Issues
Current Market OutlookLast week saw some vicious rotation early in the week, with the super-strong growth names coming down to earth while money gushed into cyclical sectors, but the leaders stabilized as the week wore on and the broad market remains positive, too. From a big-picture perspective, the 90% Blastoff signal last week (90% of NYSE stocks above their 50-day lines) bodes well for the overall market, and the fact that few (if any) leading stocks have cracked is a good sign. All in all, further potholes, rotations and shakeouts are relatively likely given the big run over the past two months and the divergent environment, but until proven otherwise, we continue to think the path of least resistance is pointed up. We’re moving our Market Monitor up another notch to a level 8.
This week’s list has a good mix of setups, with some recent earnings winners, some that have pulled back and others that are in persistent uptrends. Our Top Pick is Arconic (ARNC), which is one of the few cyclical stocks to appear in Top Ten since the uptrend got underway.
| Stock Name | Price | ||
|---|---|---|---|
| Adaptive Biotechnologies Corporation (ADPT) | 39.41 | ||
| Arconic (ARNC) | 17.00 | ||
| Bill.com Holdings (BILL) | 88.76 | ||
| Dynatrace (DT) | 36.59 | ||
| II-VI Incorporated (IIVI) | 48.64 | ||
| LiveRamp Holdings (RAMP) | 46.54 | ||
| Pan American Silver (PAAS) | 27.28 | ||
| Seattle Genetics (SGEN) | 150.85 | ||
| Tractor Supply Company (TSCO) | 122.24 | ||
| Zscaler (ZS) | 126.22 |
The overall market remains healthy, and while we still haven’t received an “all-clear” signal from our long-term timing indicator, we do have a positive signal from the 90% Blastoff Indicator, and that’s good!
Overall, our portfolio stocks are behaving quite well, with none disappointing today. In fact, many are so strong that I expect pullbacks in the future. The only sale today is of a stock that has given us a quick 30% profit. Otherwise, I’m sitting tight.
As for today’s recommendation, it’s a company in the online education industry, where demand is booming thanks to COVID-19.
Full details in the issue.
Overall, our portfolio stocks are behaving quite well, with none disappointing today. In fact, many are so strong that I expect pullbacks in the future. The only sale today is of a stock that has given us a quick 30% profit. Otherwise, I’m sitting tight.
As for today’s recommendation, it’s a company in the online education industry, where demand is booming thanks to COVID-19.
Full details in the issue.
U.S. and international markets staged a rally this week alongside momentous events in Asia as China imposes its will on Hong Kong through the passage of national security law. America indicates it will withdraw trade preferences for Hong Kong, viewing it as indistinguishable from China. China cracks down on Hong Kong as legislation advances in the U.S. to potentially delist international and Chinese companies that do not meet U.S. disclosure standards. Meanwhile, we have a new recommendation this week that has been in the news regarding Covid-19 and how we should all look at the economics of discovering new drugs.
Since the COVID-19 crash ended just over weeks ago, the market has been impressively strong, with marijuana stocks some of the strongest, as they left behind a two-year bear market.
So even though some of these stocks seem a bit over-extended today, short-term, they still have enormous upside potential in the long-term.
Full details in the issue.
So even though some of these stocks seem a bit over-extended today, short-term, they still have enormous upside potential in the long-term.
Full details in the issue.
This biopharmaceutical firm acquires, rebrands and reprices drugs for sale in the U.S., with many that treat inflammatory conditions, including a few that take aim at rare diseases.
Current Market OutlookLast week brought some upside-down action, with the leading growth stocks doing OK (some up, some down) while the lagging names (small- and mid-caps, economically sensitive sectors) did very well. And that trend continued today, with growth stocks getting hit while the major indexes ramped up. Overall, the upmove in the beaten-down areas means the intermediate-term trend has survived its first test, and while taking on some water, growth stocks remain in fine shape, with very little abnormal selling. (In fact, pullbacks in some of the hot names could offer up some solid entry points, but we’ll see how that goes.) All in all, the divergent environment isn’t ideal and will probably lead to further crosscurrents; it remains important to pick your stocks and entry points carefully, and taking some partial profits on the way up isn’t a bad idea, either. But overall, most of the evidence remains positive, so you should, too. Our Market Monitor remains at a level 7.
This week’s list has many names that have just come to life after long rest periods. Our Top Pick is Spotify (SPOT), which has always had a good story, but now has decisively broken out following a meaningful catalyst.
| Stock Name | Price | ||
|---|---|---|---|
| Allogene Therapeutics (ALLO) | 48.94 | ||
| Big Lots (BIG) | 43.12 | ||
| BJs Wholesale (BJ) | 36.69 | ||
| Guardant Health (GH) | 88.34 | ||
| Horizon Therapeutics (HZNP) | 49.89 | ||
| Neurocrine Biosciences (NBIX) | 123.40 | ||
| 1Life Healthcare (ONEM) | 34.01 | ||
| Spotify (SPOT) | 272.82 | ||
| Wayfair (W) | 167.03 | ||
| Wix.com (WIX) | 302.53 |
The broad market remains in an uptrend, according to our intermediate-term market timing indicator, but our longer-term timing indicator, while improving, remains in a negative state. Thus, it remains possible that a major pullback is right around the corner—and if one comes, it will be handy to have cash at the bottom. So I’m still working to avoid being fully invested, though it’s getting tough because our stocks acting so well.
