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Weekly Summary May 17, 2019

Cabot Prime Pro Week Week Ending May 17, 2019

Stock Recommendation Tracker

The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any changes to our recommendations over the previous week. We include this table at the bottom of the Weekly Summary, and provide a link here at the top to the Stock Recommendations Tracker.

Cabot Weekly Review (Video)

In this week’s stock market video, Mike Cintolo dives into the market’s wild action of late and what it means—in a nutshell, he’s still cautious, though it’s hard not to be encouraged by the snapback late this week, especially among leading growth titles. Even so, the onus remains on the bulls to prove the sellers are out of ammo; until then, Mike is mostly holding his strong performers (of which there are many) and being choosy on the buy side.

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Advisory Services

Cabot Growth Investor

Bi-weekly Update May 16: The market’s three-day rally has been solid, but even better than that has been the action of growth stocks, many of which have zoomed to new highs. Even so, our Cabot Tides remain negative. While a bit more strength could have Mike doing a little buying, he thinks our current stance (27% cash, lots of strong stocks) is appropriate for now. His only change tonight is placing Twilio (TWLO) back on Buy.

Special Bulletin May 14: Our Cabot Tides turned negative today, telling Mike the intermediate-term uptrend has broken. While the overall bull market is intact, it’s best to pare back on losers and laggards. We came into today with 20% in cash, and Mike is going to sell our stake in Carvana (CVNA) and sell another one-third of our position in Five Below (FIVE). That will leave us with 28% in cash, and he has a couple other positions on tight leashes.

Bi-weekly Issue May 9: In the Model Portfolio, Mike came into this week with 20% in cash, and most of his issues are acting well. But he did downgrade a couple of stocks to hold and have one (Workday) on a tight leash. There are no changes tonight, but he’ll be in touch if that changes.

Other Stocks of Interest May 10: Follow ups to stocks featured December 5, 2018 (issue 1408) to May 9, 2019 (issue 1419). 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 May 17: Mike continues to think the longer-term evidence remains positive, whether it’s the trends, the blastoff indicators from earlier this year or even the quick, encouraging dip in sentiment after the market selloff. (He’s now seen two straight big weeks of money outflows from equity funds/ETFs, which is usually a good sign for the market.) Mike’s buy ideas this week are: Coupa Software (COUP), CoStar Group (CSGP), CyberArk (CYBR) and Twilio (TWLO). He has only one sell this week, Inphi (IPHI).

Weekly Issue May 13: Mike says you should keep tight stops in place on losers and laggards, give your profitable names a bit more rope and, on the buy side, be very selective and/or keep positions small. He’s moving our Market Monitor down to a level 5. Interestingly, this week’s list is very heavy on growth-y names despite the market’s plunge. Our Top Pick is Match.com (MTCH), which has a great long-term story, and the stock has re-emerged after earnings.

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 Stocks on Watch May 17: Here are some of the stocks on Jacob’s watch list: Avalara (AVLR), Zillow (Z) and Kratos Defense & Security Solutions (KTOS).

Cabot Options Trader Market Update May 17: Jacob has received several emails the last couple of days about how to manage our former Zscaler (ZS) May 44 call position, which he sold for a 248% profit, but which several Cabot Options Traders continued to hold. This position will expire today, and these subscribers want to continue to have exposure to the stock. If you want to remain in a bullish position past today this is the classic “roll” situation.

Cabot Options Trader Market Update May 16: This morning Jacob added a new bullish position in Walt Disney (DIS). He chose to add a new position as his confidence in the overall market had improved following the ramp up of bullish option activity yesterday afternoon. In fact, his Options Barometer came in at a 7 for the first time in many weeks.

Cabot Options Trader Alert May 16: Buy the Walt Disney (DIS) October 140 Calls (exp. 10/18/2019) for $7 or less.

