Cabot Prime Pro Week Ending August 3, 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.
Also, for those that have had the pleasure of meeting Roy Ward in years past, the good news is that he will be joining us again this year! We’re excited and we can look forward to seeing him again!
Register here at super-low Cabot Prime Pro member pricing.
Cabot Weekly Review (Video)
In this week’s stock market video, Paul Goodwin, chief analyst of Cabot Emerging Markets Investor looks at how the markets have been doing over the past few months and highlights some of the stocks that are on his watch list. Paul looks at CVNA, GRUB, FANG, LULU, ZTO, TCEHY and others.
Advisory Services
Cabot Growth Investor
Bi-weekly Issue August 1: In tonight’s issue, Mike gives you all his thoughts about our stocks and what he’s looking for going forward. He also writes about one of his favorite secondary market timing indicators which is the action of defensive-oriented stocks compared to growth-oriented areas of the market. There are no additional portfolio changes tonight after selling two stocks and a portion of a third earlier this week. The portfolio is now 42% in cash.
Special Bulletin July 30: Our Cabot Tides are now on the fence, as the recent selling has driven small caps, mid caps and the Nasdaq to, or slightly below, their 50-day lines. After today’s selling rout, Mike is going to sell Nutanix (NTNX), which has broken below its prior low and is showing us a loss.
Special Bulletin July 30: This morning, Mike is going to sell Proofpoint (PFPT), which dropped after earnings on Friday. The stock hasn’t tripped our stop, but we have no profit after holding for a few months and the big-volume decline after hitting resistance multiple times tells us the buyers aren’t in the building.The sale of Proofpoint will leave the Model Portfolio with around 32% in cash.
Bi-weekly Update July 25: Mike says to remain mostly bullish, but keep your eyes open. He’s sticking with a heavily invested position, though is keeping a close eye on growth stocks and their reactions to earnings during the next couple of weeks. Tonight, our only change in the Model Portfolio is to place Grubhub (GRUB) back on Buy after a fantastic earnings-induced breakout. Try to buy on dips.
Other Stocks of Interest August 3: Follow ups to stocks featured February 28, 2018 (issue 1388) to August 1, 2018 (issue 1399). 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 August 3: Based on the action of leading stocks this week, Mike says there’s reason for hope, and he might nudge our Market Monitor back up a notch. But his main thought is to be patient and let the market find its way. Today’s Buy Ideas: Carvana (CVNA), Illumina (ILMN), SiteOne Landscape (SITE) and Trex (TREX). There are eight sells this week: Chipotle Mexican Grill (CMG), Nutanix (NTNX), Kohl’s (KSS), Shake Shack (SHAK), TripAdvisor (TRIP), Ultragenyx (RARE), Weight Watchers (WTW) and WPX Energy (WPX).
Weekly Issue July 30: Even amid the recent selling, Mike has seen plenty of positive reactions to earnings and other pieces of news last week, many of which made it into this week’s list. His Top Pick is Advanced Micro Devices (AMD), which is one of the strongest stocks in the market. Given the environment, start small and buy on dips.
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.
Cabot Options Trader Position Update August 3: Jacob thinks of trading Options as an odds game (there is more to it, but big picture it’s all about odds). So he says to himself in the case of our Pfizer (PFE) call buy “Is it likely that PFE, coming off an earnings beat, and a long-term breakout, can rally $1 in the next seven months? Yes he thinks that is very likely.”
Cabot Options Trader Alert August 2: Buy Pfizer (PFE) March 41 Calls (exp. 3/15/2019) for $1.60 or less.
Cabot Options Trader Stock on Watch August 1: One stock that has popped onto Jacob’s radar is Pfizer (PFE). The stock ripped higher following earnings yesterday and is seeing call buying today. If this afternoon the market holds itself together after the Fed and the White House statement Jacob may soon add PFE to the portfolio.
