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Weekly Summary October 9, 2020

Cabot Prime Pro Week Ending October 9, 2020

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, Tyler Laundon discusses why he thinks the market has been strong in the wake of the presidential and vice-presidential debates. He delves into the red-hot IPO market and highlights three new IPOs that should be on your radar.

UPCOMING CABOT EVENTS:

Cabot Micro-Cap Insider Member Call – October 2020

FREE WEBINAR FOR PRIME PRO MEMBERS ONLY: Thursday, October 15 Sign up now.
Cabot Prime Member Call – October 2020

FREE WEBINAR FOR PRIME MEMBERS ONLY: Wednesday, October 21 Sign up now.
Turnaround Investing with Bruce Kaser

FREE WEBINAR: Thursday, October 22 Sign up now.
Cabot Retirement Club Member Call - October 2020

FREE WEBINAR FOR PRIME MEMBERS ONLY: October 29, 2020 Sign up now.

Advisory Services

Cabot Growth Investor

Bi-weekly Issue October 8: It’s not a blastoff-type of environment, but the evidence has steadily improved during the past three weeks, first due to the action of leading growth stocks, and now, our Cabot Tides have returned to bullish territory. Thus, we continue to follow the evidence, slowly putting money to work and rotating into stronger situations. Last week, we averaged up in two of our recent buys, and tonight, Mike is adding a full position in Datadog (DDOG), a fresh leader. Elsewhere in tonight’s issue, we write about the ups and downs of recent IPOs, as well as one sector that is beginning to reemerge and has many stocks that fit our stock picking criteria. There are two portfolio changes today: Twilio (TWLO) and ProShares S&P 500 (SSO) both move from Hold to Buy.

Bi-weekly Update October 1: Do a little more buying. The overall market has snapped back nicely in recent days, and while our Cabot Tides have yet to turn bullish (they’re on the fence here), there’s been plenty of encouraging action among individual stocks. We’re still of the mind to be cautious overall—this correction could easily persist a few more weeks—but we are going to put a little money to work tonight, filling out our positions in both Pinterest (PINS) and Seattle Genetics (SGEN). Our cash position will still be around 33%, giving us cushion should the sellers reappear.

Other Stocks of Interest September 10: Follow ups to stocks featured May 7, 2020 (issue 1445) to September 10, 2020 (issue 1454). Since many of the stocks written about in Other Stocks of Interest don’t make their way into the Model Portfolio, you won’t see them followed on a regular basis in the issues. However, we are monitoring these stocks, and this listing gives you a quick view of our latest thoughts.

Cabot Top Ten Trader

Movers & Shakers October 9: Given that we’re “only” six weeks off the peak, the market could still be in a “setting-up” phase after the prior five-month advance. Still, we don’t want to get too smart for our own good. It’s not an A+ environment, but the evidence has improved, the intermediate-term trend has rejoined the longer-term trend on the upside and a lot of stocks are acting well enough. We’ll likely nudge our Market Monitor up to a level 7 in Monday’s issue. Mike’s buy ideas today are: Penn National Gaming (PENN), Quanta Services (PWR) and Taiwan Semi (TSM). His sells are: 10x Genomics (TXG), as shares are extended to the upside and have been running for months without a correction. and we’re also going to quickly cut our loss in Exelixis (EXEL)—it has bounced a bit, but the straight-down action after testing new highs is a negative.

Weekly Issue October 5: Mike writes that some caution is still in order, especially as further news-driven moves are likely in the days and weeks ahead. However, the leaders (and potential leaders) of the market are very impressive, with more and more flashing constructive action, including some that are rallying on outsized volume, both of which are a sign that big investors are getting comfortable putting money to work. It’s not a wild bull market obviously, with relatively few stocks hitting new highs, but it’s safe to say the evidence has improved, causing us to nudge up our Market Monitor today. This week’s list has a bunch of good-looking stocks that have seen good-volume buying of late. Mike’s Top Pick is Datadog (DDOG), which has returned to form after a big-volume breakout last week. Start small and add if the stock and market improve from here.

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 Basic and Pro Trade Alert October 8: Sell Half of Existing Position: Sell Half of your Taiwan Semiconductor (TSM) January 85 Calls for $9.10 or more.

Cabot Options Trader Basic and Pro Trade Alert October 8: Buy the Uber Technologies (UBER) March 38 Calls (exp. 3/19/2021) for $5.70 or less

Cabot Options Trader Basic Position Update October 7: Our Peloton (PTON) October 45 calls that were originally purchased for $6.60, are now worth $73, or a potential profit of over 1,000%. Jacob is going to bump our mental stop up from $55 to $60.

