Cabot Market Letter’ Editor Michael Cintolo gives Yahoo Finance’s Breakout his picks for stocks that will weather the current correction. Until the bull returns, Cintolo suggests that investors hold onto their big winners while trimming their losers, and create watch lists of stocks that are holding up well. He discusses six stocks in detail.
Reprinted from Yahoo Finance Breakout
Correction-Proof Stock Picks: Cabot’s Cintolo
With the S&P 500 down about 3.5% in May and slumping to a one-month low, active investors would be wise to adhere to that label and make some in-fight adjustments.
Herewith, some strategic nuggets from Cabot Market Letter Editor Michael Cintolo to help you through the turbulence.
Refresh Your Watch List:
By pruning weak stocks and raising cash, Cintolo says investors can be ready to snap up some names that may have passed them by. Be on the lookout for stocks that are “acting differently” or “showing only normal weakness” in a down market. Green Market Coffee Roasters (GMCR) is one Cintolo likes; the stock is showing signs of support “that institutional investors are in and willing to park money” for the new few years of growth.
Hold Big Winners Until They Really Break:
Cintolo uses Baidu (BIDU) as an example here. Cabot is sitting on huge gains in the Chinese Internet company, and even though there appear to be some cracks in the China growth story, Cintolo says they will hang on to BIDU through this correction as they have several times before.
MercadoLibre (MELI)
is a lesser-known but similar company to BIDU that Cintolo says is holding up great and benefiting from “institutional nibbling.”
Practice Patience OR Cut Losses Quickly:
Here Cintolo highlights Priceline (PCLN) but offers different advice for different circumstances.
“If you’re sitting on big gains [in PCLN], practice patience” because it is showing only “normal weakness.” If you’re not up or if you bought it recently, then Cintolo would be quick to cut losses “because we want to be wrong small and right big.”
Depending on your particular situation and cash stash, Cintolo’s own watch list names are interesting. On Abercrombie (ANF) he says “it looks great but the market doesn’t,” so it’s best to wait a bit. Same for the ProShares Ultra Russell 2000 (UWM), which is down 10% in May. It looks good long term, but a short term entry point is challenging.
Link to video on Yahoo Finance: http://finance.yahoo.com/blogs/breakout/correction-proof-stock-picks-cabot-cintolo-183414223.html