Cabot Options Trader Stocks on Watch May 15: Yesterday and today the S&P 500 has regained nearly half of the losses from Monday’s big sell off … though the bulls have much more to go to recoup the losses from the previous week. Option activity remains mixed with a heavy load of bullish and bearish trades, though on the bright side, the VIX has pulled back to 17, which is certainly not screaming panic. One stock that continues to pop on Jacob’s radar for bullish option activity is Walt Disney (DIS). What intrigues me most is the odd out-of-the-money call buying in the stock.

Cabot Options Trader Market Update May 13: This morning the S&P 500 gapped lower by nearly 2% following more trade drama over the weekend. Things have not improved throughout the day as the S&P 500 is down 2.7% and the Nasdaq is lower by 3.6%. This ugly action follows some optimism Friday afternoon as the market had bounced from early lows that day … that optimism is now mostly gone. Taking a step back and looking at the market from Jacob’s best indicators, the VIX and Option Order Flow, he would say the market is in an interesting spot.

Cabot Options Trader Weekly Update May 13: The Chicago Board of Options Exchange Volatility Index (VIX) closed the week at 16, or higher by 16%. The close on Friday at 16 hardly tells the story of the week for the VIX as the “fear index” spiked to as high as 22.5 on Thursday just hours before the trade deadline set by President Trump was set to pass. However, even as the Dow was down nearly 350 points Friday morning, the VIX was largely unchanged.

Cabot Options Trader Pro Weekly Update May 13: Jacob has eight long positions: GLW, JD, LULU, LVS, MSFT, RF, SBUX and SE, and one short position, QQQ.

Cabot Undervalued Stocks Advisor

Special Bulletin May 16: Carlyle Group LP (CG) joins the portfolio as a Strong Buy. Today, Crista is creating a fourth portfolio category within Cabot Undervalued Stocks Advisor: Special Situations. This will be a portfolio for capital gain opportunities that do not conveniently fit into the other three portfolios. Also, Crista will be taking a week off shortly to attend to my family, May 22-28, and therefore not publishing a weekly update on May 28. She’ll be returning emails in the evenings on most days.

Weekly Update May 14: After rising 25% from its December low to its May high, the S&P 500 index is finally taking a breather. Crista doesn’t expect a shocking price drop like we saw in December. Rather, she anticipates the S&P 500 receding to 2,750, which would be down 200 points from the recent high, or even 2,650. Pullbacks aren’t any fun, but they are normal, and they provide opportunities for investors to buy stocks while they’re on sale. Here are today’s portfolio changes: Baker Hughes, a GE Co. (BHGE) moves from Buy to Hold, DowDuPont (DWDP) moves from Buy to Hold, Schlumberger (SLB) moves from Buy to Hold, Synchrony Financial (SYF) moves from Strong Buy to Hold and Royal Caribbean Cruises (RCL) moves from Strong Buy to Hold.

Monthly Issue May 7: Today Crista is taking the opportunity to remove two stocks from the portfolios, in the quest to (a) pare back the number of stocks in the portfolios and (b) add new stocks to the portfolios. Clearly, those two goals are not necessarily simultaneously achievable. In addition, she is finding good opportunities among property & casualty insurance stocks, but she has been overweight in financial stocks, limiting her ability to add new ones. Therefore, she is removing some financial stocks today. Here are today’s portfolio changes: Adobe Systems (ADBE) joins the Growth Portfolio as a Buy, Apollo Global Management (APO) moves from Hold to Retired, Axis Capital Holdings (AXS) joins the Buy Low Opportunities Portfolio as a Strong Buy, Comerica (CMA) moves from Hold to Retired, Designer Brands (DBI) moves from Hold to Strong Buy and Supernus Pharmaceuticals (SUPN) moves from Hold to Strong Buy.

Cabot Stock of the Week

Weekly Issue May 14: As of yesterday, the market’s intermediate-term trend is now negative, so certain defensive measures are now appropriate. These might include lowering your overall risk profile by holding cash when possible, taking profits when stocks are extended, and being less tolerant of poor behavior. As for today’s recommendation, Tim is recommending Baidu (BIDU), a great Chinese stock looking for a bottom, and there’s a chance that the high-profile tariff issue is creating it right now. The stock was recently recommended by Carl Delfeld in Cabot Emerging Markets Investor. Tim has one sell today, Invitae (NVTA).