Cabot Options Trader Basic and Pro Trade Alert October 7: Sell Half of Existing Position: Sell Half of your Qualcomm (QCOM) January 120 Calls for $11.80 or more.

Cabot Options Trader Position Update October 6: Qualcomm (QCOM) Update - Likely Not Filled This afternoon QCOM was racing to recent highs, and our calls were firmly at a 20% profit. As is typically Jacob’s plan when managing positions, he sent an alert to sell half of this position, and was going to go for the home run on the balance. Unfortunately for our trade alert, not ONE minute after the sale alert was sent, stimulus talks broke down following a tweet from the President. This tweet swung the market from up on the day, to down 1.3%, bringing QCOM with it.

Cabot Options Trader Basic and Pro Trade Alert October 6: Sell Half of Existing Position: Sell Half of your Qualcomm (QCOM) January 120 Calls for $11.80 or more.

Cabot Options Trader Education October 5: In-The-Money Calls - I received a good email from a subscriber referring to a trade I highlighted in this morning’s Weekly Review.

Cabot Options Trader Pro Weekly Update October 5: Jacob has eight long positions: GM, JD, MSFT, PTON, QCOM, TSM, XLF, ZNGA and one short position: QQQ December Puts.

Cabot Options Trader Weekly Update October 5: This week’s watch list is made up of three sets of call buys that look familiar to options traders, Adobe (ADBE), Shopify (SHOP) and Tesla (TSLA) and a series of put buys in Covid-sensitive sectors, Hilton Worldwide (HLT), American Airlines (AAL) and Brinker (EAT).

Cabot Undervalued Stocks Advisor

Monthly Issue October 7: In a directionless market, with many potentially strong catalysts but one that is pricing in a strong earnings recovery that may not happen, what can an investor do? We usually focus on a few steps. First, we keep our overall market exposure within comfortable levels – not too aggressive or too light. We want to have some cash reserves to dampen any downturn and possibly deploy at bargain prices, yet work to avoid being too conservative as the market may resume its upward march. We want to make sure we know what we own and why we own it. If the market gets sporty, we want the conviction to stay the course. And, be on the lookout for new ideas. Investors can get complacent, meaning that some opportunities are bound to emerge. We anticipate finding some appealing bargains in the coming weeks. Bruce has one portfolio change today: Bristol-Myers Squibb (BMY) – Moves from Strong Buy to Hold.

Weekly Update September 30: With all of our stocks now having price targets assigned to them, we thought we’d share with you some of our process behind how we set those price targets. In setting the targets, we typically use the formula: valuation multiple x earning power = price target. When determining the multiple, we look at the company’s valuation history and how that compares to its fundamentals, including revenue and profit levels and growth, changes in its business and capital mix, and other metrics including its leadership and culture. Bruce has no changes to the portfolio today.

Cabot Stock of the Week

Weekly Issue October 5: The overall investing environment has improved from last week, but officially, our intermediate-term trend-following indicator remains negative, telling us that some degree of caution is prudent—and coming after a great five-month advance, who can disagree? Still, there are attractive stocks to buy if you’re selective, and today’s recommendation, Pininterst (PINS) is one of the hot young crop of social media/e-commerce stocks that are changing the landscape of our commerce system. The stock was originally recommended by Mike Cintolo in Cabot Growth Investor. Tim has one portfolio change today: Qualcomm (QCOM) moves to Buy.

Cabot Global Stocks Explorer

Bi-weekly Update October 8: The Explorer portfolio had another positive week, as the market is hostage to enacting another politically difficult stimulus package. Count Carl as skeptical. Stay-at-home stocks are leading the market while economic-recovery stocks struggle. Most overseas markets rose yesterday but Hong Kong’s Hang Seng Index was the one exception. That followed reports that the Trump administration is discussing potential curbs to digital payment platforms developed by Chinese tech companies Tencent Holdings and Ant Group on the grounds of national security. There are no portfolio changes today.

Bi-weekly Issue October 1: We enter the fourth quarter of 2020 today with a long-term game plan, not a 2-minute drill. The Explorer portfolio had a good week, with all positions advancing, though some more than others. Carl is comfortable with a cash position of 25%, though he will need to sell a couple of the weaker performers in our portfolio in the coming weeks to make room for new ideas in emerging markets. He gives us an update on Kraken Robotics (KRKNF), (PNG.V in Canada) and Luckin Coffee (LKNCY) and his new stock recommendation is Vipshop Holdings (VIPS), a stock that he hopes will benefit from the biggest shopping day in the world. There are no portfolio changes today.

