Issues
The market remains in good health and trending higher, though as always, fine-tuning of your portfolio is required to continue to stay in the right stocks.
This week, that means selling two stocks (SLQT and VRTX), as well as upgrading one (ZM) to buy.
As for the new recommendation, it’s tailor-made for investors looking to maximize income from dividends (it pays a 7.3% yield) and get capital appreciation potential too.
Full details in the issue.
This week, that means selling two stocks (SLQT and VRTX), as well as upgrading one (ZM) to buy.
As for the new recommendation, it’s tailor-made for investors looking to maximize income from dividends (it pays a 7.3% yield) and get capital appreciation potential too.
Full details in the issue.
Current Market OutlookAfter an impressive four-month rebound, many investors are nervously expecting the return of volatility during earnings season. But despite some recent choppiness among the leading stocks, the market remains largely unperturbed. Growth stocks are holding up well, while the major indices remain above their key trend lines. And while there are signs lately of increased demand in defensive areas of the market (like consumer staples and precious metals mining), the more aggressive segments remain strong. Finally, a healthy number of stocks are still making new 52-week highs on both major exchanges (especially the NYSE), while new lows have been remarkably sparse. All of this tells us that the intermediate-term trend still favors the bulls. While volatility may yet rear its head, we’ll continue to follow the weight of evidence.
This week’s list contains a nice mix of some of today’s leading themes: healthcare, internet, real estate/home improvement and education. Our Top Pick is Owens & Minor (OMI), which has a solid story and has broken out of an extended base on more than 10 times normal volume.
| Stock Name | Price | ||
|---|---|---|---|
| Farfetch (FTCH) | 26.23 | ||
| Floor & Décor (FND) | 68.03 | ||
| GSX Techedu (GSX) | 97.59 | ||
| Invitae (NVTA) | 32.06 | ||
| Meritage Homes (MTH) | 102.20 | ||
| Owens & Minor (OMI) | 17.01 | ||
| SailPoint Technologies (SAIL) | 31.60 | ||
| Sea Limited (SE) | 132.86 | ||
| Watsco (WSO) | 237.50 | ||
| Wix.com (WIX) | 302.53 |
Tesla shares have more than tripled this year as the company delivered a net profit yesterday, marking its fourth consecutive profitable quarter for the first time in its history. Alibaba connected Ant Group announced a mega IPO in Shanghai and Hong Kong.
These two companies dominated the news as investors looked past the upsurge in the pandemic, rising tensions in U.S.-China relations and wrangling in Washington over another shot of stimulus to jump start the economy. Today we highlight a recommendation that was previously in the Explorer portfolio but has moved only modestly from March lows despite a very innovative approach to cancer treatment.
These two companies dominated the news as investors looked past the upsurge in the pandemic, rising tensions in U.S.-China relations and wrangling in Washington over another shot of stimulus to jump start the economy. Today we highlight a recommendation that was previously in the Explorer portfolio but has moved only modestly from March lows despite a very innovative approach to cancer treatment.
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In anticipation of a booming economy in the months and quarters ahead, the stock market has rallied within a whisker of all time highs. But certain individual stocks and sectors are still languishing despite the index performance. It is among these stocks where great value and high yield can still be found.
In this issue I highlight one of the best banks in the country at a historically low price as the sector struggles. But the bank has remained solidly profitable through the horrible economy in the second quarter, and the stock will benefit as the recovery gains traction. It currently offers a great income opportunity with a high yield and getting high call premiums as the market anticipates better days ahead.
In this issue I highlight one of the best banks in the country at a historically low price as the sector struggles. But the bank has remained solidly profitable through the horrible economy in the second quarter, and the stock will benefit as the recovery gains traction. It currently offers a great income opportunity with a high yield and getting high call premiums as the market anticipates better days ahead.
While we’re not normally fans of very low-priced stocks (you usually get what you pay for in the market), today’s recommendation has been around for a while, is liquid and is just beginning what looks like a multi-year growth wave thanks to two big drivers.
Current Market OutlookGrowth stocks suffered another shot across the bow last Monday, and for the next three days, most didn’t bounce much. But last Friday and today’s action was far more encouraging, with leading stocks rebounding nicely and the broad market doing decently, too. Of course, we never put too much emphasis on just a day or two; the market wasn’t hanging by a thread before the latest bounce (the trends of the indexes and leading stocks were up), and today’s action doesn’t necessarily mean it’s up and away from here, either. In fact, with earnings season coming up, we still think focusing on the right stocks and looking for relatively lower-risk entries is your best bet. But until proven otherwise, most of the rubber-meets-the-road evidence remains bullish, so you should, too.
