Issues
The market continues to strengthen, and thus you should become more heavily invested; it’s possible this strength could run to the end of the year!
But predictions aren’t necessary; what’s necessary is listening to your stocks and acting accordingly.
Today, doing exactly that leads us to sell one stock, so that we can make room for today’s recommendation, a company that’s built one of the biggest brands in the world.
But predictions aren’t necessary; what’s necessary is listening to your stocks and acting accordingly.
Today, doing exactly that leads us to sell one stock, so that we can make room for today’s recommendation, a company that’s built one of the biggest brands in the world.
The potential vaccine and mixed election results pushed the market forward this past week, but the acceleration of the pandemic and near-term uncertainty in Washington pulled it back. It is a time to be a bit cautious. Emerging markets are showing some strength, as our timing indicator turns decidedly positive. Rotation into international stocks may be coming.
Alibaba (BABA) is a good example of the push and pulls. The Chinese e-commerce giant raked in a record-breaking $56 billion in sales in the first 30 minutes of China’s Singles’ Day on Wednesday, much higher than the $38 billion total in the entire 24-hour period last year. In comparison, Amazon booked $10.4 billion during its two-day Prime Day event last month. Yet, Alibaba’s stock was down sharply for the week. Find out why inside, where you can also learn about this week’s new SPAC recommendation.
Alibaba (BABA) is a good example of the push and pulls. The Chinese e-commerce giant raked in a record-breaking $56 billion in sales in the first 30 minutes of China’s Singles’ Day on Wednesday, much higher than the $38 billion total in the entire 24-hour period last year. In comparison, Amazon booked $10.4 billion during its two-day Prime Day event last month. Yet, Alibaba’s stock was down sharply for the week. Find out why inside, where you can also learn about this week’s new SPAC recommendation.
The huge market rally earlier this week gives us a taste of what lies ahead on the other side of this pandemic. The lockdowns will end and the economy will boom. Many stocks that have not participated in the market recovery will come alive.
While the market indexes have recovered, many stocks and sectors have not. Technology may be booming but energy, travel and hospitality, finance and other industries are still wallowing in bear market oblivion. It is these stocks that came alive this week and they should benefit when the virus fades and the recovery gains full traction.
It’s time to invest for the other side of the pandemic. In this issue, I highlight one of the very best income stocks in the history of the market. While the company has remained profitable, it has experienced a disproportionate selloff. The stock is still cheap but starting to move ahead of the next phase of this recovery.
While the market indexes have recovered, many stocks and sectors have not. Technology may be booming but energy, travel and hospitality, finance and other industries are still wallowing in bear market oblivion. It is these stocks that came alive this week and they should benefit when the virus fades and the recovery gains full traction.
It’s time to invest for the other side of the pandemic. In this issue, I highlight one of the very best income stocks in the history of the market. While the company has remained profitable, it has experienced a disproportionate selloff. The stock is still cheap but starting to move ahead of the next phase of this recovery.
Today, we are recommending a micro-cap turnaround stock. If you look at the long-term stock chart, it looks like a company in secular decline. But once you look under the hood, you will realize the company has transitioned into a software/tech enabled services company with recurring revenue.
I think this stock has ~200% upside over the long term.
This company’s characteristics include:
All the details are inside this month’s Issue. Enjoy!
I think this stock has ~200% upside over the long term.
This company’s characteristics include:
- Near-term tailwinds from the booming IPO and SPAC market
- A draconian valuation
- An activist investor with a 10% equity stake (ensuring aligned incentives)
- Low capex requirements
All the details are inside this month’s Issue. Enjoy!
The good news is the election has passed, and there is hope in the race to find a coronavirus vaccine. The bad news is that these two developments aren’t necessarily great news for all stocks, as money viciously rotated yesterday out of hyper-growth stocks, and into cyclicals.
The market strength of the past week has turned our intermediate-term market timing indicator positive once again, so it’s a good time to buy, especially if you focus on the leaders, like this week’s recommended stock, which has a novel and effective treatment for cancer.
As for our current holdings, some are hitting new highs today, while some have taken a hit, as investors sell stocks (like Zoom) that benefitted from the pandemic. But one day does not a trend make; we’re selling nothing today.
As for our current holdings, some are hitting new highs today, while some have taken a hit, as investors sell stocks (like Zoom) that benefitted from the pandemic. But one day does not a trend make; we’re selling nothing today.
Current Market OutlookThe market staged a stunning rebound last week, producing rare strength that bodes well for the months ahead. And today’s action was even more dramatic, with news of a virus vaccine causing some wild moves up in the major indexes. The intermediate-term trend is now clearly up, but the tricky part comes with individual stocks—today’s action saw growth stocks get hit (in general) while lagging cyclical names exploded higher. Overall, the evidence has clearly improved so we’re optimistic the next leg up has begun, but at the same time, it’s likely the crosscurrents we’re seeing among individual names and sectors will be with us a while (rotation and re-rotation, etc.). Thus, we’re OK with gradually extendingyour line, but it’s probably not going to be like April or May when throwing a dart made you money; continue to pick your spots and stocks carefully and give names room to maneuver.
