Issues
This week we are going right back to a stock that we were involved with last month, which has handled the market weakness very well.
Current Market OutlookToday’s market dip pulled all the major indexes we track below their 50-day lines, which officially puts the kibosh on the intermediate-term uptrend. Since we pulled in our horns weeks ago, we’re not changing our stance much: We remain cautious, with the indexes having issues and rotation coming fast and furiously among individual stocks. That said, we’re not sticking our head in the sand, either, as we’re seeing a decent number of issues either show signs of bottoming out (some of the virus winners are finally finding support) or holding firm despite the market’s wobbles. We continue to advise taking it slow and holding some cash given the overall environment, but select nibbling is OK, preferably on dips and shakeouts.
This week’s list has many names acting well, though their day-to-day action remains volatile. Our Top Pick is Seattle Genetics (SGEN), which looks like it’s starting to emerge from a two-month correction; we think you can start small here or on dips.
| Stock Name | Price | ||
|---|---|---|---|
| AGCO Corporation (AGCO) | 70.77 | ||
| Brinker International, Inc. (EAT) | 44.58 | ||
| Exelixis (EXEL) | 25.80 | ||
| Kingsoft Cloud Holdings (KC) | 36.80 | ||
| NIO Limited (NIO) | 18.80 | ||
| Norfolk Southern (NSC) | 214.26 | ||
| Pinterest (PINS) | 36.85 | ||
| Seattle Genetics (SGEN) | 178.88 | ||
| Toll Brothers Inc. (TOL) | 47.02 | ||
| TopBuild (BLD) | 157.72 |
With this morning’s broad selling, the intermediate-term of the market is now down—but the long-term trend is still up! How you handle this depends partly on your own risk tolerance and partly on how your stocks are acting. If your stocks look good, I favor holding, but if they’re falling, I recommend selling.
In this advisory, the only immediate change is the sale of one stock, LGI Homes (LGI) to create room for our new one.
And that new one, by the way, comes from a sector that is definitely outside our usual hunting ground. But fundamental trends look good, so this just might turn into a great investment!
Full details in the issue.
In this advisory, the only immediate change is the sale of one stock, LGI Homes (LGI) to create room for our new one.
And that new one, by the way, comes from a sector that is definitely outside our usual hunting ground. But fundamental trends look good, so this just might turn into a great investment!
Full details in the issue.
The markets have been a bit choppy of late, with the Dow Jones Industrial Average rising to 29,000 at the beginning of the month, then retreating and rising again. It looks like Fall may be a little volatile. As you’ll see in our Advisor Sentiment Barometer and Market Views, sentiment remains bullish, with a hint of caution.
That stands to reason, as we’ve been on a fairly unstoppable uptrend for quite some time. So, a period of catching our breath is not necessarily a bad thing. Especially, as the economy continues to hold its own, with consumer credit, job openings and the CPI all steadily improving. Unemployment, of course, remains the biggest challenge, but hopefully, the eventual end of COVID-19 will restore some semblance of normality to our hospitality and entertainment industries, which have suffered the most.
In the meantime, our contributors have continued to find some very interesting stock picks. We begin this month’s issue with our Spotlight Stock, a REIT with above average yield, and a Dividend Aristocrat. In my Feature article, I further explore the REIT industry and explain why it’s almost always a good time to hold a REIT or two in your portfolio
That stands to reason, as we’ve been on a fairly unstoppable uptrend for quite some time. So, a period of catching our breath is not necessarily a bad thing. Especially, as the economy continues to hold its own, with consumer credit, job openings and the CPI all steadily improving. Unemployment, of course, remains the biggest challenge, but hopefully, the eventual end of COVID-19 will restore some semblance of normality to our hospitality and entertainment industries, which have suffered the most.
In the meantime, our contributors have continued to find some very interesting stock picks. We begin this month’s issue with our Spotlight Stock, a REIT with above average yield, and a Dividend Aristocrat. In my Feature article, I further explore the REIT industry and explain why it’s almost always a good time to hold a REIT or two in your portfolio
The market’s uptrend is under a bit of pressure and the Fed’s dovish stand on interest rates is a sign of weakness that is unlikely to impress Wall Street. Nevertheless, Sea Limited (SE) has regained its momentum and NovoCure (NVCR) is up 35% over the past two weeks. And our emerging markets timer (EEM) is positive. This week we go to Australia for a new fintech idea that has been on a tear, but fortunately has pulled back for a decent entry point.
The markets have been a bit choppy of late, with the Dow Jones Industrial Average rising to 29,000 at the beginning of the month, then retreating and rising again. It looks like Fall may be a little volatile. As you’ll see in our Advisor Sentiment Barometer and Market Views, sentiment remains bullish, with a hint of caution.
That stands to reason, as we’ve been on a fairly unstoppable uptrend for quite some time. So, a period of catching our breath is not necessarily a bad thing. Especially, as the economy continues to hold its own, with consumer credit, job openings and the CPI all steadily improving. Unemployment, of course, remains the biggest challenge, but hopefully, the eventual end of COVID-19 will restore some semblance of normality to our hospitality and entertainment industries, which have suffered the most.
In the meantime, our contributors have continued to find some very interesting stock picks. We begin this month’s issue with our Spotlight Stock, a REIT with above average yield, and a Dividend Aristocrat. In my Feature article, I further explore the REIT industry and explain why it’s almost always a good time to hold a REIT or two in your portfolio.
That stands to reason, as we’ve been on a fairly unstoppable uptrend for quite some time. So, a period of catching our breath is not necessarily a bad thing. Especially, as the economy continues to hold its own, with consumer credit, job openings and the CPI all steadily improving. Unemployment, of course, remains the biggest challenge, but hopefully, the eventual end of COVID-19 will restore some semblance of normality to our hospitality and entertainment industries, which have suffered the most.