Cabot Small-Cap Confidential

Weekly Update October 8: The consensus opinion right now is that the market is strong because it’s looking favorably on the prospects of a clear-cut winner in the upcoming presidential election and that the likelihood of another round of stimulus is going up. However, if we’ve learned anything over the years, it’s to expect the unexpected! Still, taking it all in, Tyler is inclined to lean more bullish than bearish because, regardless of what happens in the presidential race, we remain in an economy where accommodative fiscal policy and stimulus spending are likely, and historically that’s good for stocks. There is one portfolio change today: Avalara (AVLR) Moves to from HOLD to BUY.

Special Bulletin October 6: Yesterday Palomar (PLMR) issued a press release detailing estimated Q3 pretax catastrophe losses, net of reinsurance, of $34 million to $38 million from Hurricanes Hanna, Isaias, Laura and Sally. A double-digit decline dents confidence and we’d like more details to aid in rebuilding that, or at least see evidence of a swift rebound in the stock, before moving back to buy. HOLD

Monthly Issue October 1: While automobiles have become more consumer-friendly over the last decade there are still a lot of clunky technologies that drivers deal with. Sometimes mobile devices pair seamlessly, sometimes they don’t. Sometimes, a car’s infotainment system functions so poorly that drivers are more distracted than they were in the good old days of reaching for cassette tapes under the passenger seat. Today we’re investing in a company, Cerence (CRNC) that’s developing a digital ecosystem for connected and autonomous vehicles that will make driving safer and more enjoyable for everyone.

Cabot Dividend Investor

Weekly Update October 7: It’s hard to see how the market makes a significant move higher as the uncertainty of the election comes ever closer. Plus, the pandemic is still with us and the end is still not in sight. But there is good news as well. Third-quarter GDP is expected to be phenomenal, with forecasted growth of 30%, reflecting a resilient economy that is rapidly recovering. In short, it looks like there will be a tug-o’-war with good news and bad news at least up until the election. Tom expects the market will continue to bounce around in that time frame. However, there could be great things for the market beyond the election and the pandemic. The forecast is choppiness now, and a bull run later. Meanwhile, several portfolio positions are moving higher. Tom has no rating changes today.

Monthly Issue September 9: In this uncertain environment, Tom found a rare stock. It is a company that benefits from the undeniable trend toward technological proliferation. It has solid earnings growth and stock performance. But it provides these benefits with remarkably low volatility. Digital Realty Trust (DLR) is off the high after a rare pullback and selling at a cheap price. Historically, it has less than a quarter of the volatility of the overall market. It’s a great forward-looking investment for this uncertain environment. He has no other portfolio changes.

Cabot Marijuana Investor

Update October 9: Yesterday saw strong buying in marijuana stocks across the board, with both U.S. and Canadian stocks benefitting. As a result, in the portfolio, Tim will now average up in the stocks of the five U.S. producers—Cresco Labs (CRLBF), Curaleaf (CURLF), Green Thumb (GTBIF), TerrAscend (TRSSF) and Trulieve (TCNNF)—increasing our position in each by 50%. This will reduce the portfolio’s cash level to roughly a 20% level.

Update October 7: Tim is going to put a little money into the strongest stocks—and if the strength continues, he’ll add more in the days ahead. First, he’ll commit 4% of the portfolio (roughly half a position) to TerrAscend (TRSSF), which he’s mentioned before. It’s smaller than our current four U.S. marijuana producers, but growing fast. And then he’ll double our investment in Innovative Industrial Properties (IIPR), which has just broken out to a new high.

Monthly Issue September 30: Over the past seven weeks, our portfolio has shifted from fully invested to 49% cash—and because of that we’ve lost less than the Marijuana Index; in fact we still have a decent gain YTD. Hopefully, you’ve done similarly. And now we’ll raise just a little more cash by selling our final stake in Aphria (APHA). Other changes: Innovative Industrial Properties (IIPR) is upgraded to Buy, and Turning Point Brands (TPB) is downgraded to Hold.

Special Report: April 29, 2020

U.S. Vertically Integrated Multistate Operators (MSOs)

Cabot Early Opportunities

Special Bulletin September 24: With 32 stocks in our portfolio and a market that’s going through all manner of gyrations right now, it’s time to part ways with a few of our underperforming positions. Sell OneWater Marine (ONEW), Liberty Media Formula One (FWONK) and SelectQuote (SLQT), Sell Half Schrodinger (SDGR) and Keep Holding Nikola (NKLA).

