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Weekly Summary July 20, 2018

Cabot Prime Week Ending July 20, 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 member pricing.

Cabot Quarterly Market Report and Teleconference

2Q 2018 Report

If 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, Paul Goodwin, Chief Analyst of Cabot Emerging Markets Investor, looks at the market and sees a technically positive market that may not be quite as healthy as it looks. The major indexes are holding above their 25- and 50-day moving averages, but there’s not a lot of enthusiasm heading into the heart of earnings season. The Nasdaq is leading the way higher, but the Dow and the S&P are still far from challenging new high levels. Paul looks at a couple of energy stocks that are forming nice charts, a couple of retail charts that are showing strength and one unexpected tech stock, plus a (possibly) overcooked health-care stock, a healthy restaurant chain and the disappointing emerging markets indexes.

Advisory Services

Cabot Growth Investor

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.

Bi-weekly Update July 11: Mike says to continue to lean bullish. The market’s bounce off support last week was encouraging, and while we remain in a news-driven, choppy environment, our current cash level is too high given the mostly positive evidence. Thus, tonight, he’s adding two new stocks: Ligand Pharmaceuticals (LGND) and Teladoc (TDOC), leaving us with a cash position of 20%.
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 20: Today, Mike says with most of the evidence bullish, we’re mostly bullish, though we’re also making sure to hike our stops as stocks rise and certainly aren’t against taking some partial profits on the way up, too. Today’s Buy Ideas: MongoDB (MDB), Keysight Technologies (KEYS), Serepta Therapeutics (SRPT) and Shutterfly (SFLY). Mike has two sells: Netflix (NFLX) and Oasis Petroleum (OAS).

Weekly Issue July 16: This week’s list is again heavy on growth stocks, though there are a couple of special situations presented as well. Mike’s Top Pick is ZTO Express (ZTO), a young, volatile Chinese stocks with huge growth and a very strong chart. Start small, ideally on dips.

Cabot Undervalued Stocks Advisor

Special Bulletin July 20: Crista reports on earnings from BB&T Corp. (BBT), Blackstone Group (BX), Comerica (CMA) and Skechers (SKX). Both BB&T Corp. (BBT) and Comerica (CMA) move from Hold to Strong Buy.

Weekly Update July 17: Crista writes that it’s time to anticipate rising inflation, more commonly thought of as the increase in the cost of goods and services. There are a variety of reasons that inflation could increase, including scarcity of goods that are in demand, rising prices on raw materials (e.g. energy), wage increases and monetary policy.There is one portfolio change today, Alexion Pharmaceuticals (ALXN) moves from Strong Buy to Buy.

Special Bulletin July 16: Bank of America (BAC) reported a big second-quarter earnings beat this morning. Crista says today’s good news could turn the share price around, beginning a push toward 2018 highs in the 32-33 range.

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 17: This week’s recommendation is a well-known retail name, Guess? (GES), that is temporarily low and primed to move higher. Tim has three rating changes today: TiVo (TIVO) moves from Hold to Sell, Weight Watchers International (WTW) from Buy to Hold and Zillow (Z) from Hold to Buy.

Cabot Emerging Markets Investor

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.

Bi-weekly Issue July 12: This issue’s featured stock is WNS Holdings (WNS), an information technology company that practices business process outsourcing (BPO) for global clients in the banking, financial insurance and travel industries. Paul has it rated Watch. Also, he gives you five rules, that if you follow them, will go a long way toward blunting the market’s attempts to take your money—and be in position to greatly increase your wealth when the buyers return. Noah Holdings (NOAH) is moving from Watch to Drop.

Cabot Benjamin Graham Value Investor

Weekly Update July 19: Crista has three rating changes today: LKQ (LKQ) moves from Buy to Sell at 37, Stifel Financial (SF) moves from Hold to Buy and Walt Disney (DIS) moves to Sell.

Cabot Dividend Investor

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.

Monthly Issue June 27: This month’s featured buy, Occidental Petroleum (OXY) is a large oil and gas company with a 3.7% yield, a 15-year history of dividend growth, and rapidly rising earnings. It’s being added to the Dividend Growth tier. Chloe is selling half of Intel (INTC), and replacing Invesco BulletShares 2018 High Yield Corporate Bond ETF (BSJI) with Invesco BulletShares 2022 High Yield Bond ETF(BSJM).

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 20: Vanguard Small-Cap Growth ETF (VBK) from The No-Load Fund Investor
Daily Alert July 19: Hexcel Corporation (HXL) from Canaccord Genuity Research

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.

