Issues
After a strong rebound early in the week, markets sold off a bit over the past two days as investors battle uncertainty on the virus and economic impact fronts. We remain positive on our seven Cabot Global Stocks Explorer stocks and will put some of our 35% cash position to work today with a high quality Singapore bank many of you are familiar with. Our emerging market signal stays negative.
Also, I have a special alert regarding Luckin Coffee (LK), which is down very sharply this morning.
Also, I have a special alert regarding Luckin Coffee (LK), which is down very sharply this morning.
This month we’re looking past all the current uncertainty in the market at a profitable, young company that should hold its own during this rough patch then accelerate growth into the back half of 2020 (assuming the pandemic eases as we move into the summer months).
The company offers intelligent identity solutions for global enterprises. These solutions are strategic imperatives because they help workers do their job from anywhere and help companies streamline customer experiences.
It’s not the type of stock that’s likely to surge on expectations of an immediate surge in demand, like Zoom Video (ZM) or Teladoc (TDOC). But with 115% net revenue retention the company should grow with current clients in the near-term, then grab its fair share of new business once economic activity picks up again.
We start today with a half position given the market conditions. All the details are inside.
The company offers intelligent identity solutions for global enterprises. These solutions are strategic imperatives because they help workers do their job from anywhere and help companies streamline customer experiences.
It’s not the type of stock that’s likely to surge on expectations of an immediate surge in demand, like Zoom Video (ZM) or Teladoc (TDOC). But with 115% net revenue retention the company should grow with current clients in the near-term, then grab its fair share of new business once economic activity picks up again.
We start today with a half position given the market conditions. All the details are inside.
Today’s featured companies are benefiting from the current focus on healthcare, online commerce, dining at home and limited travel behaviors.
All of the stocks that I follow with any regularity finished falling in March, and began to rebound. I’m glad for that, and happy to be buying low. However, there’s still a dark cloud on the horizon. The longer the quarantine situation lasts in the U.S. and in foreign lands, the uglier the economic situation will become. That’s because many companies are scrambling for cash to pay their employees, rent, utilities, etc. while they’re not actually selling any products that can replenish the cash flow.
There are various stocks in today’s issue that I indicated would be good for traders. “Good for traders” bears no resemblance to “good for buy-and-hold investors”, okay? Please read my recommendations carefully. When in doubt, send me an email with your questions.
Lastly, take your time investing cash positions. Many stocks will be in trading ranges, so watch for opportunities to buy low and sell high within those ranges. To that end, I’ve listed short-term upside price resistance targets on quite a few of the stocks. When the stocks rise to those targets, you’re going to tell yourself “my stock is going to keep rising!” Instead, odds are very strong that your stock will turn down. This will be a trader’s market for much of 2020. If you’ve ever toyed with the idea of buying and selling within a stock’s trading range, this is the year to do it! Best of luck to you!
All of the stocks that I follow with any regularity finished falling in March, and began to rebound. I’m glad for that, and happy to be buying low. However, there’s still a dark cloud on the horizon. The longer the quarantine situation lasts in the U.S. and in foreign lands, the uglier the economic situation will become. That’s because many companies are scrambling for cash to pay their employees, rent, utilities, etc. while they’re not actually selling any products that can replenish the cash flow.
There are various stocks in today’s issue that I indicated would be good for traders. “Good for traders” bears no resemblance to “good for buy-and-hold investors”, okay? Please read my recommendations carefully. When in doubt, send me an email with your questions.
Lastly, take your time investing cash positions. Many stocks will be in trading ranges, so watch for opportunities to buy low and sell high within those ranges. To that end, I’ve listed short-term upside price resistance targets on quite a few of the stocks. When the stocks rise to those targets, you’re going to tell yourself “my stock is going to keep rising!” Instead, odds are very strong that your stock will turn down. This will be a trader’s market for much of 2020. If you’ve ever toyed with the idea of buying and selling within a stock’s trading range, this is the year to do it! Best of luck to you!
With consumers focused on social distancing and lockdowns to help prevent the spread of the coronavirus, many restaurants have no revenues, while others are generating a little income through delivery and pick-up. Yet, despite this uncertain outlook, the crisis will eventually subside.
In this issue, we highlight six restaurant companies with both the survivability and price discount traits.
In this issue, we highlight six restaurant companies with both the survivability and price discount traits.
With COVID-19, plunging oil prices, credit/health worries and central bank printing, it’s a time of maximum uncertainty—and such uncertainty plays right into the hands of gold, which has popped back toward multi-year highs. The world’s second-largest gold mining company, is well positioned to benefit from this strength.
As the market gets back on its feet after the recent 33% drawdown, all Cabot analysts are looking for opportunities—with the growth-oriented analysts looking for strength and the value-oriented analysts looking for value—and it’s value that describes today’s featured stock perfectly. A well-known pharmaceutical giant, the stock is a bargain today.
Current Market OutlookThere are no sure things, especially in this unprecedented environment, but we think it’s a decent bet that last Monday represents a workable low in the indexes, bolstered by short-term positive divergences in the broad market and some encouraging snapback action among a good number of growth stocks. Given that the evidence is slightly better, we’re open to some nibbles here or there, especially among the stocks that have shown strong signs of accumulation. That said, we still believe it’s best to be mostly defensive—the intermediate-term trend remains strongly down, and even if a bottoming process has begun, the odds favor a volatile, news-driven few weeks (and, of course, there’s always the chance stocks break their lows down the road). Long story short, the rain has stopped for now, but the overall storm system hasn’t yet moved out to sea.