Cabot Options Trader Video Earnings Update August 1: Jacob created a video followup to the detailed earnings write-up for Tesla (TSLA) that you received earlier today. With the extreme nature of put options, he wanted to dive a bit deeper and hopefully expand your understanding further.
Cabot Options Trader Earnings Update August 1: Tesla (TSLA) will report earnings this evening after the closing bell. The stock is trading unchanged today at 300, as the market is slightly higher. For the year, TSLA is lower by 4.24%.
Cabot Options Trader Pro Video Market Update July 31: In this Market Update video Jacob highlights that option order flow has gone from extremely bearish last week, to mixed yesterday, and now slightly bullish today.
Cabot Options Trader Earnings Update July 31: PagSeguro (PAGS) pre-announced preliminary numbers this morning. This seem to be a non-event as the stock is trading marginally lower as the rest of technology continues to struggle. Option activity continues to be wildly bullish so Jacob will continue to hold his position. Jacob also shares his thoughts on iQIYI (IQ) which will report today after the close.
Cabot Options Trader Earnings Update July 31: Apple (AAPL) will report earnings this evening after the closing bell. The stock is trading unchanged today at 190, as the market is marginally higher. For the year, AAPL is higher by 12%.
Cabot Options Trader Market Update July 30: Jacob is going to continue to wait mostly on the sidelines. As he noted early Friday, and had hinted at before then, he was becoming more and more suspicious of this market given the options action. And because option activity has been so spot-on in predicting this slide, he will continue to lean on it for the signal to push into new bullish positions.
Cabot Options Trader Pro Weekly Update July 30: Jacob currently has 6 long positions: EEM, FCAU, ITB, KKR, PAGS, RF, one position not impacting his decision making: KNX and one short position: QQQ
Cabot Options Trader Weekly Update July 30: As Jacob noted on Friday, option order flow continues to be bearish, and he may rebuy our QQQ puts and make that position full again should the put buying continue.
Cabot Undervalued Stocks Advisor
Special Bulletin August 3: CF Industries (CF) rose 12% yesterday after reporting a great second quarter. While Crista admits the price resistance on CF is a bit nebulous, she’s going to stick with her plan and Sell today. Also, Universal Electronics (UEIC) reported second quarter results yesterday afternoon, and raised guidance for the third quarter. The stock was up 22% this morning shortly after the open. There’s upside resistance in the mid-40’s, where the stock rose to this morning, so Crista is moving UEIC from Strong Buy to Hold.
Special Bulletin August 2: Crista reports on six stocks in her portfolio that have reported earnings. CF Industries (CF) moves from Strong Buy to Hold.
Weekly Update July 31: Crista writes that on the bright side, the short-term volatility that’s created by all the fear-mongering has created tremendous opportunities in stocks like Knight-Swift Transportation (KNX), PulteGroup (PHM), Netflix (NFLX) and many more. Stick with companies that are thriving and add to your positions when the market whimsically pummels them. She has one portfolio change today: Alexion Pharmaceuticals (ALXN) moves from Buy to Strong Buy.
Special Bulletin July 26: Crista reports on eight stocks in her portfolio that have reported earnings. Interpublic Group (IPG) and Martin Marietta Materials (MLM) each move from Hold to Strong Buy.
Monthly Issue July 3: Crista says for now, stay focused on GDP if you’re worried about a recession (which she promises you is nowhere in sight), and literally just glance at a two-year stock market price chart if you’re worried about a bear market. Today, CF Industries Holdings (CF) joins the Growth Portfolio and Delek U.S. Holdings (DK) joins the Buy Low Opportunities Portfolio, both as Strong Buys.
Cabot Stock of the Week
Weekly Issue July 31: This week’s recommendation McCormick & Company (MKC), pays a very safe dividend and brings the promise of a bit of capital appreciation as well. The stock was originally recommended by Chloe Lutts Jensen for her Safe Income Portfolio. Tim has five rating changes today: Broadridge Financial Solutions (BR) moves from Buy to Sell, PayPal (PYPL) from Buy to Hold, Teladoc (TDOC) from Buy to Hold, Weight Watchers International (WTW) from Hold to Sell and Zillow (Z) from Buy to Sell.