Daily Alert July 18: At Home Group Inc. (HOME) from BI Research
Daily Alert July 17: Marvell Technology Group Ltd. (MRVL) from Argus Weekly Staff Report
Daily Alert July 16: Builders FirstSource (BLDR) from Upside
Daily Alert July 16: Acadia Healthcare (ACHC) from Upside

Wall Streets Best Dividend Stocks

Daily Alert July 20: MetLife, Inc. (MET) from AlphaProfit Sector Investors’ Newsletter
Daily Alert July 19: New York Community Bancorp (NYCB) from The Prudent Speculator
Daily Alert July 18: Telefónica, S.A. (TEF) from Conrad’s Utility Investor
Daily Alert July 17: Cohen & Steers Realty Shares (CSRSX) from Bob Carlson’s Retirement Watch
Daily Alert July 16: Tupperware Brands Corporation (TUP) from Dividend Advisor

Monthly Issue July 11: This month’s issue is our Top Picks for 2018 mid-year update. Capturing first place, with a gain of 27% is Ingrid Hendershot of Hendershot Investments, who recommended The TJX Companies (TJX). In this issue, Nancy updates many of our Top Picks from our January 2018 issue, and has also added a couple of new Top Picks, as well as a variety of additional investment ideas.

Premium Reports

Cabot’s 10 Best REITs to Buy Now

Special Report

July 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 Stock of the Week

Question: I’m recent subscriber of the Stock of the week. I follow buy recommendations from your portfolio for the moment. They yielded nice profit so far, but I agree with your latest thoughts that recession or some kind of bear market is on the way. I have 2 questions: 1. I’d like to plan what defensive assets to use in this case. Can you recommend the instruments to look at for about 10% interest rate with regular income and moderate/low risk? Or maybe just point out which sector should I look at - corporate/federal bonds, REIT, etc. 2. It would be awesome to receive some kind of signal of market fall beforehand. Do you plan to send some kind of warning in this case with appropriate recommendations?

Tim: Thanks for asking. The best defensive asset is cash. When our growth-oriented analysts turn defensive, they hold cash. On the other hand, if you’re looking for high income (maybe not as high as 10%—that’s greedy) Cabot Dividend investor has several portfolios that you can choose from—but you’ll have to accept the risk that your assets may shrink in a bear market. As to giving a signal before the market turns down, I would love to do so, but don’t even dream that I can. Every market top is different. Not every stock tops on the day of the top. So the best we can do is to be vigilant about maintaining a portfolio of healthy stocks, and reducing risk (possibly raising cash) when the going gets rough. And if you’d really like regular coverage of the market timing issue, I recommend Mike Cintolo’s Cabot Growth Investor, which has a full page of market timing indicators. (Mike was “Timer of the Year” some years ago.)

Cabot’s Ten Best Marijuana Stocks

Question: I came into this sector in January, got thrashed in February, bought back in and am getting trashed a second time. It’s apparent the trend in these stocks is no longer " strong”. Two of the “big 3" are below their 200 day average, the largest, CGC, is below its 50 day; all trading on very high volume. KSHB and OGRMF at their 200 day, CRON below its 50 day. You say these are long term investments but the market is saying they are practically junk at this point. My portfolio is currently down 24%, APHQF is down 57%; it seems my money could be working better for me in other Cabot investments. What happened to the “acquisition phase” this group was in back in January; we are closer to legalization in Canada yet the market is decidedly pessimistic.

Tim: Thanks for asking. You’re right that the intermediate-term trend in these stocks is not strong. But the long-term trend remains up, and Aphria (APHQF) and Aurora (ACBFF) are clearly bottoming here. Canopy (CGC) has been stronger, but it too may join them, by coming down to its 200-day moving average. Kush (KSHB) and Organigram (OGRMF) are also still quite positive, long-term. From the start, I have advised investing no more than 10% of your portfolio in marijuana stocks, and letting it grow to no more than 20%. Perhaps I should have mentioned that more often. In addition, I have repeatedly recommended diversification away from simply growers and into other peripheral players, like retailers and packers and accessory producers. (IIPR and TPB, which you don’t mention, look great.) Long-term, I remain bullish on the sector and believe the odds are extremely high that long-term holding of these stocks will reward. But it is the nature of investing that buying is easy at tops and holding is difficult at bottoms. In fact, looking ahead to October 17, which will be the first day of retail adult selling in Canada, I’ll suggest that that will be an easy time to be optimistic about the business, and thus may mark another (temporary) top for the stocks. (That’s the sort of contrary thinking that allows successful investors to buy on bad news—like this week’s proposal for a new tax on Canadian marijuana businesses— and sell on good news.)

Guide to Cabot Prime

This Guide to Cabot Prime will help you make the best use of your Prime membership to create a strong personal portfolio.