This week’s list has a broad mix of cyclical and growth issues to choose from. For our Top Pick, we’re going a bit speculative—Plug Power (PLUG) is low priced, but very liquid, and the recent pattern (huge-volume rally, controlled pullback) looks very tempting.
| Stock Name | Price | ||
|---|---|---|---|
| ANGI Homeservices Inc. (ANGI) | 14.81 | ||
| Arconic (ARNC) | 17.00 | ||
| Bloom Energy (BE) | 16.22 | ||
| Carrier Global Corporation (CARR) | 26.23 | ||
| D. R. Horton (DHI) | 66.55 | ||
| GDS Holdings Limited (GDS) | 80.15 | ||
| Plug Power (PLUG) | 8.35 | ||
| Saia Inc. (SAIA) | 129.19 | ||
| Spotify (SPOT) | 272.82 | ||
| Vapotherm (VAPO) | 48.53 |
The market remains in good health and trending higher, though the rotation out of the leading Nasdaq glamour stocks may have further to go—or may be just a false alarm.
In any case, it’s the stocks YOU own that matter, and if you’ve been choosing from our portfolio, you’ve been doing pretty well!
Today’s recommendation is a well-known and well-run company in the apparel business that should benefit from the trend toward more casual clothing. And according to our Cabot expert, it’s undervalued!
As for the current portfolio, there are two changes, a sell recommendation for Beyond Meat (BYND), which has lost momentum and a move to hold for Big Lots (BIG).
Full details in the issue.
In any case, it’s the stocks YOU own that matter, and if you’ve been choosing from our portfolio, you’ve been doing pretty well!
Today’s recommendation is a well-known and well-run company in the apparel business that should benefit from the trend toward more casual clothing. And according to our Cabot expert, it’s undervalued!
As for the current portfolio, there are two changes, a sell recommendation for Beyond Meat (BYND), which has lost momentum and a move to hold for Big Lots (BIG).
Full details in the issue.
Updates
The price charts on the S&P 500 and the Dow Jones Industrial Average are looking more and more like they’re just resting before beginning another run-up. Insurance and bank stocks’ price charts look identical, while energy stocks’ charts are more actively bullish.
On average, our portfolio is outperforming the Russell 2000 Small Cap Index (the most common benchmark for small caps) in 2016. We have a few stocks lagging the index, largely because of a drop in a few stocks over the past few days.
In this Weekly Update, I summarize information for four Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or other noteworthy news during the past week. I also include questions from subscribers along with my answers.
The Emerging Markets Timer is now fully negative, as the iShares Emerging Markets Fund (EEM) has gapped down to near its November lows. Our only additional move today is to move Pampa Energia (PAM) to a Hold.
This weekly update takes a look at how to handle bond investments when interest rates are rising. Bond prices and interest rates work like a seesaw: when interest rates rise, bond prices fall, and vice versa.
Three Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news during the past week.
Let’s maintain our current course, make incremental adjustments when they seem to make sense, and see how this plays out. I suggest one such incremental move today.
The market continues to act well, and we’re finally starting to see a bit of improvement among growth stocks, which showed solid accumulation last week and have begun to tighten up. That said, cyclical stocks remain strong, so tonight, we’re adding one to the Model Portfolio, giving us seven stocks (out of a possible 10) and a cash position around 30%.
The divergences that I mentioned in our last update disappeared last week, as the major indexes all rose over 3%, notching five consecutive positive days to hit record highs. I have one rating change today: Pembina Pipeline (PBA) moves to Buy thanks to renewed technical strength.
We’ve had nice run-ups in the DJIA and the S&P 500. Please expect a pullback, which would be perfectly normal and healthy too. The Dow could fall 6% to 18,600, and the S&P could fall 3% to 2,190. Unless a disruptive event happens, I would expect a stock market correction to be quite temporary.
The stock market has been having quite the party over the past month. Since November 8, the date of the election, the S&P 500 is up by 4.8%. Small caps have crushed that performance, rising by almost 16% over the same timeframe.
In this Weekly Update, I report on five Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or had other noteworthy news during the past week.
Alerts
This sports network company is trading at bargain levels, yet is expected to grow more than 10% this year.
We all saw U.S. stock markets exhibit exuberance on December 3 and then fear on December 4. I anticipate another strong upward move during the remainder of this week.
This old favorite and new punching bag offers turnaround potential for adventurous investors.
Our second recommendation is a sale based on sector downturn.
In the past 30 days, seven analysts have raised their EPS forecasts for our first idea today, a power services company.
Just a quick update on two of our positions and a bit of an educational component by using the strategy of averaging up, rather than averaging down.
This cutting-edge tech company’s earnings estimates were recently increased by 6 analysts who expect the company to grow 39.6% next year.
Here’s an update on five of our stocks in the portfolio.
The dividend is growing for this shipping company, and with the holiday season is full swing, analysts are expecting the company to grow 25.8% this quarter.
The market was relatively quiet today, with the Dow down 28 points and the Nasdaq down 19 as investors looked for news and rumors about the G20 economic summit this weekend.
Analysts expect this technology company to grow 18.8% annually for the next five years.
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.