Cabot Emerging Markets Investor
Bi-weekly Update August 2: Paul has no moves in the portfolio today, as he waits for earnings season to play out. Previous moves to put the portfolio in a defensive stance have given us some protection. But today’s slump in emerging market stocks has put our Buy signal in question and further weakened many of our stocks.
Special Bulletin July 31: Declining markets tend to bring on attacks by short-selling specialists, and today that’s what has happened to GDS Holdings (GDS). Paul says that it’s time to sell GDS and take the profits. And if the market eventually decides that the company is blameless and its reporting is accurate, I’ll be happy to consider it for re-inclusion.
Bi-weekly Issue July 26: Today the Cabot Emerging Markets Timer is showing a very new green light so Paul has several portfolio changes: iQiyi (IQ) moves from Hold a Half to Buy a Half and JD.com (JD) from Watch to Buy a Half. This issue’s featured stock is RYB Education (RYB), a player in the crowded field of for-profit education companies in China. Paul has it rated Buy a Half.
Cabot Benjamin Graham Value Investor
Weekly Update August 2: Crista writes that in recent days, there’s been a proliferation of articles and news commentaries about a tentative shift in the market’s multi-year preference of growth stocks over value stocks. The only point she would like to add is that the terms “growth” and “value” are not mutually exclusive. There are no rating changes today.
Cabot Small-Cap Confidential
Monthly Issue August 3: Tyler’s new recommendation is Bottomline Technologies (EPAY). The company plays in the massive digital payments market. And with customers that are expected to stick with it for a decade or more, the quality of its revenue base is top-notch. After yesterday’s Special Bulletin there are no additional changes to the portfolio.
Special Bulletin August 2: MGP Ingredients (MGPI) delivered Q2 earnings this morning that missed expectations for the second quarter in a row. Tyler is moving MGPI to Sell. Also, AxoGen (AXGN) is moving to Hold after Sales Execution Issues. He’ll get into more details on their earnings reports in tomorrows update.
Special Bulletin July 31: Instructure (INST) reported last night and results were modestly ahead of expectations, with revenue up 30% to $50 million (beating by $600K) and EPS of $-0.24 beating by $0.02. Tyler’s advice for aggressive investors is to step in and buy. Then, give the stock a few days to show us what it’s made of before we discuss our next move. Near-term downside should be limited at current levels. AppFolio (APPF) reported solid Q2 results last night that beat on both the top and bottom lines. Continue to Hold.
Weekly Update July 27: Tyler writes that there was a lot going on in the market this week but news flow from our portfolio holdings was relatively quiet. But, seven positions report next week so it will be a busy week. There are no portfolio changes today.
Cabot Dividend Investor
Weekly Update August 1: Chloe says it’s been an eventful week in the market, as some big earnings blowups worsened the ongoing exodus from leading growth stocks and big tech names. Other aggressive investments, like small- and mid-cap stocks, have also seen selling. There is one rating change today, Chloe is selling a third of the shares in Broadridge Financial (BR), due to technical weakness.
Special Bulletin July 30: Chloe writes that Intel (INTC) fell nearly 7% after reporting earnings Friday, and the stock started today with further losses. She is going to Sell the rest of INTC shares now.
Monthly Issue July 25: This month’s featured buy, McCormick & Company (MKC) was founded in 1889 and has grown to become one of the largest spice and flavoring companies in the world. In addition to their eponymous line of spices, McCormick makes condiments, stocks, oils, recipe mixes, salad dressings, baking ingredients and more. Consumer products make up about 62% of sales. Chloe is adding MKC to the Safe Income tier. Also, she is selling half of BB&T (BBT) today, due to poor technical performance and a lack of support. There are no other changes, but Chloe includes details on plenty of earnings reports.
