Issues
Market volatility has eased a bit this past month, with the Dow Jones Industrial Average gaining almost 1,000 points. The service industry, according to ISM, improved, and the unemployment rate dropped to 7.9% for September.
As you’ll see in our Advisor Sentiment Barometer and Market Views, sentiment remains about the same. It seems investors are awaiting the election results before they make any big moves.
Nonetheless, our contributors have been very busy selecting ideas that look interesting—no matter how the election turns out.
As you’ll see in our Advisor Sentiment Barometer and Market Views, sentiment remains about the same. It seems investors are awaiting the election results before they make any big moves.
Nonetheless, our contributors have been very busy selecting ideas that look interesting—no matter how the election turns out.
Markets hit pause this week as third-quarter earnings begin rolling in, doubt reigns over chance of another stimulus bill, and uncertainty over the outcome of the presidential election just three weeks out is palpable. Overseas, the Stoxx Europe 600 fell 2.2% as local governments and local authorities hurried to impose lockdown restrictions to halt the spread of Covid-19 cases. This week’s new recommendation is a fintech stock offering an intriguing mix of Southeast Asian, American and European growth. Interestingly, it has a partnership with Sea Limited (SE) and perhaps can best be described as a young “Shopify of mobile”.
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!
These are uncertain times with the election coming up and Covid still hanging around. But instead of trying to navigate the unpredictable twists and turns in the near term, let’s focus on things that are sure to last beyond the current headlines. This is a great time to focus on issues that will drive business and the markets long beyond 2020 while no one else is looking and bargains can be had.
One issue that is certain to remain is the aging of the population. The U.S. and global populations are older now than ever before and getting older still at a break-neck pace. The trend is even more pronounced in other parts of the world.
Regardless of who is elected president, the population will get older. No matter what course the virus takes, the population will continue to age. You can take that to the bank. In this issue, I identify two of the very best health care companies in the world that are perfectly positioned to benefit from the aging trend.
One issue that is certain to remain is the aging of the population. The U.S. and global populations are older now than ever before and getting older still at a break-neck pace. The trend is even more pronounced in other parts of the world.
Regardless of who is elected president, the population will get older. No matter what course the virus takes, the population will continue to age. You can take that to the bank. In this issue, I identify two of the very best health care companies in the world that are perfectly positioned to benefit from the aging trend.
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.
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 |
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.
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.
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.
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.
Updates
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.
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.
Alerts
The top five institutional holders of our first idea, a technology fund, are: Yakira Capital Management, Inc., 0.91% of shares; Ladenburg Thalmann Financial Services Inc., 0.58%; Royal Bank of Canada, 0.55%; Herzfeld (Thomas J.) Advisors, Inc, 0.52%; and INTL FCSTONE INC., 0.39%.
Our second recommendation today is a sale of a previous holding.
Looking at the revenues of the 14 companies in our Marijuana Portfolio, the average growth rate in the latest quarter, relative to the previous year, was 409%. The median, for you statistical fans, was 255%. This is one fast-growing sector!
Crista has several portfolio updates and changes today.
This Chinese financial company beat analysts’ estimates by $0.37 last quarter, and four analysts have recently raised their EPS forecasts for the company.
This software company is forecasted to grow at an annual rate of 21.47% over the next 5 years.
The top five holdings of this Morningstar three-star-rated fund are: BioTelemetry Inc (BEAT, 4.78% of assets); Vericel Corp (VCEL, 4.64%); CareDx Inc (CDNA, 4.43%); Fluidigm Corp (FLDM, 4.14%); and AtriCure Inc (ATRC, 4.08%).
This e-commerce company beat estimates by $0.12 last quarter.
Five analysts have raised their EPS estimates for this flight simulator company’s stock (also traded as CAE.TO on the Toronto exchange) in the past 30 days.
The broad stock market remains healthy, with all indexes at or near highs, with the exception of small-cap stocks, which are lagging. A rising tide lifts all boats.
This health management company beat analysts’ estimates by $.07 last quarter, and Wall Street expects the company to grow at an annual rate of 15.07% over the next five years.
This stock reported great first-quarter results.
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.