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Weekly Summary February 8, 2019

Cabot Prime Pro Week Week Ending February 8, 2019

Cabot Weekly Review (Video)

In this week’s stock market video, Mike Cintolo discusses the market’s recent pullback, which finally arrived after six weeks of strong action. Further dips are possible, but Mike sees lots of “normal” action to this point, and with the intermediate-term trend still solidly up, he’s thinking dips will provide solid entry points for a variety of leaders.

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Cabot Growth Investor

Bi-weekly Update February 7: The sellers finally showed up today, with some negative headlines causing the market to pull back. So far, though, retreats from the major indexes and leading stocks have been totally normal, and most of the evidence continues to point to higher prices ahead. In the Model Portfolio, Mike is standing pat tonight with 35% in cash, though he’s spying a few names for possible new buying.

Bi-weekly Issue January 31: The market has been acting in a near picture-perfect manner for the past few weeks, and Mike has responded by steadily adding to our exposure—he put 15% of our cash to work in early January, another 20% last week when our Cabot Tides turned positive, and tonight he’s adding one new (but familiar) name to the Model Portfolio, Exact Sciences (EXAS), leaving us with around 35% on the sideline. There are still headwinds (like our Cabot Trend Lines being negative), so he’s not flooring the accelerator, but as the evidence has improved, he’s grown more optimistic.

Other Stocks of Interest February 1: Follow ups to stocks featured August 29, 2018 (issue 1401) to January 131 2019 (issue 1412). 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 February 8: After six very strong weeks on the upside, the sellers finally showed up in the middle of the week. Mike remains mostly optimistic longer term, as enough bullish evidence has accumulated to think the path of least resistance is up. Shorter term, Mike thinks picking your spots makes sense, as does honoring your stops and seeing how this pullback unfolds. Mike’s Buy ideas this week are: Array Biopharma (ARRY), Cronos (CRON),Five Below (FIVE), and Incyte Corp. (INCY). There are a few sells today, Tableau Software (DATA), Vertex Pharmaceuticals (VRTX) and Cooper Tire (CTB) which looks okay but doesn’t appear to be a leader.

Weekly Issue February 4: It’s now been six strong weeks for the overall market, with the market’s evidence steadily improving over that time—it’s not a raging bull market yet, with relatively few new highs and a still-iffy longer-term trend, so pullbacks are possible (likely?), but there’s no question that the buyers are in control, and the lack of selling pressures seen is a good sign. Tonight’s list has a great batch of diverse stocks with Mike’s Top Pick being Entegris (ENTG), where an upcoming merger has investors piling in.

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 Stock on Watch February 6: One of Jacob’s most successful strategies is targeting an earnings season winner that is attracting bullish options activity. This afternoon, his options scanner has found that combination in Corning (GLW) and it now at the top of his watch list.

Cabot Options Trader Position Pro and Earnings Update February 6: Twitter (TWTR) will report earnings tomorrow before the open. Having sold the first half of the position for a profit of 26% the second half of the position is now at a 12% gain. This earnings event is significant as it will make or break this position. Jacob outlines what is expected and also details the earnings expectations for GrubHub (GRUB).

Cabot Options Trader Position and Earnings Update February 6: Twitter (TWTR) will report earnings tomorrow before the open. Having sold the first half of the position for a profit of 23% the second half of the position is now at a 15% loss. This earnings event is significant as it will make or break this position. Jacob outlines what is expected and also details the earnings expectations for GrubHub (GRUB).

Cabot Options Trader Earnings February 6: ON Semiconductor (ON) is trading higher by another 4.5% today and at a new multi-month high. The calls are now at a potential profit of 100%. Jacob is going to hold onto his position as the stock looks great, and option order flow was bullish yesterday as a trader bought 9,000 March 22 calls.

Cabot Options Trader Stock on Watch February 5: The vicious rotation in and out of sectors in recent years has pushed Jacob to keep a diverse portfolio of stocks. Likely due to strong earnings from Ralph Lauren (RL) and Estee Lauder (EL) this morning, many retail and consumer discretionary stocks are suddenly red hot. One of the companies Jacob now has his eyes on is Etsy (ETSY) which has seen some recent call buying.

Cabot Options Trader Earnings February 5: Jacob evaluates the earnings set-ups for the following companies: Tableau Software (DATA), Walt Disney (DIS), and General Motors (GM) which all report earnings prior to the open tomorrow.

Cabot Options Trader Position Update February 4: ON Semiconductor (ON) reported earnings after the close Friday that beat expectations. Today the stock is making a new recent high at 21.35, and the calls continue to perform well. That said, Jacob did want to bring to your attention some bearish option action this afternoon if you wanted to sell for a profit.