For today’s selection, I’m going with a small company that’s taken a proven path to growth—consolidating a fractured industry. The stock was originally recommended by Tyler Laundon in Cabot Early Opportunities and here are Tyler’s latest thoughts.
For today’s selection, I’m going with a small company that’s taken a proven path to growth—consolidating a fractured industry. The stock was originally recommended by Tyler Laundon in Cabot Early Opportunities and here are Tyler’s latest thoughts.
Welcome to the inaugural issue of Cabot Income Advisor. It is my pleasure to share investment ideas that can provide you with a high income in today’s low interest rate world.
In this issue I highlight three stocks that are great buying opportunities right now for income investors. The stocks are chosen for their high yields, ability to generate attractive call premiums and the likelihood of capital appreciation over time.
While the market indexes have rebounded strongly from the March lows, many individual industries and stocks are still dirt cheap and high yielding, In fact, this is the best market in over a decade in which to find high yields in quality stocks.
Of course, the market is still dangerous and many high yielding stocks are in a precarious financial condition. Many will have to cut the dividend and the price will likely fall. While quality high yields are out there, stocks must be chosen wisely.
These three stocks are a great way to lock in high income and start to build your high income portfolio. Now is the time to embark on your journey to higher income and a more rewarding financial future. I look forward to being your trusted partner.
In this issue I highlight three stocks that are great buying opportunities right now for income investors. The stocks are chosen for their high yields, ability to generate attractive call premiums and the likelihood of capital appreciation over time.
While the market indexes have rebounded strongly from the March lows, many individual industries and stocks are still dirt cheap and high yielding, In fact, this is the best market in over a decade in which to find high yields in quality stocks.
Of course, the market is still dangerous and many high yielding stocks are in a precarious financial condition. Many will have to cut the dividend and the price will likely fall. While quality high yields are out there, stocks must be chosen wisely.
These three stocks are a great way to lock in high income and start to build your high income portfolio. Now is the time to embark on your journey to higher income and a more rewarding financial future. I look forward to being your trusted partner.
Updates
We’re letting go of Equifax (EFX) today, booking a nice profit, and reducing our exposure to Home Depot (HD) by half. We also sold Amgen (AMGN) on Monday, after health care industry stocks suffered a major selloff. Drug companies and distributors are anticipating even more pressure to rein in drug prices next year.
Market volatility has picked up. Stocks are popping and dropping all over the place. In other words, welcome to the thick of earnings season.
Seventeen Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news. I also include questions from subscribers along with my answers.
The Emerging Markets Timer is right on the fence, as the MSCI Emerging Markets Fund (EEM) is just a hair below its 50-day moving average, but still well within its recent trading range. Earnings season has claimed its first victim among our holdings, but the portfolio remains in good health. Tonight we’re selling Line Corp. (LN) and moving Tata Motors (TTM) to a Hold.
We saw very strong earnings reports last week from E*Trade (ETFC) and Goldman Sachs (GS). Yesterday, Scottrade Financial Services agreed to be acquired by TD Ameritrade (AMTD). This week;s Update discusses how that scenario might affect E*Trade (ETFC).
Thirteen Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news. Included in my summaries are three new sell recommendations: BJ’s Restaurants (BJRI), W.W. Grainger (GWW) and iShares Minimum Volatility USA ETF (USMV).
Not much has changed with the market during the past week, so we’re sticking with our stance—the Model Portfolio has 40% in cash and holding six resilient stocks. We continue to believe the next major market move is up, but in the near-term, you should take your cues from the market and individual stocks. We have no changes tonight.
Two of our stocks—Reynolds American (RAI) and U.S. Bancorp (USB)—reported earnings this morning (details are below). So far, earnings season is off to a good start, with the big banks and Netflix (NFLX) beating estimates in recent days.
After reaching new highs this summer, the S&P 500 index has receded to price support around 2,120. That’s frustrating for investors because most good stocks will move somewhat in tandem with the S&P, so your stock portfolios have probably been a disappointment in recent weeks.
I move one stock to Hold this week. And I may make a move or two in the coming days depending on intra-day trading action.
Five Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news. This update also includes three questions from subscribers along with my answers.
Alerts
Listed are the top five holdings for this small cap fund in this article.
This business services process provider beat analysts’ estimates by $0.11 last quarter, and with its recent acquisition, earnings should continue their upward track.
Analysts expect this 17.37% annual growth over the next five years for this financial market company.
The market was slammed today as a quiet open turned into a huge wave of distribution. In the Model Portfolio, we are selling two positions as both plunged through long-term moving averages.
This turnaround stock has new management and its shares are a discounted opportunity.
Now in its seventh year, MJBiz.com has over 1,000 exhibitors and more than 26,000 attendees, an increase of 137% from the year before. It’s BIG!
Analysts are forecast 25% annual growth for this construction aggregate company over the next five years.
Analysts expect this managed services firm to grow at 30% annually over the next five years.
This domain provider’s shares were recently upgraded by Baird to ‘Outperform’.
One of our stocks moves to Strong Buy.
Wall Street is latching on to this lithium producer.
One of our stocks is surging over 50% today on news that Vista Equity Partners will buy the firm.
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 Top Ten 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 Top Ten features.