Cabot Prime Pro Week Ending July 27, 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 Quarterly Market Report and Teleconference
2Q 2018 ReportIf the first quarter of 2018 was characterized by two major corrections (the first in February, and its echo in March), then the second quarter of 2018 was characterized by recovery—but a recovery so camouflaged by frequent corrections and a lagging Dow and continuing economic uncertainty that most investors barely recognized it. You can listen to the Quarterly Analyst Teleconference here.
Cabot Weekly Review (Video)
In this week’s stock market video, Mike Cintolo discusses the still-positive trends in the major indexes and most leading stocks, but he does have his eye on a couple of yellow flags, including some stalling out among growth stocks while money flows into beaten-down areas. It’s something to watch, but Mike’s just going with the evidence (which remains mostly positive) and highlights a handful of current and potential leaders to watch as earnings season progresses.
Advisory Services
Cabot Growth Investor
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.
Special Bulletin July 24: Mike is going to sell one-third of our shares in Five Below (FIVE) tonight, taking partial profits after a good rally. Longer-term, he still believes the stock has further to run, but after its recent action he’ll take some off the table. He’s also going to place Shake Shack (SHAK) on Hold, as the stock had hit resistance a couple of times in recent weeks ahead of earnings.
Bi-weekly Issue July 18: Mike says that the market’s action since its late-June shakeout has been solid, with the major indexes and many leading stocks pushing back toward new high ground. Granted, not everything looks perfect, but the majority of evidence remains positive, including our trend-following indicators, so he remains mostly bullish. He also dives into a market-based study that asks the question: What happens after big market up years? There are no portfolio changes tonight.
Other Stocks of Interest July 20: Follow ups to stocks featured February 14, 2018 (issue 1387) to July 18, 2018 (issue 1398). 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 July 27: Today, Mike says it’s best to take things on a stock-by-stock basis—things that react well to earnings should be held (partial profits are fine, but he’d generally hold most of your shares), while things that trip your stop (on earnings or not) should be dumped. Today’s Buy Ideas: Advanced Micro Devices (AMD), Coupa Software (COUP), Illumina (ILMN) and Yext (YEXT). He has more than a few sells this week from Top Ten based on weakness: Abiomed (ABMD), Align Technology (ALGN), Carrizo Oil & Gas (CRZO), Exact Sciences (EXAS), iRhythm Technologies (IRTC), Loxo Oncology (LOXO), Shutterfly (SFLY), Twitter (TWTR) Urban Outfitters (URBN) and Willams Sonoma (WSM).
Weekly Issue July 23: This week’s list is again heavy on growth stocks, though a couple of turnarounds make the list, too. Our Top Pick is one of the first earnings winners of the season—V.F. Corporation (VFC) is a steady-eddy type of company that just lifted from a six-month consolidation after topping estimates.
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 July 27: Jacob is raising his stop on our KKR (KKR) position. While the stock continues to look great, and our position is at a profit of over 100%, he is going to raise the stop from $1.44 to $2. While the recent option activity has been concerning, in the big picture the indexes mostly look fine and the VIX is not flashing any warning signs as it trades below 13. Should option activity swing back bullish, Jacob has a growing list of strong earnings names he is patiently waiting to get involved with.
Cabot Options Trader Earnings Update July 26: Jacob gives his take on Amazon (AMZN) and Intel (INTC) who are both reporting earnings after the market close today. He also gives us several scenarios regarding Facebook (FB) options.
Cabot Options Trader Market Update July 25: Jacob says that even though put buying has picked up, the market is essentially trading sideways and is doing a great job of absorbing the nonstop “negative” headlines. One stock that has hit his radar the last two days for unusual call activity is ETrade (ETFC). He also updates Facebook (FB) which is reporting earnings today after the close.
Cabot Options Trader Earnings July 25: KKR (KKR) will report earnings tomorrow before the open. Jacob is currently holding a half position that is up over 100%. He is going to hold the position through earnings as the stock continues to look great. He also writes up Paypal (PYPL).
Cabot Options Trader and Pro Alert July 25: Sell Half of Existing Position: Sell HALF your Housing ETF (ITB) December 41 Calls for $0.60 or more.
