If the stock were to close at these levels, that would be a stock gain of 20% in the three trading days following earnings. Our position is in great shape, up approximately 97%. Jacob is going for the home run on this position, and setting a mental stop to protect our gains.
Stock on Watch March 6: ON Semiconductor (ON) raced to the top of my watch list on February 28 when traders executed several trades.

Stocks on Watch March 5: Nutanix (NTNX) is trading higher by another $2.85 today, and our position is in great shape. Jacob is also keeping an eye on Salesforce.com (CRM), which reported earnings last week that beat expectations.

Trade Alert March 5: Sell HALF your Nutanix (NTNX) April 37.5/47.5 Bull Call Spreads for $3.40 or more.

Weekly Update March 5: The VIX closed the week at 19.6, higher by 19%. And at the markets lows for the week on Thursday afternoon and Friday morning, the VIX traded above 25.

Cabot Undervalued Stocks Advisor

Special Bulletin March 8: Aerospace and oilfield service supply company KLX Inc. (KLXI) reported a strong fourth-quarter 2018 earnings beat this week. Crista is moving the stock 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.

Special Bulletin March 5: The Boards of Directors of AXA and XL Group (XL) have unanimously agreed that AXA will purchase property & casualty insurer and reinsurer XL Group for $57.60 cash per share, a 33% premium to the March 2 closing price and a 59% premium to the XL share price when it joined the Buy Low Opportunities Portfolio on December 6, 2016.

Cabot Stock of the Week

Weekly Issue March 6: Tim sees risk in buying at this height—and he’s really trying to avoid buying high—so his selection today is AllianceBernstein (AB), an undervalued stock that recently had a great correction and is now working its way back up. Vipshop (VIPS) moves to Sell and BioTelemetry (BEAT) moves to Hold.

Cabot Emerging Markets Investor

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.

Special Bulletin March 6: Following what seemed to be a perfectly successful quarterly report on Monday evening, YY Inc. (YY) opened up today but then plowed steadily lower all morning. The stock found support at 117, and rebounded slightly finishing the day near 120. Paul advises holding your remaining shares of YY to see what happens tomorrow.

Cabot Benjamin Graham Value Investor

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 9: Across our portfolio, our average gain is roughly 46%, and all but two of our current positions are outperforming their benchmark since we added them, meaning our simple average outperformance is 35.5%. No ratings changes.

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 7: Volatility continues, and against the backdrop of uncertainty, it’s a good time to have some extra safety built in to your portfolio. Most of the stocks in our portfolio have weathered the recent market correction well. One rating change: General Motors (GM) moves to Hold.
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.

Wall Street’s Best Investments

Daily Alert March 9: Planet Fitness (PLNT) from Schaeffer’s Investment Research
Daily Alert March 8: PulteGroup (PHM) from AlphaProfit Sector Investors’ Newsletter
Daily Alert March 7: BeiGene (BGNE) from Cabot Emerging Markets Investor
Daily Alert March 6: Versum Materials (VSM) from Pivotal Point Trader
Daily Alert March 5: Goldman Sachs (GS) from Positive Patterns
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 9: AllianceBernstein Holding (AB) from Cabot Dividend Investor
Daily Alert March 8: Anheuser-Busch (BUD) from Global Investing
Daily Alert March 7: STAG Industrial (STAG) from The Wealth Advisory
Daily Alert March 6: EnLink Midstream LLC (ENLC) from Capitalist Times
Daily Alert March 5: Duke Energy (DUK) from Conrad’s Utility Investor
Daily Alert March 5: SELL Macquarie Infrastructure (MIC) from High Yield Wealth

Monthly Issue February 14: Nancy’s featured stock today is Foot Locker (FL). Boosting the positive feelings for the stock is the outlook for retail, in general, due to tax cuts, a growing economy, and an improved job market—all of which contribute to optimism on the part of consumers.

This Week’s Q&As

Cabot Options Trader and Cabot Options Trader Pro

Question: Did I miss something, or are you telling us to sell half of the initial half position you suggested we purchase last week? When will you tell us to purchase the other half position?

Jacob: Your question is a good one. Unfortunately, or fortunately, I picked the bottom on Friday as the market was down 4% in 4 days. So I went conservative, intending to buy more INTC or MU Monday. Well. the market exploded higher, and I missed on the second buy. The upside, of course, is that we locked in a quick profit of 40%, though on a smaller position than I wanted.
When the market is moving 1% a day, there will be mistakes. In this case, it was a good mistake. We will see how the market handles this morning’s selling pressure. I may re-buy or just sit on my hands.

Cabot Stock of the Week

Question: I just received some money from an inheritance and would like to invest in some of the heritage stocks that you’ve mentioned in some of your issues. Can you send the latest list of heritage stocks for me to take a look. Thanks for your excellent Stock of the Week issues.