Cabot’s 10 Best Marijuana Stocks
Update June 14: Tim recently attended the Cannabis World Conference and Business Expo in New York City. His main takeaway from that conference was that the trend continues to gain strength, at a faster rate than expected. He also updates the 10 stocks in the portfolio.
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 August 3: Owens Corning (OC) from Shortex Market Letter
Daily Alert August 3: Myriad Genetics (MYGN) from Shortex Market Letter
Daily Alert August 2: RYB Education, Inc. (RYB) from Cabot Emerging Markets Investor
Daily Alert August 1: SoftBank Group Corp. (SFTBY) from Internet Wealth Builder
Daily Alert July 31: Liberty Global Plc (LBTYA) from The Buyback Letter
Daily Alert July 30: Bausch Health Companies Inc. (BHC) from The Turnaround Letter
Monthly Issue July 18: This month’s issue is our Top Picks for 2018 mid-year update. Capturing first place is Paul Goodwin and Tim Lutts, Chief Investment Analysts for Cabot Emerging Markets Investor and Cabot Stock of the Week. Both picked GDS Holdings (GDS), for a stunning 116.58% return! Also, Nancy updates many of our Top Picks from our January 2018 issue, as well as some additional investment ideas.
Wall Streets Best Dividend Stocks
Daily Alert August 3: Johnson & Johnson (JNJ) from The Investment Reporter
Daily Alert August 2: Mexichem, S.A.B. de C.V. (MXCHY) from Global Investing
Daily Alert August 1: Diageo plc (DEO) from Argus Weekly Staff Report
Daily Alert July 31: Boulder Growth & Income Fund (BIF) from Contrarian Outlook
Daily Alert July 30: Sell Half: Buckeye Partners (BPL) from Energy & Income Advisor
Daily Alert July 30: BB&T Corp. (BBT) from Cabot Undervalued Stocks Advisor
Monthly Issue July 11: This month’s issue is our Top Picks for 2018 mid-year update. Capturing first place, with a gain of 27% is Ingrid Hendershot of Hendershot Investments, who recommended The TJX Companies (TJX). In this issue, Nancy updates many of our Top Picks from our January 2018 issue, and has also added a couple of new Top Picks, as well as a variety of additional investment ideas.
Premium Reports
Cabot’s 10 Best REITs to Buy Now
Special ReportJuly 18: Nancy has always loved real estate; in fact, she owns a small real estate franchise. But she loves the idea of a diversified real estate portfolio and REITs fit the bill. They have been excellent investments for her subscribers over the years as they offer the perfect opportunity to buy real estate with very little capital. And she believes the boom cycle in real estate is far from over. With that in mind, she set out to find the 10 Best REITs for today’s economy and market. She looked at growth, valuation, dividend yield, and fundamental and technical strength.
Cabot’s 10 Best Buy and Hold Stocks for 2018
Update July 13, 2018: Today, Crista updates investors on portfolio news and performance of the stocks in Cabot’s 10 Best Buy and Hold Stocks for 2018. In terms of individual stock performance, Supernus Pharmaceuticals (SUPN) is up 34.6% YTD through July 12, while Universal Electronics (UEIC) is down 28.0% YTD. The performance of the remaining stocks ranges between +19.5% and -18.2%.
Update June 12, 2018: On June 11, 2018, USG Corporation (USG) announced that its Board of Directors agreed for the company to be acquired by Gebr. Knauf KG for $44 per share in cash. Crista suggestion is that investors sell USG now, rather than wait for the remaining $0.96 per share to accrue from the special dividend and the remaining potential capital appreciation.
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 June 18: 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.
A Richer Retirement
Special Report This handbook is designed to help you secure a better, longer, richer retirement for yourself by making the most of your savings both before and during retirement.
Ask the Experts
Cabot Emerging Markets Investor
Question: WB has been going down for quite a while. Do you expect it to come back, or should I sell it before all of my profit is gone?
Paul: I’m sure WB will come back, but I have no idea how low it might go and when it might get back on track. The best way to handle it is to sell now. If you want to sell half of two-thirds of your position and keep the rest on a short leash, that’s up to you. But you should definitely be reducing your exposure and booking some profits now.
