Issues
The evidence for the overall market continues to improve; over the past week, two blastoff indicators have turned green, which should bode well when looking out over the next few months. Growth stocks, however, remain in a consolidation phase following some huge runs, with many (not all) stocks sagging back during the past week or two. Overall, though, the pullbacks have been normal, so we remain optimistic, though we’re still stepping slowly and looking for decent entry points.
In tonight’s issue, we’re doing a touch more buying, filling out a position in one of our stocks, following the addition of a full position last week. That will leave us with around 18% in cash.
In tonight’s issue, we’re doing a touch more buying, filling out a position in one of our stocks, following the addition of a full position last week. That will leave us with around 18% in cash.
Today we’re breaking into a familiar market by going back to the insurance industry.
But today’s addition is very different from our other rapid growth insurance companies in a major way (as you’ll soon see!).
The stock is acting strong and the fundamentals remain great, despite COVID-19.
All the details are inside this month’s Issue. Enjoy!
But today’s addition is very different from our other rapid growth insurance companies in a major way (as you’ll soon see!).
The stock is acting strong and the fundamentals remain great, despite COVID-19.
All the details are inside this month’s Issue. Enjoy!
Three of today’s featured companies seem most obviously ready to begin or continue run-ups in the coming days. The fourth featured company is sitting at the bottom of a steady trading range, offering attractive opportunities for growth investors, dividend investors and traders.
U.S. stock markets are rising again. At some point in the coming months, the sober reality of the country’s economic situation will impact the stock market, but for now, there’s money to be made. Energy stocks and stocks within the investment, life insurance and annuity industry look especially bullish right now.
U.S. stock markets are rising again. At some point in the coming months, the sober reality of the country’s economic situation will impact the stock market, but for now, there’s money to be made. Energy stocks and stocks within the investment, life insurance and annuity industry look especially bullish right now.
Precious metal stocks have become mixed of late as economic optimism has increased, but some are still strong, and today’s recommendation is one of them.
Current Market OutlookLast week saw some vicious rotation early in the week, with the super-strong growth names coming down to earth while money gushed into cyclical sectors, but the leaders stabilized as the week wore on and the broad market remains positive, too. From a big-picture perspective, the 90% Blastoff signal last week (90% of NYSE stocks above their 50-day lines) bodes well for the overall market, and the fact that few (if any) leading stocks have cracked is a good sign. All in all, further potholes, rotations and shakeouts are relatively likely given the big run over the past two months and the divergent environment, but until proven otherwise, we continue to think the path of least resistance is pointed up. We’re moving our Market Monitor up another notch to a level 8.
This week’s list has a good mix of setups, with some recent earnings winners, some that have pulled back and others that are in persistent uptrends. Our Top Pick is Arconic (ARNC), which is one of the few cyclical stocks to appear in Top Ten since the uptrend got underway.
| Stock Name | Price | ||
|---|---|---|---|
| Adaptive Biotechnologies Corporation (ADPT) | 39.41 | ||
| Arconic (ARNC) | 17.00 | ||
| Bill.com Holdings (BILL) | 88.76 | ||
| Dynatrace (DT) | 36.59 | ||
| II-VI Incorporated (IIVI) | 48.64 | ||
| LiveRamp Holdings (RAMP) | 46.54 | ||
| Pan American Silver (PAAS) | 27.28 | ||
| Seattle Genetics (SGEN) | 150.85 | ||
| Tractor Supply Company (TSCO) | 122.24 | ||
| Zscaler (ZS) | 126.22 |
Fortunately, most banks entered the current downturn in much better condition than when they entered the 2009 financial crisis. Meaningfully higher capital levels, stronger loan reserves, more stringent risk controls and tighter cost structures will all help support banks’ financial health in the difficult period ahead.
In this issue, we recommend six banks whose weak share prices imply an overly dour economic outlook.
In this issue, we recommend six banks whose weak share prices imply an overly dour economic outlook.
The overall market remains healthy, and while we still haven’t received an “all-clear” signal from our long-term timing indicator, we do have a positive signal from the 90% Blastoff Indicator, and that’s good!
Overall, our portfolio stocks are behaving quite well, with none disappointing today. In fact, many are so strong that I expect pullbacks in the future. The only sale today is of a stock that has given us a quick 30% profit. Otherwise, I’m sitting tight.
As for today’s recommendation, it’s a company in the online education industry, where demand is booming thanks to COVID-19.
Full details in the issue.