Cabot Options Trader Weekly Market Update February 4: The combination of strong earnings and a dovish Federal Reserve sparked another impressive week for the market. The S&P 500 gained 1.57%, the Dow rose 1.32%, and the Nasdaq added 1.38%. The Chicago Board of Options Exchange Volatility Index (VIX) closed the week at 16.15, or lower by 7.35%. Essentially it was an ideal week for volatility sellers as the known worries have seemingly dissipated ... for now.

Cabot Options Trader Pro Weekly Market Update February 4: Jacob has seven long positions: CIEN, ON, PE, RF, TWTR, SBUX and ZS, one position not impacting his decision making, PSTG and one short position, QQQ.

Cabot Undervalued Stocks Advisor

Special Bulletin February 8: Skechers (SKX) had strong fourth quarter results and the stock is still rated a hold. Crista also likes the price action on Commercial Metals Company (CMC) where the stock has fallen toward the bottom of a two-month trading range. Risk-tolerant investors could continue to buy at the current price.

Special Bulletin February 7: Marathon Petroleum (MPC) and Voya Financial (VOYA) report strong fourth-quarter results; Total SA (TOT) reported an earnings miss; and price action on Comerica (CMA) and Guess? (GES) has caught Crista’s attention.

Monthly Issue February 5: Crista is not putting any new money to work as she is getting prepared to buy on pullbacks. Here are today’s portfolio changes: Apple (AAPL) moves from Buy to Hold, Apollo Global Management (APO) moves from Buy to Hold, Blackstone Group LP (BX) moves from Strong Buy to Buy, Comerica (CMA) moves from Hold to Buy, Commercial Metals (CMC) moves from Buy to Strong Buy, Delta Air Lines (DAL) moves from Buy to Strong Buy, D.R. Horton (DHI) moves from Buy to Hold, Knight-Swift Transportation (KNX) moves from Buy to Hold, Marathon Petroleum (MPC) moves from Buy to Strong Buy and Supernus Pharmaceuticals (SUPN) moves from Buy to Strong Buy.

Special Bulletin February 4: Alexion Pharmaceuticals (ALXN) reported yet another earnings and revenue beat this morning. It remains on HOLD, but Crista will be looking to place it back on BUY with a pullback.

Weekly Update January 29: Crista says the stock market recovery continues in a slightly better style than she had hoped for. She had expected big upswings followed by pullbacks, which is normal for a recovery. What she hadn’t expected is that there are lots of great stocks trading out of synch with each other; some peaking within trading ranges while others are bottoming within trading ranges. Here are today’s portfolio changes: DowDuPont (DWDP) moves from Buy to Strong Buy, Marathon Petroleum (MPC) moves from Hold to Buy and Universal Electronics (UEIC) moves from Hold to Strong Buy.

Cabot Stock of the Week

Weekly Issue February 5: Market trends remain quite positive, and Tim continues to recommend that you work to get more invested. Today’s recommendation, AbbVie Inc. (ABBV), is a well-known medical stock that really at a bargain, that’s due for a correction. One portfolio change today, downgrading Apollo Global Management (APO) to hold.

Cabot Emerging Markets Investor

Bi-weekly Issue February 7: Emerging market stocks remain in an uptrend, though like most stocks around the globe, a little resting wouldn’t be uncalled for after the recent run-up. Carl has two new buys today, Nio Inc. (NIO) and Sea Limited (SE). Many of his recommendations are making solid progress, and he’s optimistic both of these can be leaders going forward.

Bi-weekly Update January 31: Emerging markets (EEM) continue to gain ground, and just today moved above their 200-day average. Since the S&P 500 index bottomed the day after Christmas, the EEM has risen 14% to reach a seven-month high. The Emerging Markets Timer remains positive, so Carl continues to lean bullish and thus is moving Alibaba (BABA) from a Hold a Half to a Buy a Half.

Special Bulletin January 28: Vale SA (VALE), rated a hold in the portfolio, said Monday it had suspended dividend payments and share buybacks as the miner faces spiraling losses over its dam that burst leaving hundreds of people missing and presumed dead in southeast Brazil. Thus Carl recommends you Sell your shares.

Cabot Small-Cap Confidential

Weekly Update February 8: The market continues to look good as stocks are grinding higher with a few normal-looking down days mixed in (like yesterday), keeping investors honest. Tyler is encouraged by the price action for many of the stocks in the portfolio, with a few companies having reported earnings this week and a number on tap for next week too. There are two rating changes with Arena Pharmaceuticals (ARNA) and Rapid7 (RPD) moving to hold.

Monthly Issue February 1: Today’s stock, Avalara (AVLR) is a cloud-based provider of sales and indirect tax compliance software. Its motto is “tax compliance done right.” To achieve its vision of being part of every transaction in the world the company has developed solutions that help customers become more efficient and accurate with respect to sales tax calculations, returns filing and remittance. Following this Issue is the full text of Tyler’s 2019 Small Cap Outlook.

