Issues
Today, we are being a little contrarian and recommending an investment in a company that operates in a down and out industry. Nonetheless, we believe there is significant upside over the next couple of years.
This company’s characteristics include:
All the details are inside this month’s Issue. Enjoy!
This company’s characteristics include:
- High margins
- No capex requirements
- An 8% dividend yield
- A cheap valuation
All the details are inside this month’s Issue. Enjoy!
The stay-at-home paradigm has revolutionized the workforce, accelerating demands on the cloud and in telecommunications – including the rollout of next generation 5G wireless networks.
The bull market is alive and well, as the intermediate-term negative signal I mentioned in recent weeks has been erased by a new positive signal. Happily, we sold very few stocks during the correction (most of ours behaved very well) so today’s recommendation means the portfolio is once again full.
And what is today’s recommendation? A major provider of global infrastructure services whose stock has low risk at this point and good potential for profit as the world slowly gets back to business.
And what is today’s recommendation? A major provider of global infrastructure services whose stock has low risk at this point and good potential for profit as the world slowly gets back to business.
Current Market OutlookThree weeks ago, the major indexes were on their knees and very few stocks were in good shape. But there’s been a steady improvement in the overall evidence since then, and while it’s not 1999 out there, the picture looks pretty good—the intermediate-term trend has returned to the bullish side of the fence, while many individual stocks (growth and otherwise) show constructive action. We’ve even seen a big pickup in the number of names hitting new highs (multi-month high in NYSE new highs on Friday)! Short-term, the steady up-move in the market and many stocks could easily bring a pullback or some hesitation, but there’s no question the rubber-meets-the-road evidence has improved greatly, which is what counts most to us. We’re nudging our Market Monitor up to a level 7 in today’s issue.
This week’s list has a bunch of good-looking charts from a variety of sectors. Our Top Pick is Marvell Technology (MRVL), which is helping to lead the recent charge in chip stocks.
| Stock Name | Price | ||
|---|---|---|---|
| Abercrombie & Fitch (ANF) | 16.55 | ||
| Fastly (FSLY) | 126.61 | ||
| Marvell Technology Group (MRVL) | 43.51 | ||
| Paylocity (PCTY) | 188.72 | ||
| Penn National Gaming (PENN) | 64.89 | ||
| Roku, Inc. (ROKU) | 221.62 | ||
| Synnex Corp. (SNX) | 150.56 | ||
| Tesla, Inc. (TSLA) | 441.83 | ||
| TG Therapeutics, Inc. (TGTX) | 30.49 | ||
| United Rentals, Inc. (URI) | 198.89 |
It’s not a blastoff-type of environment, but the evidence has steadily improved during the past three weeks, first due to the action of leading growth stocks, and now, our Cabot Tides have returned to bullish territory. Thus, we continue to follow the evidence, slowly putting money to work and rotating into stronger situations. Last week, we averaged up in two of our recent buys, and tonight, we’re adding a full position in a fresh leader.
Elsewhere in tonight’s issue, we write about the ups and downs of recent IPOs, as well as one sector that is beginning to reemerge and has many stocks that fit our stock picking criteria.
Elsewhere in tonight’s issue, we write about the ups and downs of recent IPOs, as well as one sector that is beginning to reemerge and has many stocks that fit our stock picking criteria.
After a dismal 2019, when semiconductor sales fell 12% to $412 billion, the World Semiconductor Trade Statistics organization predicts that they will rise 3.3% in 2020 and 6.2% in 2021. But today’s recommendation is doing a lot better than the average chip company.
This month and early November will be jammed with possibly market-moving events: earnings season, presidential (and now importantly, vice presidential) debates, the actual elections, a likely new federal stimulus package, possible change (in either direction) in the pandemic’s course, and perhaps news about a vaccine solution.
But for now, we’re stuck in Limbo-Land, with the worst (hopefully) of the pandemic behind us, yet so many unknowns just ahead. We outline some basic suggestions that we follow when in this type of market.
But for now, we’re stuck in Limbo-Land, with the worst (hopefully) of the pandemic behind us, yet so many unknowns just ahead. We outline some basic suggestions that we follow when in this type of market.
Current Market OutlookThe top-down view of the market remains just so-so, with the intermediate-term trend effectively on the fence—most indexes are hanging around their 50-day lines and have recouped about half of the recent corrections. Thus, some caution is still in order, especially as further news-driven moves are likely in the days and weeks ahead. However, the leaders (and potential leaders) of the market are very impressive, with more and more flashing constructive action, including some that are rallying on outsized volume, both of which are a sign that big investors are getting comfortable putting money to work. It’s not a wild bull market obviously, with relatively few stocks hitting new highs, but it’s safe to say the evidence has improved, causing us to nudge up our Market Monitor today.