Cabot Emerging Markets Investor

Bi-weekly Issue May 16: U.S.-China turbulence led to a rollercoaster week for global stocks with some recovery during the past couple of days. Our Emerging Market Timer has turned negative, as EEM has fallen below both its 25-day and 50-day moving averages. Several of our portfolio companies posted strong earnings this week and the portfolio is already in a conservative stance. Carl’s new recommendation today is a stock that will diversify the portfolio and give us exposure to a country with a youthful population and a robust economy. It’s ICICI Bank (IBN) and Carl recommends that you Buy a Half position. Here are today’s portfolio changes: Baozun (BZUN) moves from Buy a Half to Sell, Largo Resources (LGORF) from Buy a Small Position to Buy a Half Position and Sea Limited (SE) moves from Hold a Half to Buy a Half.

Bi-weekly Update May 9: With markets expecting a deal right around the corner, the Trump administration signaled its frustration by threatening to raise tariffs on roughly $200 billion of Chinese imports to 25%, from 10%, last Friday. The stakes are high, as neither side wants to appear to be “losing face,” but both sides fear just as much the political costs of a weaker economy. The Chinese may be betting that 2020 campaign pressures will in the end force the U.S. to take less than what they want. Here is the key: an agreement will require some level of trust and an understanding that neither side will try to spin any deal reached as a clear win. This is a tall order indeed. Carl has three portfolio changes today: He is buying a full position of ProShares Short MSCI Emerging Markets (EUM), moving Daimler Benz (DDAIF) from Buy a Half to Hold and moving Baidu (BIDU) from Buy to Hold.

Cabot Small-Cap Confidential

Weekly Update May 17: Looking forward, assuming the U.S. doesn’t go to war with Iran and this trade fight/war continues about as it has, Tyler thinks the prospects for a small-cap rally into the back half of the year still look good. First, small caps are trading on par with large caps on valuation, at 16.5 times forward earnings. Second, analysts, who became overly bearish in late 2018 as the market tanked, have begun to turn more bullish. Forward estimates are now moving up. Consensus estimates suggest earnings in the S&P 500 will grow by 11.7% in 2020, while S&P 600 earnings will grow faster, by 18.7%. Tyler has one portfolio change today, CareDx (CDNA) moves from Hold to Buy.

Monthly Issue May 3: Today’s stock, Domo (DOMO) is a $1 billion market cap company that has developed a business intelligence (BI) platform that allows every worker in an organization to access real-time data from their mobile device. Tyler also updates all the stocks in the portfolio and has one change today: Bottomline Technologies (EPAY) moves from to Buy to Hold.

Cabot Dividend Investor

Weekly Update May 15: Tom writes that the market is absorbing two harsh realities; it won’t get a trade deal that was already partially priced in and the trade situation took a turn for the worse. After the initial panic, investors are realizing that the new tariffs will do very little tangible damage to the overall economy. And trade negotiations will continue with renewed urgency. Tom has one portfolio change today. Intel Corporation (INTC ) moves from Buy to Hold. The news has been very bad. This is a long-term winner facing a hostile external environment in the short term. He will not tolerate things turning south anymore and if it goes the other way look for a special bulletin and possible sell in the days ahead.

Monthly Issue April 24: Tom writes that things are good. The economy appears to be stronger than most expected. The Atlanta Fed is estimating first-quarter GDP growth at 2.8%. That’s a sweet number considering that the first quarter tends to be about 1% slower than the rest of the year. Housing starts and consumer confidence are strong and now it appears that the global economy is also in better shape than previously forecast. His featured stock this month is, Intel Corporation (INTC), the largest computer chip maker in the world. The company has over $70 billion in annual revenues and $264 billion in market capitalization. INTC is being added to the Dividend Growth Tier. Tom has no other portfolio changes today.