Special Report: 2019 Small Cap Outlook

Cabot Dividend Investor

Weekly Update February 6: Tom believes the market is looking healthy again the next stages of this market should be ideal for dividend payers. The relative return of dividend stocks in the upcoming quarters and years could be the best in a long time. There is one rating change today, CME Group (CME) which Tom is selling half and holding the remaining for the promising fourth-quarter earnings announcement.

Monthly Issue January 30: Right now Tom is favoring the more recession-resistant, safe stocks. His featured stock this month is, AbbVie Inc. (ABBV), a Chicago-based biopharmaceutical company formed in 2013 when it was spun off from Abbott Laboratories (ABT). The spinoff has already eclipsed its old parent in size and is now the eighth-largest pharmaceutical company in the world. There has been one rating change since last week’s update: STAG Industrial (STAG) was upgraded from a HOLD to a BUY. The reason for the change is momentum and performance. The stock is consistently outperforming the market on both the upside and the downside.

Cabot Marijuana Investor

Monthly Issue January 31: The portfolio’s cash level is in the high teens, and Tim would like to reduce that, ideally on a substantial correction by the sector. For now, that cash will sit. What he will do is sell a third of Canopy Growth (CGC) and Cronos (CRON) tomorrow, using the average price of the day, and reinvest the proceeds equally in Cresco Labs (CRLBF) and KushCo (KSHB) and new addition Elixinol (ELLXF).

Update January 23: Time writes that we are in the midst of a cultural shift, but still far from through it. Marijuana is still far from universally accepted, and until it is, the sector will continue to have great growth potential. That’s how investing works. In this update he reviews all the sales, full and partial, of the Cabot Marijuana Investor Portfolio since inception and gives you the results.

Wall Street’s Best Investments

Daily Alert February 8 Fidelity Europe (FIEU) from Fidelity Monitor & Insight
Daily Alert February 7: J.B. Hunt Transport Services, Inc. (JBHT) from Argus Weekly Staff Report
Daily Alert February 6: Arena Pharmaceuticals, Inc. (ARNA) from Cabot Stock of the Week
Daily Alert February 5: AdvisorShares Ranger Equity Bear ETF (HDGE) from Nate’s Notes
Daily Alert February 4: VanEck Vectors Gold Miners ETF (GDX) from Jack Adamo’s Insiders Plus

Top Picks Issue January 16: In this issue, Nancy recaps the big winners from last year. For our Top Picks 2019, she has a huge variety of investments for your review.

Wall Streets Best Dividend Stocks

February 2019 Issue February 6: In this issue, Nancy is a bit more optimistic as she feels investors are remaining bullish. Her Spotlight Stock is Janus Henderson Group plc (JHG) which is an independent asset manager, specializing in active investments. They have double-digit growth in an expanding industry, a healthy stock repurchase program, and the shares look very attractively valued.

Daily Alert February 8: Bemis Company, Inc. (BMS) from Directinvesting.com
Daily Alert February 7: Duke Energy Corporation; 5.625% Fixed Rate (DUKB) from Income Securities Investor
Daily Alert February 6: Easterly Government Properties, Inc. (DEA) from The National Investor
Daily Alert February 5: Kinder Morgan, Inc. (KMI) from High Yield Wealth
Daily Alert February 4: Quaint Oak Bancorp, Inc. (QNTO) from Hughes Investment Management

Ask the Experts

Cabot Options Trader

Question: Hope you had a great weekend. Got a question on what to do with my TEAM positions. I bought 200 TEAM at $89.47, so am sitting on a $2469 or 13% gain with the stock at $102.18. Simultaneously I sold 2 TEAM 2/15 90 calls for $7.17 that are now valued at $12.90 , for a loss of $1146. My question is - should I let the options expire, pocket the initial revenue from the sale and lose the potential gains and possibly more which may come, or buy the calls back and protect my gains and potential further gains in the equity position – I do like being in this sector and stock and would value your input.

Jacob: Great buy on the stock! Did you buy it on the drop shortly after earnings? I was debating buying it that day, but wimped out. So this is not going to be a great answer because big picture its your call to make on the future of TEAM and the risk you want to take. But let’s start here ... If I liked the stock/sector ... I could buy back the calls for the loss and sell a new set of calls closer to the current stock price. Maybe the March 105 calls for $4.50 or longer term the June 110 calls for $8.50. Or a combination of these ideas. This is the more risky way of playing it, but gives you more upside. Another way I could handle this, especially if I have mixed emotions, is simply take off one covered call as noted above, and sell one of the new calls listed above. And then let the remaining one covered call play itself out (you would likely lose the stock in February). Big picture, great trade by you!