Monthly Issue September 16: Tyler’s advice today is to continue to average into the stocks that are most attractive to you and which you think you’ll have the best chance of holding onto through the inevitable corrections. The September selloff may or may not be over. The market is trying to look forward into the first half of 2021 at a time when vaccines could hit the market. There is lot of uncertainty surrounding what could happen, and how evolving business and consumer trends will shift. And that’s going to continue to work through the market in hard-to-predict ways. Our game plan will continue to be to find companies that can excel now, in 2021, and beyond. Since we often don’t know exactly how things will play out it’s important to always average in. Today’s Top Pick is Kinsale Capital (KNSL), the only publicly traded property and casualty (P&C) insurer focused exclusively on the excess and surplus (E&S) lines market in the U.S.

Cabot Profit Booster

Weekly Issue October 6: The Stock – STMicroelectronics (STM) - STM has been rebounding with everything else since the March bottom, but it wasn’t particularly powerful, with a two-steps-forward, one-step-back type of advance for many months. After getting back to its pre-pandemic high, shares went sideways for 10 weeks, but last week’s guidance hike brought back the buyers, with STM pushing to new highs on solid volume. Stop – 28.5. The Covered Call Trade: Buy STMicroelectronics (STM) Stock at 33, Sell to Open November 35 Strike Calls (exp. 11/20/2020) for $1.30, or a Net Price of 31.70 or less.

Cabot Micro-Cap Insider

Weekly Update October 7: Before getting into the updates from this week, Rich wants to spend a little time providing context for his most recent recommendation, New BBX Capital (BBXIA), because it’s a little different from his typical recommendation. New BBX Capital, is his first “Quick Trade” idea. New BBX is an obscure micro-cap spinoff that is trading at a big discount to its fair value. There is one portfolio change today: The buy limit for RVRA increases to Buy under 1.98.

Special Bulletin October 5: Rich usually waits until the second Wednesday of the month to share his latest micro-cap recommendation with you, but in this case, he couldn’t wait. He closely follows stock spin-offs and occasionally, they present incredible opportunities. He believes the recent spin-off of New BBX Capital (BBXIA) from Bluegreen Vacation Holdings (BVH) represents one such opportunity.

Monthly Issue September 9: Today, Rich is profiling a Canadian SaaS company that is trading for a “value” multiple. NamSys Inc (NMYSF) has sticky, recurring revenue. Other characteristics include: Strong historic revenue growth (25% CAGR), over 40% insider ownership, a strong balance sheet (a significant net cash position) and a cheap valuation. Here are today’s portfolio changes: Increase Buy limit for HopTo (HPTO) To 0.50 from 0.45, move Greystone Logistics (GLGI) from Hold to Buy under 1.00 and move P10 Holdings (PIOE) to Hold.

Special Report

A Defensive Healthcare Stock with 100% Upside

Special Report

The Best Way to Play the Oil Market Dislocation

Cabot Income Advisor

Weekly Update October 7: It still not a great market for call premiums, as fewer investors are willing to bet on higher prices in the months ahead while staring ahead to this uncertain election. That said, there are still certain special opportunities. The writing of the call last week on Visa (V) is a good example. Certain stocks break the mold as investors are willing to bet on a higher price in isolated cases. Great call writing opportunities could emerge at any time. And Tom will be on the lookout. That said, the greatest likelihood at this point is choppy waters ahead for the market over the next month or so, but with much better days ahead beyond the election and pandemic.

Monthly Issue September 23: There has been a lot of activity in the portfolio this past week. Four positions, including AABV, IIPR, QCOM and USB, had covered calls written on them with an options expiration date of last Friday, September 18. Three of those positions exceeded the strike price and were called away (IIPR, QCOM, and USB). There are currently only two positions with outstanding calls. The recent downward-trending market has reduced the level of call premiums and it isn’t an ideal point in time to write more. But things can change quickly. Tom’s featured stock is: Visa (V).

Special Report:

Off the Radar Cash Generators

Special Report:

The Covered Call Income Machine

Cabot Turnaround Letter

Weekly Update October 9: Earnings reports by Cabot Turnaround Letter recommended companies: Lamb-Weston (LW). Today’s podcast is about 8 minutes and covers brief updates on: Wells Fargo (WFC), Lamb-Weston (LW), GameStop (GME), General Electric (GE), Jeld-Wen (JELD), Barrick Gold (GOLD) and Molson Coors (TAP).

Monthly Issue September 2020: Energy Service Companies: With a small cadre of mega-cap technology stocks driving the stock markets to record levels, we are, as contrarian investors, looking for industries that are extremely out of favor yet remain fully relevant in the economy. One such industry is energy service. These companies provide all the services, drilling rigs and related equipment and supplies that oil and gas producers need to find, drill for and produce their hydrocarbons. In essence, they provide the picks and shovels. Producers long-ago outsourced these functions to the specialists.

