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Cabot Prime Pro Week Ending May 25, 2018

Cabot Prime Pro Week Ending May 25, 2018

2018 Cabot Wealth Summit Registration — August 15-17

What do Cabot’s most successful investors have in common? They come to the Cabot Wealth Summit!

If you haven’t yet registered for the 2018 Cabot Wealth Summit, now’s the time because the hotel rooms sell out. A rich and intense program of stock picks, market analysis, investing tips and techniques and a chance for face-to-face Q&A with Cabot’s experts and analysts. We will also have great social activities! All in beautiful, historic Salem, Mass.

Register here at super-low Cabot Prime Pro member pricing.

Cabot Weekly Review (Video)

In this week’s stock market video, Paul Goodwin looks at the market and sees a “yes, but …” market. Yes, the intermediate-term trend is up, but in the longer term the market is still wedging down from its January high and February low. Paul shows a few examples of old friends, the stocks that have shown very long-term appreciation, and a few new friends, stocks that are showing exceptional strength right now and have sound businesses. Paul also invites everyone to the Cabot Wealth Summit, which will be held in Salem, Massachusetts on August 15–17.

Advisory Services

Cabot Growth Investor

Bi-weekly Issue May 23: Continue to lean bullish. Mike hasn’t made any new buys or sells in the Model Portfolio since the last issue; he’s still holding 30% in cash. He is, however, switching Five Below (FIVE) and Proofpoint (PFPT) to Hold ratings based on their recent sluggishness.

Bi-weekly Update May 16: Mike says to remain optimistic, but continue to take it day by day. The green light from the Cabot Tides remains in effect, which, combined with our solidly bullish Cabot Trend Lines, tell us to lean bullish. From here, he’s still looking for the market and leading growth stocks to follow through to the upside before doing more buying. Tonight, he has no changes in the Model Portfolio.

Other Stocks of Interest May 25: Follow ups to stocks featured December 20, 2017 (issue 1383) to May 23, 2018 (issue 1394). 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 May 25: Mike says the setup looks great. We’ve had a tedious three-month correction with multiple retests of the lows (and positive divergences in the broad market) and some bearish sentiment readings (which is a good thing). Then we saw the rally in early May, followed by the recent tightness. Throw in a bunch of stocks that are tightening up near their highs and we certainly have a solid platform to lift off from. Today’s Buy Ideas: E*Trade (ETFC), Integra Lifesciences (IART), Melco Resorts (MLCO), Phillips 66 (PSX) and Wix.com (WIX). Mike has three sells: Petrobras (PBR), Pioneer Natural (PXD) and Pure Storage (PSTG).

Weekly Issue May 21: This week’s list has a ton of strong stocks in a variety of growth-oriented sectors. Mike’s Top Pick is LPL Financial (LPLA), a mid-sized Bull Market stock that is acting very well and recently crushed earnings expectations.

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 May 25: Cabot Options Trader—Sell Existing Position: Sell your Schlumberger (SLB) September 72.5 Calls for $1.80 or more.

Trade Alert May 25: Cabot Options Trader Pro—Sell Existing Position: Sell your Schlumberger (SLB) September 72.5/82.5 Bull Call Spreads for $1.50 or more.

Trade Alert May 24: Cabot Options Trader Basic and Pro—Speculative Trade: Buy iQIYI (IQ) December 25 Calls (exp. 12/21) for $4.70 or less.

Earnings May 24: Jacob breakdowns what the options market is pricing in terms of earnings for Nutanix (NTNX) and Splunk (SPLK).

Trade Alert May 23: Cabot Options Trader Pro—Adjust Existing Position: Against your Microsoft (MSFT) July 92.5 Calls, Sell the June 101 Calls (exp. 6/15) for $0.45 or more.

Stock on Watch May 23: Following the trend Jacob noted recently of call buyers targeting laggards, yesterday and again this morning his options scanner is picking up on call buying in JD.com (JD).

Position Update May 22: Axon Enterprises (AAXN) is trading higher by another $2 this afternoon and our calls originally purchased for $4.10 are now worth $18, or a potential profit of 340%. And while Jacob is not selling his AAXN position today, I’m going to raise my mental stop again. The new mental stop is at $13.