Question: I kept my shares of XLNX options (I was on vacation at the time you advised selling). Obviously, I’m glad I still own the options. What would you recommend I do now? Should I sell them between now and March? Or do you think I should exercise the option come March? What would be your suggestion based on different market scenarios?

Jacob: First off, I’m thrilled you were on vacation and didn’t sell! That sale haunts me, but I had to stick to my stop, and at the time of my sale the market was totally unwinding. So I live with the mistake and a 75% profit. Now how I would manage this position? I really like XLNX, and if the market can stay in gear, I continue to think XLNX will work well. However, should the market lose steam I would expect XLNX will fall as well. So I would manage this position like I do with all of our big winners. I would set a mental stop below. So with the calls trading at $30 today, perhaps I would set a mental stop at $23. That way I wouldn’t get shaken out should the stock fall a couple dollars, but this would stop me should the stock really fall apart. This will also prevent me from selling should the stock continue to run. And as the stock runs higher, I would raise my stop along the way. Of note, XLNX got downgraded this morning, which explains the weakness today.

Cabot Small-Cap Confidential

Question: I’m looking for one, or a few, of your reports that are specific towards small-cap software/cloud-based technology stocks. Thanks for all your help.

Tyler: It’s been little while since a big update on specific small cap software/cloud names given my focus on medical technology themes in Q4 2018. That said, last week’s Issue (the February Issue), featuring Avalara (AVLR), a cloud-based provider of tax compliance software, should be taken as a sign I still like the group. As should buy ratings on many current cloud software positions (EVBG, QTWO, etc.). Also, in my 2019 Small Cap Outlook I put together a few thoughts together on this space.

Question: Tyler, although Goosehead reported Q3 earnings on 11/5/2018, “Q4 earnings will tentatively be announced 03/13/2019. With 4 analysts covering GSHD, the consensus EPS estimate is $0.05, and the high and low estimates are $0.06 and $0.04, respectively. Expected Timing: After close”. And other than Form 4 filing notices, there’s no news provided by Schwab. Your thoughts?

Tyler: I think consensus estimates are about the best guess right now. Obviously we’ll know more about how the business model is working after the earnings report. But the trends have thus far seemed positive. And it will be interesting to see if management does end up issuing a special dividend by the end of March (probably at the same time as issuing earnings, if it’s going to), as it hinted it might on the last conference call. In terms of things to watch out for, on the last conference call management pulled out slowing mortgage originations as the biggest potential near-term headwind (partially offset by new referral partners). That’s one thing that we’ll want to keep an eye on in early-2019, but I think estimates are factoring that in. In short, there’s not a lot of new information to go on since the last report (good, or bad), so I haven’t changed my outlook on the stock. I continue to think it’s a good long-term buy, and that over time the float should increase and bring in a more diverse shareholder base (which I think will be a positive).

Cabot Growth Investor

Question: With the market having had a big run and now touching its 200-day moving average, should we hold off on new buying given that the market might correct?

Mike: No, we wouldn’t go that far for two reasons. First, there’s no telling if the market is going to pull back, though we agree the risk of a dip is rising. Second, and more important, it really depends on the action of an individual stock -- if something has a great story and excellent numbers and is at an attractive entry point, it can be bought. Conversely, waiting on names that are extended makes sense. So it’s more of a stock-by-stock situation -- be discerning, but don’t avoid buying because of a possible short-term dip.

Cabot Undervalued Stocks Advisor

Question: May I have your opinion on ICE?

Crista: Intercontinental Exchange’s (ICE) earnings growth is expected to slow to 9% in 2019, while the P/E is high in comparison at 20. ICE therefore doesn’t fit my investment strategy, although it’s certainly not a “problem stock”. If I already owned it, I would use a stop-loss order at 74.50. If it rose to its recent high around 81, I’d cancel the stop-loss order and I’d sell at 81, moving on to a more undervalued growth stock.

Premium Reports

Cabot’s 10 Best Stocks to Buy and Hold for 2019

Special Report

January 3: Crista has designed this portfolio of 10 stocks to compete with the S&P 500 during the coming year, with no trading, no buying and no selling whatsoever.

Cabot’s Best Safe Investments for Uncertain Times

Special Report

December 21: This report gives you some suggestions of the safest, productive places to put your money when the market gets bumpy.

Cabot’s 10 Favorite Low-Priced Stocks for 2019

Special Report

December 13: Welcome to Cabot’s 10 Favorite Low-Priced Stocks for 2019, our annual pick of some little-known stocks that, for one reason or another, have a great shot of tacking on some great gains in the short-term (and, if things go well, longer-term, too). Of course, the market environment hasn’t been following the usual script—instead of a strong November-December, the market is scuffling. That will require some patience and picking your spots on the buy side, but ideally will work to our advantage (creating more advantageous entry points), too.

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.

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.