Cabot Prime Week Ending October 26, 2018
Cabot Quarterly Market Report and Teleconference
3Q 2018 ReportThe third quarter of 2018 was fun and profitable for most investors, with numerous indexes hitting new highs in August and September, but now we’re just halfway through October and the malaise that affected foreign stocks has spread to U.S. stocks. I suggest you take it all in stride and respect the markets trends which are short-term down, but long-term remaining definitively up. You can listen to the Quarterly Analyst Teleconference here.
Cabot Weekly Review (Video)
In this week’s stock market video,Mike Cintolo discusses the market’s continued free fall and the importance of remaining in a defensive stance—the market’s intermediate-term trend turned down in early October, and the longer-term trend went negative last Friday, which usually leads to at least another leg down (as we saw this week). Being mostly on the sideline, Mike’s focused mostly on spotting stocks showing some relative strength, and brings you a bunch of names you should have on your watch list as he waits for the market to find a low.
Advisory Services
Cabot Growth Investor
Bi-weekly Issue October 24: Stay defensive and remain patient. In the Model Portfolio, Mike sold the remaining shares of Ligand last Friday, leaving us with a large 71% cash position, which provides not only a cushion against any further market plunges but also plenty of buying power for fresh leaders when our indicators turn green. And he’s also keeping tight stops on the remaining positions.
Bi-weekly Update October 17: Mike writes that you should remain defensive. The market has been bouncing decently during the past four trading days, but our Cabot Tides remain clearly negative and most growth stocks are still in steep corrections. Longer-term, he’s optimistic this bull market will eventually resume, but right now, it’s best to hold plenty of cash, cut back on new buying and patiently wait for a new uptrend to being. He has no portfolio changes tonight.
Other Stocks of Interest October 12: Follow ups to stocks featured May 9, 2018 (issue 1393) to October 10, 2018 (issue 1404). 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 October 26: In the very (very, very) short-term, Mike will be interested to see if today’s decline results in a small positive divergence in the broad market—on the Nasdaq, for instance, 561 stocks hit new lows on Wednesday, whereas so far this morning, the number is “only” 380. That’s not definitive by any stretch, but he’s likely to see some letup in the downside momentum before the bulls put up a fight. Today’s buy ideas are Amarin (AMRN), Petrobras (PBR), Vale (VALE) and Spirit Airlines (SAVE). As for Sells: The plunge this week caught up with many stocks that had been holding up well, tripping another batch of stops. As always, if you’re already heavily in cash, you could consider holding and trying to sell on a bounce, but we’ll just follow the system.
Weekly Issue October 22: This week’s list includes a broad mix of stocks and sectors, including one very new IPO and a couple of special situations. Mike’s Top Pick, though, is Ciena (CIEN), the mid-sized networking outfit that looks ready for a sustained upturn once the pressure comes off the market. The Market Monitor remains at a level 4 today.
Cabot Undervalued Stocks Advisor
Special Bulletin October 24: Alexion Pharmaceuticals (ALXN) and Knight-Swift Transportation (KNX) each reported strong earnings beats this morning.
Weekly Update October 23: Today, Crista is featuring this morning’s earnings reports on CIT Group (CIT) and Regions Financial (RF). Also, five stocks move from Strong Buy to Hold: Baker Hughes, a GE Co. (BHGE), DowDuPont (DWDP), Marathon Petroleum (MPC), Regions Financial (RF) and Voya Financial (VOYA).
Special Bulletin October 22: Interpublic Group of Companies (IPG – yield 3.4%*) reported a strong third quarter that pleased the market on October 19. Despite a subsequent, modest increase in 2018 earnings estimates, the 2019 consensus estimate remains unchanged, now reflecting just 4.6% expected earnings growth. Crista is therefore ready to sell IPG from the Growth & Income Portfolio. Sell.
Monthly Issue October 2: Today’s featured stocks include Alexion Pharmaceuticals (ALXN), CIT Group (CIT), and a new addition to the Growth & Income Portfolio: Delta Air Lines (DAL). Today’s portfolio changes are: Blackstone Group LP (BX) moves from Buy to Hold, Delek U.S. Holdings (DK) moves from Strong Buy to Hold and Martin Marietta Materials (MLM) moves from Strong Buy to Hold. Crista also writes about General Electric (GE).