Market Update May 22: Option order flow in the last week and a half has been very interesting. Last week Jacob noted bullish activity in three 2018 “dogs”: Proctor & Gamble (PG), Coca-Cola (KO) and General Electric (GE). And yesterday’s order flow list was more of the same as traders were buying calls in underperformers such as Celgene (CELG), Ford (F) and Beacon Roofing Supply (BECN).

Trade Alert May 22: Cabot Options Trader and Cabot Options Trader Pro—Buy-Write: Buy Tivo (TIVO) Stock and Sell the June 14 Calls (exp. 6/15) for a net of $13.60 or less.

Position Update and Education May 21: Jacob updates his mental stops on, Axon Enterprises (AAXN), Intel (INTC) and Microsoft (MSFT). He also educates us on Time Decay.

Weekly Market Update May 21: This week Jacob writes there will be ten public Federal Reserve speeches including Fed Chairmen Jerome Powell’s speech on Friday morning. Also, Wednesday afternoon, traders will get an inside look at the April meeting of the Federal Reserve when the minutes from that meeting are released. On the earnings front, this week will be heavy with retail companies reporting. And on Thursday there are four interesting growth stocks that will deliver earnings.

Cabot Undervalued Stocks Advisor

Weekly Update May 22: Crista has several rating changes today: Comerica (CMA) moves from Buy to Hold, Interpublic Group (IPG) moves from Strong Buy to Hold, KLX Inc. (KLXI) moves from Strong Buy to Hold, Martin Marietta Materials (MLM) moves from Strong Buy to Buy and Morgan Stanley (MS) moves from Hold to Sell. She also asks the question—Can the Price of Oil Continue Climbing?

Monthly Issue May 1: Today, D.R. Horton (DHI) joins the Growth Portfolio as a Strong Buy, and PBF Energy (PBF) moves from the Buy Low Opportunities Portfolio to the Growth & Income Portfolio. Also, Crista discusses stock market trends pertaining to energy stocks, financial stocks and takeover stocks.

Cabot Stock of the Week

Weekly Issue May 22: Though most major indexes have yet to break out to new highs, Tim says that trends are definitely improving. In fact, both our long-term and intermediate-term market timing indicators are now positive. Today’s recommendation, is a growing but little-known company in the banking industry. The stock, Green Dot (GDOT) was originally recommended by Mike Cintolo in Cabot Top Ten Trader. There is one rating change: PulteGroup (PHM) moves from Buy to Hold.

Cabot Emerging Markets Investor

Bi-weekly Update May 24: Emerging market stocks have had another soft week, with the iShares EM Fund (EEM) below its 25-, 50- and 200-day moving averages, although Chinese stocks continue to hold steady. Today, Paul sold Petrobras (PBR) in a Special Hotline and tonight he’s moving 58.com (WUBA) to a Hold rating.

Special Bulletin May 24: Petrobras (PBR) gapped down this morning, falling from yesterday’s close of 15.1 to open today at 13.1 and has been skidding slowly lower. The most likely cause of this correction is the company’s decision to cut diesel prices by 10% in hopes of helping to resolve a three-day trucking strike in Brazil. After this kind of gap down PBR is likely to need some time to recover. Accordingly, Paul recommends selling PBR and holding the cash.

Bi-weekly Issue May 17: This issue’s featured stock is Noah Holdings (NOAH), incorporated in 2005, it’s an investment firm that offers other alternatives. Noah offers fixed-income, private equity and securities investments to both high-net-worth individuals and enterprises through its 237 branches and sub-branches in 79 Chinese cities. Tonight, Paul is buying half positions in 58.com (WUBA) and IQIYI (IQ), but earlier this week, he sold out of our remaining shares of Weibo (WB).

Cabot Benjamin Graham Value Investor

Weekly Update May 24: This week’s retail news and earnings reports brought great surges in the share prices of Lowe’s Companies (LOW) and Williams-Sonoma (WSM). Crista has been planning to sell WSM on the rebound to price resistance near 55. News of the earnings beat was enough to drive the stock up 20% to 57 in after-hours trading yesterday. Sell above 54.