Encouragingly, for the second straight week, Top Ten is finding a lot of growth-oriented stocks that are showing peppy action. Our Top Pick is Seattle Genetics (SGEN), which has a nice four-month launching pad and isn’t far from new highs.
| Stock Name | Price | ||
|---|---|---|---|
| Atlassian (TEAM) | 182.16 | ||
| Barrick Gold (GOLD) | 27.20 | ||
| Dexcom (DXCM) | 421.36 | ||
| GDS Holdings Limited (GDS) | 80.15 | ||
| Netflix, Inc. (NFLX) | 423.92 | ||
| NVIDIA Corporation (NVDA) | 242.42 | ||
| Okta, Inc. (OKTA) | 148.41 | ||
| Quidel Corp. (QDEL) | 93.49 | ||
| Seattle Genetics (SGEN) | 150.85 | ||
| Slack (WORK) | 24.12 |
We’re beginning to see some short-term signs of spring in the market, first via some resiliency in the broad market, and now from buyers actually stepping up to the plate. We think there’s a decent chance the market has found a workable low, and we’re encouraged to see a decent number of growth stocks bounce back. All of that is good to see, but the primary evidence -- the trends of the market and most stocks --are still pointed down. We’re not ruling out a nibble or two if the buyers keep at it, but it’s best to remain defensive until we see more than a modest bounce.
In tonight’s issue we talk about one group that has seen some very big-volume buying of late, a sign big investors were eager to jump in on weakness. And we also review our remaining positions and a few other top-notch names we think could put on big runs once the market enters a new uptrend.
In tonight’s issue we talk about one group that has seen some very big-volume buying of late, a sign big investors were eager to jump in on weakness. And we also review our remaining positions and a few other top-notch names we think could put on big runs once the market enters a new uptrend.
Updates
Small caps resumed their upward trajectory over the past week, rising by 1.3%. Our portfolio did a little better, rising by an average of 2.6%. And small cap growth looks good for the year ahead. While anything can happen in the market, the game plan remains the same: stay in good stocks, avoid bad ones, and get out of those that have faltering outlooks. In short, stay the course.
Remain bullish. The market is in good shape, and we’re starting to see some growth stocks reassert themselves. There are still some potholes out there, but we believe you should remain heavily invested. In the Model Portfolio, we sold Five Below (FIVE) on a Special Bulletin yesterday, replacing it with GrubHub (GRUB), and today, we’re placing Facebook (FB) back on Buy.
Oil prices and energy stocks have strengthened, so I’m putting Pembina Pipeline (PBA) back on Buy today. However, I’m moving Costco (COST) back to Hold after the warehouse retailer’s latest sales results caused the stock to pull back once more.
Three Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news in the past week. I have one sell recommendation: Rackspace Holding (RAX).
The Emerging Markets Timer is still pointed up, despite the market’s recent consolidation. Our moves tonight are increasing our Buy recommendation for Alibaba (BABA) to a full position, lowering our rating of Telkom Indonesia (TLK) to Hold a Half and returning Weibo (WB) to a Buy a Half recommendation.
Today I’m removing Delta Air Lines (DAL) from the Growth Portfolio. The company’s earnings outlook has deteriorated to an expectation of EPS declining 1% in 2016, and the price chart has not improved since I put the stock on Hold two months ago.
Small caps added another five points this week as the grind higher continues. Granted, the percentage rise was less than 1%. But nevertheless, the strength in small caps is creating a sense of greater confidence in the sustainability of the market’s uptrend.
Six Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news. There is one sell recommendation: Dollar General (DG).
Remain bullish. The market has been consolidating its recent gains, which is a good sign, and all of our market timing indicators remain clearly bullish. Short term, today’s drop could lead to further weakness, especially with Fed Chief Janet Yellen speaking on Friday morning. But our market timing indicators are bullish, so the odds still favor higher prices in the weeks and months ahead. In the Model Portfolio, we’ll stand pat tonight with nine stocks and a cash position of 8%.
The stock market also seems to be in wait-and-see-mode, consolidating on low volume for a second week in a row.
Last week, I changed the recommendation on Dollar Tree (DLTR) to Hold, and on Big Lots (BIG), Kraft Heinz (KHC) and WellCare (WCG) to Buy.
The market has been holding up well, and small caps in particular are looking steadfast as we move into the second half of August.
Alerts
Analysts expect this 17.37% annual growth over the next five years for this financial market company.
The market was slammed today as a quiet open turned into a huge wave of distribution. In the Model Portfolio, we are selling two positions as both plunged through long-term moving averages.
This turnaround stock has new management and its shares are a discounted opportunity.
Now in its seventh year, MJBiz.com has over 1,000 exhibitors and more than 26,000 attendees, an increase of 137% from the year before. It’s BIG!
Analysts are forecast 25% annual growth for this construction aggregate company over the next five years.
Analysts expect this managed services firm to grow at 30% annually over the next five years.
This domain provider’s shares were recently upgraded by Baird to ‘Outperform’.
One of our stocks moves to Strong Buy.
Wall Street is latching on to this lithium producer.
One of our stocks is surging over 50% today on news that Vista Equity Partners will buy the firm.
This loyalty solutions company beat analysts’ estimates by $0.07 last quarter, and nine analysts have recently increased their EPS forecasts for the company.
We’re changing out some funds this month, recommending a growth fund.
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.