Cabot Options Trader Pro Alert July 24: Close Existing Position: Close your S&P 500 ETF (SPY) September 295/300 – 220/215 Iron Condor for $0.31 or less.
Cabot Options Trader Earnings July 24: Tomorrow morning Fiat Chrysler (FCAU) will report earnings. We are currently long FCAU stock and short the August 21 Calls. Jacob is going to continue to hold the buy-write as option order flow has been bullish for months. Jacob also writes about GrubHub (GRUB).
Cabot Options Trader and Pro Alert July 23: Roll Position: Sell your PagSeguro (PAGS) November 35 Calls and Buy the November 30 Calls.
Cabot Options Trader Pro Weekly Update July 23: Regarding PagSeguro (PAGS), It is very likely that Jacob will roll to a strike closer to the current stock price in order to get better exposure to a potential PAGS turnaround.
Cabot Options Trader Weekly Update July 23: Jacob writes that earnings season really ramps up this week, with one-third of the S&P 500 reporting.
Cabot Undervalued Stocks Advisor
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.
Weekly Update July 24: Crista writes that if you are a growth stock investor with a disciplined investment strategy, you should consider owning NFLX. She personally loves to buy popular, large-cap growth stocks when they are occasionally cheap, such as Facebook (FB) in late 2016, Alphabet (GOOGL) in late 2017 and Apple (AAPL) right now. If she were a pure growth investor, she’d watch for a near-term opportunity to buy NFLX below 355. There are no rating changes today.
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 24: We tried our hand with Carvana (CVNA) last July, but our timing was off—shares knocked us out after a few weeks as the post-IPO droop took effect. But the fundamental story never faltered, and after a huge 11-month consolidation (which included a 50% correction), the stock has broken free on the upside. So we’re getting back onboard.Tim has one rating change today: BB&T Corp. (BBT) moves from Hold to Sell.
Cabot Emerging Markets Investor
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.
Bi-weekly Update July 19: Emerging market stocks have been attempting to bounce after a sharp selloff in late June, but haven’t been able to hold up to investors’ fears of a trade war between the U.S. and China. Paul has two moves in the portfolio this week: He’s selling 51Job (JOBS), which has kept drifting lower and he’s lowering our half position in ZTO Express (ZTO) to a Hold rating.
Cabot Benjamin Graham Value Investor
Weekly Update July 26: Crista writes that we’re going through a period of tremendous stock price volatility, very similar to the aftermath of a correction in the broader stock market, except this particular price action is affecting random individual stocks and industries. Hold on tightly to your high quality stocks. There are no rating changes today.
Cabot Small-Cap Confidential
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.
Special Bulletin July 26: Shares of IntriCon (IIN) are rocketing higher today after the company turned in a far better quarter than expected. Officially, Tyler is moving IIN back to Hold until he can better gauge the stock’s next move.
Monthly Issue July 6: Tyler’s new recommendation is Chefs’ Warehouse (CHEF). With this month’s new addition, Tyler decided to go in a different direction then he has with previous recommendations. Instead of featuring another rapid-growth medical device or software stock, he’s selected a consumer defensive stock in a very specialized industry and with a more modest growth profile. There are no changes to the portfolio.
Cabot Dividend Investor
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.
Weekly Update July 18: Chloe writes that markets remain strong. The major stock market indexes all ended last week in the black and, after a brief pause Monday, advanced strongly yesterday. She also provides earnings dates and expectations for most of our other stocks. There is one rating change today, McGrath RentCorp (MGRC) moves to Hold, after it violated its 50-day moving average.