Cabot Small-Cap Confidential

Weekly Update May 25: While Tyler is keeping most stocks at Buy this week, he does think near-term upside is somewhat limited and that being more selective with new purchases is a wise decision. He has one rating change, AppFolio (APPF) moves from Buy to Hold.

Monthly Issue May 4: Tyler’s new recommendation is MGP Ingredients (MGPI), also known as Midwest Grain Products, a $1.4 billion market cap company that makes premium distilled spirits, industrial alcohol, specialty wheat starches and specialty wheat proteins. There are no changes to the portfolio, but because it’s earnings season, Tyler suggests keeping new purchases small, particularly for those stocks that have yet to report.

Cabot Dividend Investor

Weekly Update May 23: Chloe says we’re still pretty much in wait-and-see mode, but are cautiously optimistic. Most of our holdings are looking constructive, with AllianceBernstein (AB), American Express (AXP), BB&T Corp. (BBT) and UnitedHealth (UNH) all potentially on the cusp of big breakouts.

Monthly Issue April 25: Chloe is selling one third of our 3M (MMM) shares. This month’s featured buy is McGrath RentCorp (MGRC), which joins the Safe Income Tier.

Cabot’s 10 Best Marijuana Stocks

Summer Issue May 24: With this issue, Tim is replacing two of the portfolio stocks—Emerald Health (EMHTF) and CannaRoyalty (CNNRF)—with new recommendations—Hydropothecary (HYYDF) and iAnthus Capital (ITHUF).

Wall Street’s Best Investments

Daily Alert May 25: TAL Education (TAL) from Cabot Emerging Markets Investor
Daily Alert May 25: Weibo (WB) from Cabot Emerging Markets Investor
Daily Alert May 24: Integra Lifesciences Hldgs Corp (IART) from Argus Weekly Staff Report
Daily Alert May 23: Elbit Systems (ESLT) from Positive Patterns
Daily Alert May 22: Vanguard Selected Value Inv (VASVX) from The No-Load Fund Investor
Daily Alert May 21: Nevro Corp. (NVRO) from Canaccord Genuity Research

Monthly Issue May 16: Our May Spotlight Stock is, Zayo Group Holdings (ZAYO), a cutting-edge technology stock. Nancy’s Feature article its focus on a specific niche within the much-anticipated 5G network arena.

Wall Streets Best Dividend Stocks

Daily Alert May 25: Medtronic (MDT) from Contrarian Outlook
Daily Alert May 24: Physicians Realty (DOC) from The Intelligent REIT Investor
Daily Alert May 23: Alexandria Real Estate Equities, Inc. (ARE) from Barclays Capital Equity Research
Daily Alert May 22: Pembina Pipeline Corp (PBA) from Conrad’s Utility Investor
Daily Alert May 21: Chevron (CVX) from Sound Advice

Monthly Issue May 9: The Spotlight Stock is Discover Financial Services (DFS). While best known for its credit card business, Discover offers a variety of services, from home-equity and student loans to deposit products. Nancy’s Feature explores its benefits.

Premium Reports

Cabot’s 10 Best Takeover Stocks

Special Report May 3: There are a variety of reasons that a corporation might want to purchase another company. They might want to acquire a company’s patents or products to enhance their product lines; access the company’s distribution network and sales relationships; or simply aim to increase their earnings growth rate by purchasing a very profitable company within a related industry. After all, stronger earnings growth leads to better share price appreciation—a topic that boards of directors care very much about. Crista’s investment strategy, which combines both growth and value criteria, inadvertently identifies potential takeover targets. That’s because big companies and she often seek the same thing: stock investments in undervalued, financially thriving companies that can deliver profits to investors. The ten companies are all undervalued growth stocks. What’s more, they’re small enough that big competitors and peers within their sectors could easily finance their acquisitions, often through current cash flow.

Cabot’s 10 Best Covered Calls on Dividend Stocks

Special Report April 12: With interest rates just coming off of historically low levels, income investors have been desperately searching for alternative sources of yield. Dividend stocks are the obvious answer. But there’s an even better way to create yield: by executing a covered call strategy on stocks that pay dividends.

Cabot’s 10 Best Small-Cap Cloud Computing Stocks to Buy Now

Special Report Updated April 15: 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.