This week’s list is growth-heavy after we saw many positive earnings reactions last week; yes, most took on some water today but they remain in uptrends until proven otherwise. Our Top Pick is Zendesk (ZEN), which is early stage and acts like it wants to go higher. Try to buy on weakness.
| Stock Name | Price | ||
|---|---|---|---|
| Amicus Therapeutics (FOLD) | 21.15 | ||
| Enphase Energy (ENPH) | 116.95 | ||
| HubSpot (HUBS) | 345.57 | ||
| JD.com (JD) | 84.91 | ||
| QUALCOMM Incorporated (QCOM) | 142.44 | ||
| Roku, Inc. (ROKU) | 221.95 | ||
| Uber (UBER) | 48.20 | ||
| Yeti Holdings (YETI) | 51.52 | ||
| Zendesk (ZEN) | 124.63 | ||
| Zillow (Z) | 104.12 |
The market’s recovery this week has been very impressive, especially in the face of what looks like continued election uncertainty in the days ahead. That said, two days of action isn’t the be-all, end-all, but it’s certainly encouraging; we’re adding one new half position tonight in Novocure (NVCR) and aiming to add more. The only issue is that many stocks we’re high on are reporting earnings tonight or early next week; if they can survive their reports, we’ll likely be putting money to work.
In tonight’s issue, we write about all our stocks and some bullish signposts for the market longer-term--whether we’re seeing a kickoff here or whether it takes a while longer, the odds strongly favor the past two months being a normal rest within a major bull market.
In tonight’s issue, we write about all our stocks and some bullish signposts for the market longer-term--whether we’re seeing a kickoff here or whether it takes a while longer, the odds strongly favor the past two months being a normal rest within a major bull market.
Updates
I summarize the latest news for 21 companies. I also include an important question on Ulta Beauty from a subscriber along with my answer. One stock is now a SELL.
The overall market is in good shape, with all three of our market timing indicators still bullish, though individual growth stocks still have a bit more to prove as we move through the heart of earnings season. We have no changes today (the Model Portfolio is 20% in cash), but are ready to move to a fully invested stance should earnings season go well.
In the wake of surprisingly successful second-quarter results among large-cap banks, all eyes are turning to regulatory reform as the next catalyst to rising earnings estimates among bank stocks.
Amid all the debate around health care, and despite the on-again-off-again repeal-and-replace effort, small-cap healthcare is still the number-one performing sector this year. Our two medical device stocks are rated Buy, and both are trading at or near 52-week highs.
Earnings season, which brings quarterly financial reports to light, has begun. Initial quarterly reports have spawned some volatile action in individual stocks. Some of the wide swings are warrantied and some aren’t. I sort through the maze and offer my advice on nine companies in the updates.
The iShares EM Fund has bolted higher since July 10, giving us a robust and unambiguous Buy signal. We have two portfolio moves tonight.
The broad market strengthened over the past week, led by a rebound in tech stocks. Other leading sectors included real estate, energy and, for a second week, materials. Utilities also rebounded, as interest rates pulled back. The only industry group that hasn’t advanced over the past five days are the financial stocks.
We seem to be experiencing a more active stock market than that of a typical summer. The adage “sell in May and go away” hasn’t seemed to fit in 2017. There’s been lots of price action among oil refiners and marketers, food retailers, steel, technology and investment companies.
On average, our portfolio rose by 3.2% this week. That pleases me because it was twice as much as the small cap index. Across our 11 positions, we have an average gain of 32%, which is 22.7% better than you’d have done if you just bought the Russell 2000 every time I recommended one of our current stocks.
Relief and a rally returned to the stock market on Wednesday, July 12, as Fed Chair Janet Yellen assured Congressional members and investors that her Federal Open Market Committee would not “normalize” interest rates by raising rates at predetermined time intervals.
Put a little money back to work. Our trend-following indicators are still bullish, and we’ve seen the Nasdaq and growth stocks show renewed strength in recent days. The market isn’t completely out of the woods, but there’s enough evidence to do a little new buying.
The broad market remains in a holding pattern. Some stocks are breaking out to new highs, but others are breaking down. The Nasdaq regained some ground this week, but the divergences between the major indexes remain. There’s no reason to panic, but we are making a couple of moves to reduce risk this week.
Alerts
The top three sectors in this ETF are: Real Estate, 26.32% of assets; Financial Services, 15.27%; and Consumer Defensive, 14.87%.
In the past couple of months, coverage of the shares of this cybersecurity stock was initiated at Mizuho.
Analysts expect this grocer to grow by double-digits next year.
Growth stocks were hit hard today, though they found some support in the afternoon. Bigger picture, we remain optimistic that the market’s next big move is up, as our long-term Cabot Trend Lines are still bullish. Near term, however, the market has clearly lost some steam. Near term, however, the market has clearly lost some steam and we are selling one position today as a result.
Rather than wait until Thursday, I would like to let you know that I’m moving one stock to a sell following its 7% decline Tuesday following disappointing news that electric vehicle subsidies in China are being cut 50%.
The top five holdings of this defense fund are: Boeing Co (BA, 20.27%); Northrop Grumman Corp (NOC, 11.93%); General Dynamics Corp (GD, 9.19%); TransDigm Group Inc (TDG, 6.27%); and Spirit AeroSystems Holdings Inc (SPR, 4.99%).
Technology stocks are the leaders, gaining an average 18.7% so far in 2019.
The shares of this auto parts supplier were recently upgraded at Guggenheim to ‘Buy’.
Two stocks in the portfolios have reported earnings and there is news on one other.
Three analysts have raised their EPS estimates for our first pick today, and secondly, we are taking some profits.
Coverage of the shares of this enterprise cloud computing company were recently initiated at Mizuho, with a ‘Buy’ rating, and at Stephens & Co. and Atlantic Equities, with an ‘Overweight’ rating.
Portfolios
Strategy
A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.
A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.
Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.
Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.
Our Cabot Momentum Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Momentum Trader features.