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 July 27: Industrias Bachoco, S.A.B. de C.V. (IBA) from Positive Patterns
Daily Alert July 26: Teladoc (TDOC) from Pivotal Point
Daily Alert July 25: DXC Technology Company (DXC) from Dow Theory Forecasts
Daily Alert July 24: NetApp Inc (NTAP) from Argus Weekly Staff Report
Daily Alert July 23: Ligand Pharmaceuticals (LGND) from Cabot Growth Investor
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 July 27: Kimco Realty Corporation (KIM) from Barclays Capital Equity Research
Daily Alert July 26: iShares Select Dividend ETF (DVY) from The Personal Capitalist
Daily Alert July 25: RLJ Lodging Trust (RLJ) from Sound Advice
Daily Alert July 24: Supremex Inc. (SXP.TO) from The Income Investor
Daily Alert July 23: Washington Prime Group (WPG) from Forbes Dividend Investor
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: Can you give me your thoughts on Bilibili.
Paul: I hope the golf is going well, because the market is giving me fits. I’ve had Bilibili on my radar since its IPO in March. It’s an intriguing story, but right now story isn’t the most important thing. The real thing to be watching is the chart for BILI and the chart for the Golden Dragon ETF (PGJ) that tracks Chinese ADRs. PGJ has been up and down all year, and threw a shoe in late June. Since that big correction, it has been trading sideways without being able to make much progress and took a real hit today. The chart for PGJ tells me that investors are just not interested in Chinese stocks right now, which will be a real headwind for BILI or any other stock, whether a recent IPO or a Red Chip. The chart for BILI is pretty much dancing in parallel with PGJ. The stock traded as high as 22 in June, but fell back to its May low in today’s nasty market. There will be a time to invest in BILI, but not until the market settles down and the chart tells us that people are ready to take on some Chinese exposure. It’s possible that BILI has put in a bottom and is a good buy here, but I don’t see any evidence of that. When playing with high-risk equities, it’s better to be a little late getting in than taking a chance to tag the bottom.
Question: You asked whether BZUN or RYB might be candidates for inclusion in the EM portfolio.
Paul: I would say that Baozun (BZUN) is a real possibility. I had BZUN in the portfolio in the middle of 2017, but made the mistake of bailing out when it went sideways for a couple of months. It’s a good story—being a brand partner to non-Chinese companies and running their sales operations inside China—and revenue and earnings projections are solid. I’m in the process of making the decision on which stock to cover in this week’s issue, and BZUN is in the mix. The final decision will be made based primarily on which of the final candidates has the strongest chart at the time. RYB Education (RYB) is also an interesting story. In fact, I just wrote a Wall Street’s Best Daily piece that included my take on the company. I also see that the stock just picked up coverage from Jefferies Financial Group, which is a positive sign.
Cabot Options Trader
Question: PAGS Had it locked up expiration today. Is this one of the reasons for the bullish tone on the stock? Are you seeing really bullish activity in the option threads (Can you cite some examples of these trades please )? Thanks
Jacob: Here are some recent examples: Buyer of 9,000 PagSeguro (PAGS) August 25/30 Bull Call Spreads for $2.25 – Stock at 26.75, Buyer of 6,000 PagSeguro (PAGS) August 30 Calls for $1.05 – Stock at 27, Buyer of 2,000 PagSeguro (PAGS) August 30 Calls for $1.70 – Stock at 27.5 (also buyer of July 30 calls and November bull risk reversals) and Buyer of 4,000 PagSeguro (PAGS) September 30/35 Bull Call Spread for $1.80 – Stock at 29.5
Question: I’ve been on board Options Trader Pro with you since day one. Your analysis and picks are very valuable to me. I would like your opinion on something. I’m considering buying a long call on KMI not too far out of the money, maybe a leap. The company is shoring up it’s balance sheet, prospects of increasing dividends and lucrative positions in pipelines in the Permian. My question is how far out I should go. I think the stock could hit 20 within a year. At what point is the option premium too excessive?
Jacob: Thanks for being on board and for the kind words. I haven’t looked at KMI in awhile. But since you brought it to my attention I dug into the options.
First off the calls are incredibly cheap across the board. For example, to pay $0.90 for the January 18 seems like a fantastic risk/reward. Similarly the March 18 calls for $1.05 are cheap, and so are the January 20 calls for $1.09 (exp. in 2020). Basically there isn’t an option out there that I think is expensive. And if it were me, and I liked the upside potential, I might target the March 18 or 19 call, or longer term the January 20 call expiring in 2020.
Guide to Cabot Prime Pro
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