Overall, our portfolio stocks are behaving quite well, with none disappointing today. In fact, many are so strong that I expect pullbacks in the future. The only sale today is of a stock that has given us a quick 30% profit. Otherwise, I’m sitting tight.
As for today’s recommendation, it’s a company in the online education industry, where demand is booming thanks to COVID-19.
Full details in the issue.
U.S. and international markets staged a rally this week alongside momentous events in Asia as China imposes its will on Hong Kong through the passage of national security law. America indicates it will withdraw trade preferences for Hong Kong, viewing it as indistinguishable from China. China cracks down on Hong Kong as legislation advances in the U.S. to potentially delist international and Chinese companies that do not meet U.S. disclosure standards. Meanwhile, we have a new recommendation this week that has been in the news regarding Covid-19 and how we should all look at the economics of discovering new drugs.
Updates
I have recommended selling nine stocks in November because of high stock prices and a turnover in the market caused by the election of the new President, and in this update, I suggest where you should invest the proceeds of your sales. Also, three Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news during the past week.
Put a little money to work. Our Cabot Tides turned positive yesterday, so both the intermediate- and longer-term trends of the market are now pointed up. That said, there remain many crosscurrents and growth stocks are generally struggling.
I now recommend selling Pattern Energy (PEGI), a yieldco that is facing a multitude of short- and medium-term challenges, and I’m putting Pembina Pipeline (PBA) on Hold today. On the plus side, we’re sitting on a two-month, 21% gain in Prudential Financial (PRU) and are going to book some profits today, while holding the rest for further gains. Lastly, because of its recent strength, I’m putting US Bancorp (USB) back on Buy, but I recommend waiting for a pullback.
Financial stocks, as a group, are undervalued, with strong expected earnings growth, bullish price charts and prospects of upward earnings revisions as interest rates rise. Today’s Portfolio Changes: BigLots (BIG) moves to a Hold, and D.R. Horton (DHI) increased its dividend.
We’re going to reel in a few profits during this post-election stock market surge in the event the honeymoon is short-lived. Along those lines, today I recommend you sell your remaining stake in Mitek (MITK), as well as sell half your position in LeMaitre Vascular (LMAT) and NanoString (NSTG).
Fifteen Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news during the past week. I have changed my opinion on CVS Health (CVS) from Buy to Sell.
U.S. markets were mixed today after a remarkable three-day rally in the S&P 500 that began on Monday. The market is still working out the potential winners and losers implied by a Trump presidency, but having the S&P and the Dow above their 25- and 50-day moving averages is a good first step, although there’s no question the action is incredibly bifurcated.
While today brings an unexpected new political reality, markets around the world are already adjusting to the new order.
The reality is, there are so many undervalued stocks right now that I have to fight the urge to add another dozen to the Cabot Undervalued Stocks Advisor portfolios.
Fourteen Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news.
Remain cautious! The sellers continue to have the upper hand with the major indexes and most stocks. You should be holding plenty of cash (and some resilient stocks) while waiting for the bulls to retake control.
We’re letting go of Equifax (EFX) today, booking a nice profit, and reducing our exposure to Home Depot (HD) by half. We also sold Amgen (AMGN) on Monday, after health care industry stocks suffered a major selloff. Drug companies and distributors are anticipating even more pressure to rein in drug prices next year.
Alerts
We all saw U.S. stock markets exhibit exuberance on December 3 and then fear on December 4. I anticipate another strong upward move during the remainder of this week.
This old favorite and new punching bag offers turnaround potential for adventurous investors.
Our second recommendation is a sale based on sector downturn.
In the past 30 days, seven analysts have raised their EPS forecasts for our first idea today, a power services company.
Just a quick update on two of our positions and a bit of an educational component by using the strategy of averaging up, rather than averaging down.
This cutting-edge tech company’s earnings estimates were recently increased by 6 analysts who expect the company to grow 39.6% next year.
Here’s an update on five of our stocks in the portfolio.
The dividend is growing for this shipping company, and with the holiday season is full swing, analysts are expecting the company to grow 25.8% this quarter.
The market was relatively quiet today, with the Dow down 28 points and the Nasdaq down 19 as investors looked for news and rumors about the G20 economic summit this weekend.
Analysts expect this technology company to grow 18.8% annually for the next five years.
This tech company beat earnings estimates by $0.06 last quarter, but an announced acquisition caused shares to tumble a bit, creating a buying opportunity.
This technology company is forecasted to grow its earnings at an annual rate of 30% over the next five years.
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.