In the meantime, our contributors have continued to find some very interesting stock picks. We begin this month’s issue with our Spotlight Stock, a REIT with above average yield, and a Dividend Aristocrat. In my Feature article, I further explore the REIT industry and explain why it’s almost always a good time to hold a REIT or two in your portfolio.
In September’s Issue of Cabot Early Opportunities we continue our search for companies that have some of that special sauce that can take them from good to great. We serve up a mix of software, consumer and MedTech names, as well as a Top Pick that’s growing like a weed despite participating in a seemingly stodgy industry. Enjoy!
Fertilizer companies aren’t the sexiest names on Wall Street, but the sector has shown an ability to trend when conditions are right, and that time looks to be here.
After a sharp two-week correction that targeted growth stocks in particular (and high-flyers like TSLA and ZM above all), the market may or may not be ready to resume its uptrend. For now, however, I’m keeping it simple and staying heavily invested.
Today’s recommendation is a stock that’s been in the news recently and might be viewed as the next Tesla, but I don’t like that comparison, as there are numerous differences. In any case, it has great potential and I think you’ll like the story.
As for the current portfolio, something’s got to go to keep the portfolio at or below 20 stocks and the victim this week is Zscaler (ZS), which has brought us a fine profit in five months and is now at risk of giving some back.
Full details in the issue.
Today’s recommendation is a stock that’s been in the news recently and might be viewed as the next Tesla, but I don’t like that comparison, as there are numerous differences. In any case, it has great potential and I think you’ll like the story.
As for the current portfolio, something’s got to go to keep the portfolio at or below 20 stocks and the victim this week is Zscaler (ZS), which has brought us a fine profit in five months and is now at risk of giving some back.
Full details in the issue.
Current Market OutlookThe market has been thrashing around during the past few trading days, with big gaps up and down, dramatic reversals and news-driven moves. But overall, nothing has really changed from our point of view—most growth leaders are still under pressure after suffering abnormal selling the prior couple of weeks, which, coming after a prolonged upmove, raises the odds that further potholes are ahead. Of course, it’s not all bad—today was a stick save for the major indexes (most bounced nicely off their 50-day lines), and while the broad market has pulled back, many areas are doing so normally. All told, we remain flexible, and are open to the possibility that the recent dip was more of a shakeout than the start of a rough patch, but the burden of proof is on the bulls to step up. Until then, we prefer being cautious.
The good news is that our stock screens continue to pick up on some potential fresh leaders should the market find its footing. Our Top Pick this week is Novocure (NVCR), an innovative player in the cancer market that’s come to life after a year-long rest. Try to buy on dips.
| Stock Name | Price | ||
|---|---|---|---|
| 10X Genomics (TXG) | 121 | ||
| DouYu (DOYU) | 16 | ||
| The Gap, Inc. (GPS) | 17 | ||
| Guardant Health (GH) | 103 | ||
| The Mosaic Company (MOS) | 18 | ||
| MyoKardia (MYOK) | 124 | ||
| Novocure (NVCR) | 98 | ||
| Snap Inc. (SNAP) | 24 | ||
| Taiwan Semiconductor (TSM) | 80 | ||
| Target (TGT) | 148 |
Updates
The market continues to lean bullish, with warning signs. While the Dow has been hitting all-time highs, the S&P has gone nowhere for two weeks and the Nasdaq has actually lost ground. Investors seem to be deserting “risk-on” assets, leading to underperformance in the Russell 2000 (IWM) and high-growth sectors including Semiconductors (SMH) and Biotechs (XBI).
Twenty-three of our portfolio companies reported June quarter results. Among those companies, 14 reported EPS that exceeded analysts’ consensus estimates; seven of which exceeded all analysts’ estimates.
Summaries of the latest news for 12 companies. One stock, which has advanced 29.6% in the past 26 months, is now a Sell because the company is being acquired.
The iShares EM Fund has been trading sideways since July 19, but is holding well above its rising moving averages, so our Buy signal is in good shape. We have one portfolio move tonight.
I’m making three portfolio moves today. I’m putting one stock on Hold due to an earnings miss and taking half our profits in another stock off the table, as the stock has stalled out. We’re also selling one stock, as planned, due to significant technical erosion in the chart.
Despite the pullback yesterday (specifically in tech stocks) the market appears to be in bull mode. Small caps have been toying with breaking out of their 2017 trading range, but haven’t made a convincing move just yet. Keep an eye on the 870 level on the S&P 600 Small Cap Index.
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.
Alerts
Five analysts have raised their earnings estimates for this biopharma in the past 30 days.
Our Cabot Tides turned negative today, telling us the intermediate-term uptrend has broken.
This semiconductor stock has recently received two analyst upgrades: from KeyBanc, to ‘Overweight’, and Goldman Sachs, to ‘Buy’.
One stock announces first-quarter results and M&A activity and moves from Strong Buy to Hold and another announces first-quarter results, a dividend decrease and an intention to separate into two companies.
Zacks Research also recently recommended this genetic information company stock based on rising sales and increasing analyst price targets.
Three stocks in the portfolio reported earnings.
One portfolio stock reports a disappointing first quarter.
This construction company beat analysts’ estimates by $0.19 last quarter, and five analysts have raised their EPS forecasts for the company in the past 30 days.
Four stocks in the portfolio reported earnings.
This medical device company beat analysts’ earnings estimates by $0.08 last quarter.
Further bad news on the U.S.-China trade front prompted another sharply lower open today, and unlike Monday, the buyers never showed up. At day’s end, the Dow had fallen 473 points and the Nasdaq plunged 160 points.
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.