This week’s list has a bunch of good-looking stocks that have seen good-volume buying of late. Our Top Pick is Datadog (DDOG), which has returned to form after a big-volume breakout last week. Start small and add if the stock and market improve from here.
| Stock Name | Price | ||
|---|---|---|---|
| Alibaba (BABA) | 288 | ||
| Datadog (DDOG) | 107 | ||
| Purple Innovation (PRPL) | 25 | ||
| Seres Therapeutics (MCRB) | 30 | ||
| SolarEdge Technologies Inc. (SEDG) | 273 | ||
| STMicroelectronics (STM) | 33 | ||
| Teck Resources Limited (TECK) | 14 | ||
| Twilio (TWLO) | 283 | ||
| Twitter (TWTR) | 47 | ||
| Zendesk (ZEN) | 105 |
The intermediate-term negative signal I mentioned last week remains in effect, telling us some caution is appropriate, whether it be holding cash or leaning toward lower-risk stocks. But overall, I can’t say the danger is high yet—and because I sold our three highest-risk stocks last week, this week I am selling none.
As for new buying, this week I’m going with a high-potential fast-growth stock that came public last year and that was recently hitting new highs.
You may not be a user (I’m not) but you’ll almost certainly know the name.
Full details in the issue.
As for new buying, this week I’m going with a high-potential fast-growth stock that came public last year and that was recently hitting new highs.
You may not be a user (I’m not) but you’ll almost certainly know the name.
Full details in the issue.
Updates
The market backdrop is much improved this week and small caps posted another week of encouraging action (up 2.1% over the last five sessions). The S&P 600 had that sketchy drop below the 200-day line (red line in chart) in mid-August, but the index has come back strong since.
The iShares EM Fund is holding up in fine style, holding well above its 25-day moving average, so our Buy signal remains in place. While our stocks are generally holding up well, there has been a slight increase in volatility.
The week has brought some impressive rebounds, and I’m putting two stocks back on Buy today. That brings our total number of Buy-rated positions to six (plus our bond ladder), a slightly more constructive stance than we’ve taken in recent weeks.
There’s a lot on my mind lately: hurricanes, child-rearing, college freshmen, human tragedy and Dollar Tree (DLTR).
The market didn’t change much over the past week but it feels like it’s on more solid ground. Perhaps that’s because it’s been three weeks since we were on the brink of a bigger leg down. Or because earnings-related volatility is calming down. Or because after two weeks of gains, a week of consolidation feels like the right next step.
In this Weekly Update, I summarize the latest news for one company. I also include pertinent questions from subscribers with my responses.
Growth stocks and many indexes perked up nicely during the past couple of weeks, but the intermediate-term trend is effectively neutral and we still haven’t seen much big-volume buying. We’re optimistic, but advise you to continue being selective on the buy side and holding a chunk of cash on the sideline.
Last week’s action still improves the market picture a bit, but yesterday’s panic shows we’re not out of the woods yet. I’m making one portfolio change today.
In this Weekly Update, I summarize the latest news for five companies.
The iShares EM Fund is holding up well, staying comfortably above its 25-day moving average, so our Buy signal remains in place. While our stocks are holding up well, there’s a lot of sideways movement in the portfolio. We have no changes to the portfolio tonight.
If you want to build a buy-and-hold portfolio of attractive takeover targets, look no further than undervalued small- and mid-cap growth stocks. Presuming normal stock market action, you’ll reap the benefits associated with owning growth stocks, and you’ll periodically reap the additional exciting benefit of owning takeover stocks.
The market continues to be a bit sketchy, and the S&P 600 Small Cap Index is still trading right around the 820 level, which has served as a rough support line thus far this year.
Alerts
The top five holdings of this fund are: Mastercard Inc A (MA, 3.64%); Microsoft Corp (MSFT, 3.43%); PayPal Holdings Inc (PYPL, 3.36%); Visa Inc Class A (V, 3.11%); and Bank of America Corporation (BAC, 2.70%).
Today, we are recommending a gold company and selling two ETFs.
The market suffered another round of selling today, and this time it was concentrated in the Nasdaq and many resilient growth stocks.
This software company is forecast to grow 25.25% annually, over the next five years.
This telecom beat Wall Streets’ estimates by $0.15 last quarter and fifteen analysts have increased their EPS forecasts for the company in the last 30 days.
This building products supplier is expected to grow by 18.7% next year.
The market was hit hard again today as investors continued to discount a protracted trade war between China and the U.S., with fears of slowing growth bringing out the sellers.
Abercrombie & Fitch (ANF) reports first-quarter 2019 results.
This railroad company beat analysts’ estimates by $0.11 last quarter, and 26 analysts have raised their EPS forecasts for the company in the past 30 days.
This Indian bank is expected to grow at an annual rate of 37.6% over the next five years.
Portfolios
Strategy
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.