Cabot Marijuana Investor

Update May 15: In today’s update Tim is selling all of CannTrust (CTST), Charlotte’s Web (CWBHF) and iAnthus (ITHUF). This will take his cash position to approximately 20%. He’d like to point out that a very healthy practice is to analyze all your recent trades. If they’re working, great; do more of the same. But if they’re not working, stop. Step back. Reassess. And consider doing something different.

Monthly Issue April 25: The main trend remains up, in both the broad market and the cannabis sector in particular. When these uptrends will end, no one knows, but Tim guarantees that they will someday. Long-term, however, he remains very bullish on both the companies and the stocks in the industry and continue to adjust the portfolio’s holdings to optimize growth (with reasonable security.) Today the portfolio is adding a new position in CannTrust (CTST) and averaging up in HEXO (HEXO), taking the portfolio’s cash down to 10% and splitting the proceeds between both stocks.

Wall Street’s Best Investments

Daily Alert May 17: RealPage, Inc. (RP) from Game Changers
Daily Alert May 16: Invesco Russell MidCap Pure Growth ETF (PXMG) from Moneyletter

Monthly Issue May 15: Nancy begins this issue with our Spotlight Stock, Facebook (FB) a social media company that used to be a media darling, but became its favorite punching bag in the last couple of years, and not unjustly. The company stumbled when it neglected to care for its members, while allowing fraudulent invasions by not-so-nice folks. But, with an exciting new venture, it’s ready to take on some pretty big competitors in the payments business. You’ll find the details in her Feature article.

Daily Alert May 15: Fidelity Contrafund Fund (FCNTX) from Fidelity Monitor & Insight
Daily Alert May 14: Alkermes plc (ALKS) from The Medical Technology Stock Letter
Daily Alert May 13: Qorvo, Inc. (QRVO) from Nate’s Notes

Wall Streets Best Dividend Stocks

Daily Alert May 17: Crown Castle International Corp. (CCI)from Safe Money Report
Daily Alert May 16: Wasatch-Hoisington U.S. Treasury Fund (WHOSX) from Bob Carlson’s Retirement Watch
Daily Alert May 15: Sell: Apollo Global Management, LLC (APO) from Cabot Undervalued Stock Advisor
Daily Alert May 15: Sell: Comerica Incorporated (CMA) from Cabot Undervalued Stock Advisor
Daily Alert May 15: Axis Capital Holdings Limited (AXS) from Cabot Undervalued Stock Advisor
Daily Alert May 14: Cummins Inc. (CMI) from The Prudent Speculator
Daily Alert May 13: Cohen & Steers Global Income Builder, Inc (INB) from Contrarian Outlook

Monthly Issue May 8: Nancy’s Spotlight Stock, New Residential Investment Corp. (NRZ), is a Real Estate Investment Trust that focuses on the mortgage market. The company has withstood plenty of interest rate cycles, and continues to grow its reach and earnings, internally and by acquisition. Her Feature article further explores the mortgage REIT industry and the frequent confusion about REITs and their responsiveness to interest rate movements.

Ask the Experts

Cabot Growth Investor

Question: You’ve said in recent writings that you’ve seen some complacency creep into the market via some indicators you watch -- but have also said (in relation to money flows) that there’s no sign of exuberance. Can you explain?

Mike: Thanks for asking. Another way to say it is that there was never any big ramp in greed -- the get-me-in-at-any-price feeling among investors who are sure that things are going higher. However, there was a lack of fear -- the big issues of late last year (economy, Fed tightening, trade deals, political uncertainty) had vanished, at least until the past two weeks. Generally speaking, a lack of fear (complacency) is often something that’s seen near market potholes, and sure enough, we’ve seen some serious wobbles in the May. But a rush of greed is something will often eventually lead to a major top. It seems subtle but there’s a difference between the two.