Ask the Experts

Cabot Emerging Markets Investor

Question: I am a subscriber to your Cabot emerging market investor newsletter. What trading platform do you recommend for me so I may purchase some of the securities.

Paul: All of the stocks recommended in Cabot Emerging Markets Investor trade on U.S. exchanges and can be bought using an online broker such as TD Ameritrade, E*Trade Financial, Schwab, Fidelity or any other. A little shopping around will find the service with the best combination of trading fees, research resources and news that feels best for you.

Question: BIDU has lost big the last few days. I have an $8000 profit in it. Should I sell it before it drops more? Why is it dropping so fast?

Paul: BIDU is dropping because of the resignation of Qi Lu, the man Baidu hired to run its AI and self-driving cars program. Investors are taking his departure hard, and the stock is suffering as a result. I think it makes good sense to take at least partial profits in BIDU. I would suggest selling half and holding the rest for now. If the stock stabilizes above 230, it should be fine. But if it drops below 210, you should consider reducing your exposure even further.

Cabot Options Trader

Question: Autozone AZO, was hammered this am after earnings (beat). With this big of a drop, what is your thought on buying in after your 3 day waiting period ?

Jacob: To be perfectly honest, I don’t have much of an opinion on AZO. It rarely trades options and given the big decline, I wonder if its in the penalty box for a while. If I were looking to play a bounce, I might look at the September 640 calls. However, I have to be honest, paying $32 for a call $20 out of the money is not something I love. Sorry I don’t have a better answer. It would probably be a stay away for me. Likely better opportunities elsewhere.

Question: I was away during the last couple of weeks and I’m going over the alerts that I missed. For the FCAU covered calls opened on May 8:
I could open the position tomorrow and sell the JUN 22 calls (instead of the 23) for probably $1 - $1.10 (net debit of approx $21.00). My breakeven for this trade would be at about $21.02. Selling the 22 calls increases the chance my position would be called away, but I’m OK with that. Is there anything I’m missing re opening this adjusted position? Since I’m two weeks late, I’m trying to take in premium that’s comparable to what you took in on May 8.

Jacob: The trade idea you had works perfectly. And you should get a better price as FCAU is trading slightly lower this morning following more Trump/Auto/Tariff talk. Big picture I don’t expect this talk to really hurt FCAU as I assume it’s another example of the administration negotiating publicly.

Cabot Dividend Investor

Question: What is the difference between the position size of ‘1' versus ‘1/3'?Or rather, how big is the position size of ‘1'?

Chloe: We don’t use dollar values for the position sizes, since the size of our members’ portfolios can vary widely. Instead, we use the concept of full, half, third, etc. positions. Each investment typically starts as a full position, making it equal in size to each other. So if we buy a $50 stock one month and a $200 stock the next month, we’ll own four times as many shares of the $50 stock. The actual number of shares doesn’t matter though. The position size column includes a number of different values because we’ll sometimes take partial profits or sell part of our position for another reason. That’s how we wind up with values like 1/3, 1/2, etc.

Cabot’s 10 Best Marijuana Stocks

Question:I’d like to know good entry points on the 10 stocks you’re focusing on in this quarter. Im also a subscriber to the Cabot Top Ten trader reports and so I’m more comfortable to be advised by an expert with a ranged entry point.

Tim: Thanks for asking. I’d like to help, but the systems of Cabot Top Ten Trader and Cabot’s Ten Best Marijuana Stocks are so different that it’s not quite appropriate. Top Ten is for traders, with no intended long-term commitment. The stocks are technically attractive now, so it’s appropriate to set short-term entry points (ours are good for two weeks). The marijuana stocks, on the other hand, are the opposite. I believe you should have a bias toward long-term holding of these stocks (as I said in the introduction), but some are not at attractive buy points now—particularly those that have returned to resistance at their January highs. In those cases, either a substantial pullback or a powerful breakout to new highs will provide a better entry point. Having said that, I will give you some guidelines. If I were to try to buy a few at this time, I might target KSHB, ACBFF, CGC at or below 26 and APHQF at or below 9.

Guide to Cabot Prime Pro

This Guide to Cabot Prime Pro will help you make the best use of your Prime membership to create a strong personal portfolio.