Tim: You are wise to want to own Heritage Stocks. However, you cannot buy Heritage Stocks; you can only develop them.
In Cabot Stock of the Week, for example, I have developed Tesla (TSLA) and China Lodging Group (HTHT) as Heritage stocks. The first has a profit of 1,030% as I write, the second, 310%.
But when I first bought those two stocks, the first in 2011 and the second in early 2016, I wasn’t trying to develop Heritage Stocks, I was only trying to make a profit.
And I did. But as my profits grew, I came to believe that those two companies had far more growth potential than the average stock. Eventually, somewhere after the point when my profit in each stock exceeded 200%, I formally awarded them Heritage Stock status, meaning that I will hold them through any normal technical sell signal, as long as the fundamental prospects remain good.
To date, neither stock’s chart has given an absolute sell signal (which I would ignore), but there have definitely been weak spots in both charts, and it has been quite comfortable, psychologically, to ride through them, secure in the belief that long-term holding will be rewarding.
Now, I have owned many other stocks over the decades that could have been treated the same way.
I had a profit of over 1,200% in Amazon (AMZN) in 2000, and sold just after the market top. I also had big profits at the same time in Qualcomm (QCOM) and Yahoo! But if I had designated any of those three as Heritage Stocks at the time and held patiently, I would have lost a lot of money in the years that followed. Even Amazon took almost ten years to get out to new highs.
Which is simply to point out that market timing matters. Buying stocks in 2008, when nobody wanted them, was very profitable for most investors with the courage to get in then. Buying stocks today, 10 years later, is not likely to yield profits so easily.
And stock selection matters, too! Yahoo! shrank to become a shadow of its former self before it was acquired by Verizon (VZ), and Qualcomm is still below its 2000 peak. So designating them as Heritage stocks (back in 2000) would have been a mistake. On the other hand, I’ve also had big profits over the years in Apple (AAPL), Home Depot (HD), Microsoft (MSFT) and Netflix (NFLX) to name a few, but not designated them as Heritage Stocks. If I had, those profits would be big today.
So what do I advise for you today?
If you’re looking to develop Heritage Stocks, do not buy any of those stocks listed above. They’ve already had their big runs—though doubtless some will run further.
Instead, look for smaller, less well-respected companies with big growth potential.
For example, Twitter (TWTR), SiteOne (SITE), Square (SQ), Grubhub (GRUB), Teladoc (TDOC), BioTelemetry (BEAT), Zillow (Z), Etsy (ETSY), Splunk (SPLK), Planet Fitness (PLNT), Insulet (PODD) and Cronos Group (CRON) all have great growth potential and are under-owned compared to those well-known stocks above. Also, I suggest you look to China, where the economy is growing fast. I like Autohome (ATHM), Baidu (BIDU) and TAL Education (TAL).
When you’ve selected one or more stocks whose story makes sense to you, invest as you would with any growth stock, buying on constructive chart patterns, letting winners run, and cutting losses short. Eventually, when your profit is large enough and your confidence in the business strong enough, you might choose to designate your own stock a Heritage Stock.

Cabot Emerging Markets Investor

Question: Autohome (ATHM) earnings were good but they were unaudited. Stock is down again. Hold? thanks

Paul: The top and bottom line were both good. I think what the market was reacting to was the company’s guidance, which didn’t come up to expectations.
ATHM has made up much of its big dip at today’s open. I think it’s worth holding to see how it handles itself over the next week or so. ATHM formed what may be a double-top pattern in January and February, so that’s something else to keep in mind.

Question: My understanding is that YY beat on the top and bottom lines and gave better than expected guidance. One of the fastest growing companies in China.
Yet they began falling after reporting. I could have sold a half at some stop point but I didn’t. I don’t watch these events minute by minute so I was shocked when I saw my portfolio go negative due to YY at -12%.
It’s hard to get analysis and news on these smaller Chinese companies. I did make big gains on YY. Is this a profit taking situation? What do you know?

Paul: The portfolio has already taken partial profits in YY (we sold half of our position on February 9) and we still have a big profit (we bought at 61). So we can afford to practice a little patience, although we won’t just sit and watch as the stock grinds away at our profit margin.
At this point, the actual numbers, both actual and estimated, are pretty much irrelevant. I have no idea why YY is dropping like a rock, but knowing why doesn’t change the situation. If YY doesn’t arrest its decline in the afternoon session, I will probably advise selling it, even knowing that it’s possible the stock will rebound tomorrow. It’s also possible that it won’t rebound, and I’m not willing to bet the portfolio’s profits on an uncertainty.
Anyway, I would take profits by selling at least half of your YY position and keep an eye on technical support levels at 115 and 110 (the stock has already dropped through its November resistance at 120/122).
I’ll be sending out a mid-day Special Hotline with essentially the same advice.

Question: YY Inc. (YY) is misbehaving. Should we sell some, hold or buy more? The earnings were good.

Paul: The portfolio’s position still has a big profit (bought at 61), but this is a very big correction. It’s a puzzle, because we have already taken profit by selling half of our stake, so I feel we can afford to give it plenty of rope. My expectation is that the stock will improve in the afternoon session. If the selling continues, I have a couple of technical support levels that I expect to provide some lift. If it looks like YY has really fallen out of favor, I will recommend selling the rest, but I’m not eager to do that.

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