Cabot Small-Cap Confidential

Question: You were very helpful with your previous note on building a portfolio. I did what you said but now I feel I was too slow on the moves., though I bought 9 out of 15 in your book.
I made approx. 14% from Feb 20 thru today. As you said in last 2 days the prior 2 weeks have been huge winners with reports on earnings and sales growth. Here is my question;
Should I just buy each and every stock you list ? I don’t know any of these companies. Except as a CPA I know sales tax and there will be many adopters of software to handle it. Great future for AVLR Again I follow your guidance ... but now it feels the broader market has had its run for 2019 already and should I increase my ‘Laudable” allocation as I call it?
In sum: (1) buy all the companies on Buy list, or (2) buy more dollars/shares of each?

Tyler: As you can imagine it’s tough to give personalized advice. And, in fact, we’re prohibited by the SEC to do so. But, in general, I would look to increase my position size in those stocks I felt most confident in before buying the entire portfolio, just for the sake of doing so. I can see working up to a portfolio over time that matches Cabot Small-Cap Confidential, but probably doing so in a very short window of time isn’t the best idea (unless many of the position sizes are quite small). I much prefer averaging into different stocks at different prices and at different periods of time to work up to a “full” portfolio. It just helps reduce risk, in my opinion. Always keep some cash available is another of my “rules.” By updating the ratings every week I hope to give a good sense of where I see opportunities to make money, and where I think it’s good to be conservative. Plus, with one new stock per month, we are able to seek out the best opportunity for current market conditions. As to whether or not the market has already made its run for 2019, I won’t pretend I know. And I’d encourage you to keep an open mind too. As you know the market is a wily beast! And while the major market indexes are near highs, the small cap indexes have a ways to go before they get “toppy.” Plus, individual stocks don’t always move in lockstep w/the broad market (unless there is a really strong up or downtrend).

Cabot Options Trader

Question: I have both OKTA and ZS options but it expires tomorrow, May 17. I have very good gains on both options. I know earning for OKTA is May 30. If I feel that there is another leg up due to earning run, is there a way to “extend” the expiration to, say June?

Jacob: So in fact both OKTA and ZS BOTH have earnings on 5/30 ... going to be an interesting night for that “sector.” So yes, if I wanted to extend a position I would “roll.” In this scenario I would sell the May option today/tomorrow before expiration and then Buy to Open a ZS August 80 call or OKTA August 110 call. Great trades by you!

Cabot Undervalued Stocks Advisor

Question: If there is a stock market sell-off and money is withdrawn from the market by an exodus from ETFs/Mutual Funds, how does one protect him/herself as fundamentals will not matter?

Crista: The vast majority of stock investors are going to experience big drops in portfolio values during bear markets or market corrections, and there isn’t too much that we can do about it. There are a small percentage of stock investors who successfully use strict stop-loss disciplines, but I can’t recommend that style of investing to my broad subscriber base because very few investors really master the task. I know from experience that using stop-loss orders is a fine art that often causes investors a lot of angst.

Knowing in advance that our stocks will fall periodically, through no real fault of their own, here are a combination of things that I recommend to investors:

1. Stick with high-quality stocks, so that when your stock falls dramatically, you can retain confidence in the company in which you’re invested. As a hypothetical example, “Apple is an excellent, growing company, and the share price just fell 30% for no good reason. I will hold my shares and await the rebound.”

2. Keep cash on hand, so that you can “buy low” during market downturns, thereby turning lemons into lemonade. “Wow, I’ve always wanted to own Alphabet (GOOGL), and the share price is down 25% this year. It’s now or never! Let’s buy some shares!” The same holds true for adding to the great stocks that you already own.

3. I don’t sell high-quality stocks during market downturns. But I do move them from Buy to Hold recommendations during the obvious price drops, and I move them back to Buy recommendations when the price charts seem to indicate that they’re going to rebound soon. And with dividend stocks, you can lock in quite an attractive yield during market downturns, which I frequently point out to investors.

Over the short term, stock market action is driven by human behavior and news headlines. Over the longer term, stock market action is driven by corporate successes/failures and the economy. The more we are able to disassociate ourselves from the fear that emanates from short-term market moves, the more we’re able to sit back and ask ourselves, “How can I capitalize on this nonsense?”