Cabot Stock of the Week
Weekly Issue October 23: Tim points out today that for the first time in 30 months, Cabot’s long-term market-timing indicator, the Cabot Trend Lines, has turned negative. This does not mean that the market will necessarily head lower from here, but it does mean that the odds are now worse than they have been in a long time, so an additional dose of caution is wise. For today’s stock, Match.com (MTCH), it might mean waiting for an ideal buy point as well as using tighter stops than usual. The stock was originally recommended by Mike Cintolo in Cabot Top Ten Trader. Here are tonight’s Portfolio changes: CSX Corp. (CSX) moves from Hold to Sell, DowDuPont (DWDP) from Buy to Sell, Green Dot (GDOT) from Hold to Buy, McCormick & Company (MKC) from Buy to Hold, Synchrony Financial (SYF) from Buy to Hold and Voya Financial (VOYA) from Buy to Sell.
Cabot Emerging Markets Investor
Bi-weekly Update October 25: The Cabot Emerging Markets Timer is solidly negative, and the U.S. indexes have joined in the decline. Paul is going to increase our cash position by selling our half position in RYB Education (RYB) and nudge our defensiveness up a tic by moving Ecopetrol (EC)to a Hold.
Bi-weekly Issue October 18: The tariff wars and rising interest rates are beginning to have a measurable effect on the economies of the world, with emerging economies taking the biggest hit. Paul is going to keep our cash level as high as necessary to stay away from the giant slalom course that is the emerging markets right now. Tonight’s recommendation is Petrobras (Petróleo Brasileiro S.A.) (PBR), the Brazilian national oil company. Oil prices hit their highest levels since 2014 in October, and even with their recent slip, are at a level to provide huge valuation premiums to owners of large oil reserves, which Petrobras has in spades. It’s rated Buy a Half. Paul has no changes to the portfolio tonight.
Cabot Dividend Investor
Weekly Update October 24: Today, Chloe is selling the rest of McGrath RentCo (MGRC) and Occidental Petroleum (OXY), which has no obvious support level, and in which we have a 15% loss. She is also selling half of CSX Corp. (CSX), which has fallen 7.5% over the past week despite reporting estimate-beating earnings. And, Dunkin’ Brands (DNKN) and UnitedHealth Group (UNH) move to Hold.
Monthly Issue September 26: Today Chloe is adding a little more diversity, increasing her consumer exposure by adding a well-known chain, Dunkin’ Brands Group (DNKN), to the Dividend Growth tier. Also, Community Health Trust (CHCT) moves to Hold.
Cabot Marijuana Investor
Monthly Issue October 25: Short-term, Tim’s advice is to hold off new buying on most of these stocks and let this correction run its course a little longer. If things perk up, both in the marijuana sector and in the broad market, he’ll be happy to jump right back in, but for now, he’ll stand pat.
Update October 16: Tomorrow’s the day that stores across Canada begin selling marijuana legally, and as Tim has said several times before, he believes the odds are that this will mark an intermediate-term top for many of the stocks in the sector. Thus, he’ll be taking partial profits in all the portfolio’s Canadian producers today (that’s six stocks) by selling half of each position. Aurora Cannabis (ACBFF), Canopy Growth (CGC), Cronos Group (CRON), HEXO Corp. (HYYDF), and Organigram (OGRMF).
Wall Street’s Best Investments
Daily Alert October 26: Constellation Brands, Inc. (STZ) from Argus Weekly Staff Report
Daily Alert October 25: John Wiley & Sons Inc. (JWA) from Positive Patterns
Daily Alert October 24: Altair Engineering Inc. (ALTR) from Cabot Stock of The Week
Daily Alert October 23: Sell: D.R. Horton, Inc. (DHI) from Dow Theory Forecasts
Daily Alert October 23: Zebra Technologies Corporation (ZBRA) from Dow Theory Forecasts
Daily Alert October 22: Upland Software, Inc. (UPLD) from Canaccord Genuity Research
Monthly Issue October 17: Nancy’s Spotlight Stock is Brookdale Senior Living (BKD), the nation’s largest operator of housing for seniors. In her Feature article, she delves into how the aging of our population is creating vast opportunities in this sector, as well as some of the specifics that are driving the improvements for our Spotlight company.
