Issues
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”.
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.
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.
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.
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 S&P 600 Small Cap Index bounced off rock-solid support at the 820 level late last week, and over the last few sessions has migrated back to its 50-day moving average line at around 837.
The Emerging Markets Timer is doing just fine, as the iShares EM Fund has rebounded from its May 17–18 dip.
The S&P declined 1.8% last Wednesday, its worst drop since September. We’ve seen a decent rebound in most of our stocks since, but the market needs to behave for the next couple of weeks to keep the bullish case intact. Long-term, the market’s trend remains up.
Updates on all our stocks, no ratings changes, and 10 stocks that look likely to rise 5% in the near term.
The year’s first major bout of market volatility hit this week. It’s about time. I’m moving two of our stocks to Hold.
This Weekly Update includes summaries for three Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or other noteworthy news during the past week, plus questions from subscribers along with my answers.
Trim your sails a bit and see how the market handles itself going forward. Today’s whopping decline isn’t the end of the world for growth stocks, but the broad market is more worrisome, with the Cabot Tides now neutral and our Two-Second Indicator turning negative.
The major indexes pulled back late last week, then rallied Monday after Saudi Arabia and Russia said they would extend oil production cuts. Crude prices surged to their highest level in two weeks, and energy stocks led the market higher. Things cooled off again on Tuesday, as housing starts disappointed and the U.S. dollar fell to its lowest level since before the election.
It’s no secret that I’ve favored energy, financial and construction materials stocks for many months. That’s because many stocks in those sectors are expected to achieve very strong, multi-year profit growth.
It’s been a wild week, much more so than a high-level look at the small-cap index would imply. According to the index, we’re just moving sideways with a little wiggle here and there. But when you look within our portfolio—wow! This was anything but a quiet week. Stocks were jumping all over the place as earnings reports came out.
In this Weekly Update, I include summaries for 10 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 in great shape, as the iShares EM Fund has pushed out to new highs in recent days. We’re holding on tight to our winners, but we are downgrading one stock to Hold tonight.
Alerts
Two stocks reported fourth-quarter results; plus price action on two more.
This cybersecurity company is expected to grow by 53.2% this year.
In the past 30 days, nine analysts have raised their EPS estimates for this DNA sequencing company.
This medical device company beat analysts’ EPS estimates by $0.09 last quarter, and the shares were recently initiated at Deutsche Bank with a ‘Buy’ rating.
Two stocks have rating changes today.
Seven analysts have increased their EPS estimates for this financial stock in the past 30 days.
Trends remain good for investors in the marijuana industry.
One of our portfolio stocks reported Q4 2018 results the other night that were better than expected.
One stock reports strong fourth quarter and moves from Strong Buy to Hold; a second falls on temporary problems.
This digital entertainment and e-commerce company is expected to grow at double-digit rates this quarter, boosting its shares’ momentum.
The shares of this payment company were recently initiated by Jefferies with a ‘Buy’ rating and were upgraded by UBS to ‘Buy’
This medical equipment company beat earnings estimates by $0.04 last quarter.
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.