Wall Street’s Best Investments

Daily Alert October 9: Short: Dave & Buster’s Entertainment, Inc. (PLAY) Shortex Market Letter
Daily Alert October 9: Darden Restaurants, Inc. (DRI) Shortex Market Letter
Daily Alert October 8: Sell: LTC Properties, Inc. (LTC) Forbes Dividend Investor
Daily Alert October 8: The Kraft Heinz Company (KHC) Forbes Dividend Investor
Daily Alert October 7: Valero Energy Corporation (VLO) Sound Advice
Daily Alert October 6: 1-800-FLOWERS.COM, Inc. (FLWS) Upside
Daily Alert October 5: Elastic N.V. (ESTC) FMA Trader Alert

Monthly Issue September 17: The markets have been a bit choppy of late, with the Dow Jones Industrial Average rising to 29,000 at the beginning of the month, then retreating and rising again. It looks like Fall may be a little volatile. As you’ll see in our Advisor Sentiment Barometer and Market Views, sentiment remains bullish, with a hint of caution. Nancy begins our issue this month with her Spotlight Stock, Realty Income Corporation (O), a REIT with above average yield, and a Dividend Aristocrat. In her Feature article, she further explores the REIT industry and explains why it’s almost always a good time to hold a REIT or two in your portfolio.

Ask the Experts

Cabot Profit Booster

Question: I am a new subscriber to your CPB service. I’m new to options trading and excited to learn more from you and add more tools to my investing tool chest. I couldn’t figure out how to purchase the stock and do the sell to open order all at one time, so I am waiting to get filled on the purchase of the 100 shares of stock before submitting the covered call. Am I going about this the correct way?

Jacob: First off Welcome to Cabot Profit Booster, and the world of options! Now on to your question ... Since this is your first options trade, yes, I would first buy 100 shares of STM, then, Sell to Open 1 of the November 35 call. Later down the road you can execute the trade in one trade structure, but for now, lets get you into this trade, and we will work together to advance your understanding for the next trade.
Don’t get terribly worked up about the prices of this trade. Since this is your first options trade, most importantly I want you to get the “mechanics” of executing the trade correctly on your brokerage platform.

Quarterly Cabot Analyst Meeting

The recording of the Cabot Prime Members Meeting with the Analysts from July 15, 2020 is now available for you to listen to at your convenience—click here for access. This private call with our analysts is one of your exclusive Cabot Prime Pro member benefits.

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 Global Stocks ExplorerCabot Growth InvestorCabot Marijuana InvestorCabot Stock of the WeekCabot Undervalued Stocks AdvisorCabot Dividend Investor
ABBVBuy
ACCDBuy 1/2
AEMBuy
APPFHold
APT.AXBuy 1/2
AREHold
ARNABuy
AVGOHold
AVLRBuy
AZEKHold
BABAHold
BEBuy
BGSBuyBuy
BIGSold
BIPBuy 2/3
BMYHold
BSCLBuy 1/2
BUGSold
CCIHold 1/2
CDLXBuy
CGCSee Advisory
COLMHoldBuy
CRLBFSee Advisory
CRNCBuy
CURLFSee Advisory
DDOGBuy
DLRBuyBuy
DOWHold
DXCMHold
EPDHold
EQHStrong Buy
EVBGHold
EVERBuy
FIVEBuy
FVRRHold 3/4
GMStrong Buy
GRWGSee Advisory
GSHDHold 3/4
GTBIFSee Advisory
GTLSBuy
HTHTHold
IIPRSee AdvisoryHold 2/3
INSPBuy
KLBuy 1/2
KPTIHold
LLYBuyBuy
MKSIHold
MOBuy
MPCHold
NEEHoldHold 1/2
NETHold 1/2
NKLAHold
NVCRBuy
PGXHold 1/2
PINSBuyBuy
PLMRHold
PWRBuy
QCOMBuyHold 2/3
QTWOBuy
REMXBuy 1/2
RGENBuy
RNGSold
ROKUBuy 1/2
RPAYBuy
SEHold 1/2Hold
SGENBuy
SPCEBuyBuy
SPTBuy
SSOBuy
STAGHold 1/2
TAPBuyStrong Buy
TCNNFSee AdvisoryHold
TOTHold
TPBSee Advisory
TRSSFSee Advisory
TSLAHold
TSMBuy 1/2Buy
TSNBuy
TWLOBuy
UEICBuy
VBuy
VIACBuy
VIPSBuy 1/2
VLOHold 1/2
VOYABuy
VZBuy
WINGHold
XELHold 2/3
ZMHold