Premium Reports

Cabot’s 10 Best REIT’s to Buy Now

Special Report

May 2, 2019: JUST UPDATED—REITs are a way for investors to have a diversified portfolio of real estate-related investments even if you don’t have millions of dollars, much like mutual funds did for stocks. And REITs are traded on the market, just like stocks. In this new, exclusive report, you’ll discover how to profit in REITs, even when interest rates are rising.

Cabot Prime Pro Quarterly Report

Special Report

April, 2019: The first quarter of 2019 was as good as the previous one was bad. And that’s not surprising. In fact, in his last quarterly report, Tim concluded by writing, “What the charts are signaling now is quite bullish! So don’t be afraid. Follow your favorite Cabot analyst. Use appropriate risk management tools. And make some money while the market is once again going the right way.”

Cabot’s Ten Best Canadian Small-Cap Stocks

Special Report

Updated March 6, 2019: One of the generally accepted wisdoms over the past couple of years has been that the U.S. stock market is where the action is. But relative performance of ex-U.S. markets is showing that’s no longer the case. There are market-beating returns available to those investors willing to step abroad. And one of the easiest steps to take is just over the border with our neighbor to the north, Canada. For the modestly adventurous investor, I think there are quite a few Canadian stocks worth a look right now.

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.

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.

Stock Recommendations Tracker

The table below lists all of the stocks held in any Cabot portfolio.
Updated or revised recommendations from the past week are in purple text.
Stocks added to a portfolio are highlighted in green text.
Closed stock positions in the past week are highlighted in red text.

StockCabot Small-Cap ConfidentialCabot Emerging Markets InvestorCabot Growth InvestorCabot Marijuana InvestorCabot Stock of the WeekCabot Undervalued Stocks AdvisorCabot Dividend Investor
AAPLBuyStrong Buy
ABBVBuyBuy
ACBSee Advisory
ADBE
ALXN Buy
ANFBuy
APHASee Advisory
APPFHold
ARNABuy
AVLRHold
AXPBuy 1/2
AXSStrong Buy
BABABuy 1/2
BHGEHold
BIDUHoldBuy
BIP BuyBuy
BSCJ Buy 1/2
BSCL Buy 1/2
BXStrong Buy
BZUNSell
CDNABuy
CDXSBuy
CFStrong Buy
CGStrong Buy
CGCSee Advisory
CHCTHold
CITBuyStrong Buy
CMCStrong Buy
CMGBuy
CRLBFSee Advisory
CRONSee Advisory
CTSTSell
CURLFSee Advisory
CVNASell
CWBHFSell
DALBuyStrong Buy
DBIStrong Buy
DDAIFHold 1/2
DOMOBuy
DOWStrong Buy
DWDPHold
ED Hold 2/3
ELLXFSee Advisory
EPAYBuy
EPDBuy
EUMBuy
EVBGHoldHold
EXASHold
FIVESell 1/3
GESBuy
GSHDBuy
GTBIFSee Advisory
HEXOSee Advisory
HTHTHold
IBNBuy 1/2
IIPRSee Advisory
INTCHold
ITHUFSell
KNXHold
KSHBSee Advisory
LGORFBuy 1/2
LUVBuy
LXBuy 1/2Buy
MKC Hold
MOBuy
MOSHold
MPCHold
MTCHBuy
NEE HoldHold
NVTA Sell
OGRMFSee Advisory
OKTABuy
PGX Buy 1/2
PLNTBuyBuy
QCOMBuy
QTRXBuy
QTWOBuy
RCLHold
RGENBuy
RPDHoldHold
SANMStrong Buy
SEBuy 1/2
SLBHold
SSOBuy
STAGHoldHold
SUPNStrong Buy
SYFHold
TCEHYBuy
TIVOHold
TOTHold
TPBSee Advisory
TSLAHold
TTDHold
TWLOBuyHold
UEICHold
UPLDBuy
VFFSee Advisory
VOYABuyStrong Buy
WDAYHold
XEL Hold 2/3
ZTOBuy 1/2