Wall Streets Best Dividend Stocks
Daily Alert October 26: Sell: Magna International Inc. (MGA) from Validea Hot List Newsletter
Daily Alert October 26: Thor Industries, Inc. (THO) from Validea Hot List Newsletter
Daily Alert October 25: Sell: DSW Inc. (DSW) from The Turnaround Letter
Daily Alert October 25: Mitsubishi UFJ Financial Group, Inc. (MUFG) from The Turnaround Letter
Daily Alert October 24: Aberdeen Asia-Pacific Income Fund, Inc. (FAX) from High Yield Wealth
Daily Alert October 23: TiVo Corporation (TIVO) from Cabot Undervalued Stocks Advisor
Daily Alert October 22: Texas Instruments Incorporated (TXN) from Dividend Advisor
Monthly Issue October 10: This month’s Spotlight Stock, Carnival Corporation (CCL), is in one of Nancy’s favorite industries—cruising! The company is the largest in the sector, offering cruises that target all socioeconomic ranges. In her Feature article, she explores the industry, which is seeing unprecedented demand right now.
Ask the Experts
Cabot Dividend Investor
Question: PGX hasn’t been this low in quite a while. I like the dividend but it’s getting eaten up by the latest price drop. Still a buy?
Chloe: PGX declined 2%-3% earlier this month due to the spike in interest rates, but has stabilized over the past couple weeks. The ETF’s history only goes back to 2008, so it’s hard to say exactly what will happen if interest rates continue to rise. However, it’s worth noting that PGX has rarely traded below the mid-13s, even back in 2010-2011 when interest rates were significantly higher than they are now. Whether to buy now depends on your goals, risk tolerance and cash position. The 6% yield is very secure, and most declines will be much smaller than that, making PGX much safer than most investments. But still isn’t guaranteed not to lose money.
Cabot Growth Investor
Question: Not to take much of your valuable time, but a very quick message here. just thought i’d ask, despite that you seem to be a “the market did what it did, and looking back at it is just (pretty useless) “rear-view mirror” action as well as it being, technically speaking, at least, too late. anyway, thought i’d ask, do you have a view/opin. on what specifically is causing the worries over global growth? (i was going to ask what’s causing the market to really, really bleed red lately, but that (all the red lately) seems, mostly at least, to be from worries over global growth). could it be the (to be direct here) Trump tariffs that are responsible for a lot of it? any view(s) on that would be welcomed.
Mike: Thanks for writing. And never worry about emailing -- I’m happy to take time to answer, always. First off, I wouldn’t say we never look back -- but I tend to do post-analysis a few weeks later, when the dust has settled and the emotions aren’t running high. I don’t ignore the past, but overanalyzing it so soon usually isn’t as productive. As for the reason, I would say that the complete meltdown in all things construction and housing and industrial does probably mean the market is sniffing out a global slowdown of some sort. Is it tariffs? Maybe. Or maybe it’s the Fed? Or the election? I try not to get into that. I don’t think the cost of the tariffs themselves are a big deal -- but if they are contributing to a global slowdown in China and elsewhere, then that will hit earnings. Really, though, we’ll see -- there have been some quick meltdowns (1997, 1998) that didn’t lead to any real economic damage. And then we’ve seen others that have, of course. So we’ll see what things look like in a month or two, but if I had to guess it was just a tipping point of (a) many stocks having had giant runs during the past two years and (b) some perception change that maybe the global economy is at a tipping point.
Premium Reports
Cabot’s 10 Best Canadian Small-Cap Stocks
Special ReportAugust 31: 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 there are market-beating returns available to investors willing to step abroad too. And one of the easiest places to find them is just over the border with our neighbor to the north, Canada.
10 Monthly Dividend Stocks to Buy for Year-Round Income
Special ReportAugust 9: Dividend-paying stocks are favorites of retirees and other investors who live off income from their investing portfolios. Like bonds, dividend-paying stocks provide a steady income stream that you can spend without eroding your principal. Unlike bonds, many stocks increase their dividends over time, so your income stream can actually rise each year. This report includes profiles of Chloe’s 10 favorite monthly dividend payers, each of which offers a unique mix of yield, capital appreciation and safety. If you’re looking for monthly income, you’re sure to find at least one that’s right for you.
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 ReportUpdated August 10: 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 ReportUpdated August 10: 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.
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.