Question: My Son “25" told me at lunch today that the game Fortnite is crazy popular. I looked up that it is owned by Epic and that TCEHY bght 40% of same. Wondering if this is worth a shot. TCEHY has done nada this year.
Paul: I think TCEHY is definitely worth a shot, but I’m not sure what’s the right time to take that shot. The stock is still in a downtrend, and there’s nothing that says it can’t go any lower. The prudent thing to do is to wait until TCEHY actually puts in a bottom and then get in as soon as it starts to move up. I just wrote a piece for the Wall Street’s Best Daily series dealing with the comparison between Facebook and Tencent Holdings.
Question: I could use your help today. I never sold HTHT and it is really down 13% on greater than average volume. I don’t find any news. Do you know the reason? And what is your opinion?
Paul: I can’t find any reason for the decline in HTHT either. But it really doesn’t matter, does it? The company will report its Q2 results on August 22 after the close, but it’s pretty clear that HTHT has lost at least one major institutional holder. The most important thing right now is for you to protect your capital by selling the stock. Don’t worry about whether it will bounce tomorrow or will rally back in the future. Second-guessing sell decisions is a losing strategy. If the stock comes back, you can always buy it again.
Cabot Options Trader
Question: If possible, can you do a trader earnings update for me on Jul 31 for SHOP. I believe it should report earnings on Aug 1st before the market opens.
Jacob: With the stock trading at 152, the options market is pricing in a move of $13, or 139 to the downside and 165 to the upside. Skew is pricing in extreme risk to the downside and upside. Open interest is skewed bearish on a ratio of 1.7:1 put over call. On Friday a trader bought 1,200 August 160 puts for $7.80. (Though of note I’ve seen tons of this small, but noticeable put activity in tech names for the last two weeks.)
Also, I have a different earnings date than you. I have 7/31 before the market opens.
Subscriber Response: I did not care which date was correct. To play it safe, I chose your date to get ahead of the game. I sold 1/3 of my position. For the rest, I sold a deep in-the-money call down to 180 in Canadian dollars expiring this Fri, Aug 3. I received $16 in Canadian$ for the call. The stock is trading around 180 in Canadian$ at the moment. I couldn’t believe that I almost did a perfect job with your help.!
Question: Hello Jacob: First of all congrats because I did 30% on my portfolio last month with your suggestions. But I have a question that always cross my mind and please see if you can answer short and precise: When you consider that an option is cheap or is not? Is there any formula?
Jacob: That is a great return! Nice trading by you! Your question is a great one. In essence I think of trading Options as an odds game (there is more to it, but big picture its all about odds). So I say to myself in the case of our Pfizer (PFE) call buy “Is it likely that PFE, coming off an earnings beat, can rally $1 in the next seven months? Yes I think that is very likely.” And if I only have to risk one or two dollars for that much time, with that much upside potential, then I think the call is cheap. And if I’m right, and PFE rallies a couple dollars, because the calls were so inexpensive, this trade could easily be a couple hundred percent winner.
Cabot’s 10 Best Marijuana Stocks
Question: Good day Mr. Lutts, I read in a recent Cabot Flyer (e-mail) that the next 10 Best Marijuana Stocks will be sent out in August. I wait patiently for each report but once I hear its release is near, I look forward to it. I am looking forward to your new report to guide my planned purchases. Would you know on which day (date) in August, it will be released?
Tim: The next full issue of Cabot’s Best Marijuana Stocks will be published August 30. Previous issues have been early-to-mid-month, but we’re shifting the timing to get around the Cabot Summit (August 15-17) and to get beyond earnings season. As to the stocks, there are no obvious clinkers today, so if there are to be any sales, they are as yet unidentified. The sector is currently building a normal base (with the exception of TPB which hit a new high this week), so nibbling on any of the other nine would be okay.
Guide to Cabot Prime Pro
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