Issues
Real estate stocks are on fire right now, thanks largely to plunging mortgage rates and record lows in housing inventories for sale.
Coronavirus fears re-emerged in a big way over the weekend, causing today’s across-the-board selloff. As we look at the evidence, here’s what we see: The intermediate-term uptrend has been cracked, especially when you look at the broader major indexes, and given that this selling comes after a big run and more than a few yellow flags during the past month, it’s likely we’re in a correction that will take some time to play out. That said, it’s also very unlikely that this is the end of the overall bull market, as the longer-term trends and stance of the indexes and most leading stocks are positive; heck, many stocks look just fine (so far) on their charts. Put it together, and we think it’s time to play a little defense and build up some cash by cutting losers and laggards, though we’re also aiming to hold most of our resilient, profitable performers, giving them a chance to hold up and get going.
Encouragingly, this week’s list has a bunch of decent-looking growth-oriented names to consider. Our Top Pick is Zoom Video Communications (ZM), which has not only a very strong chart but also a growth story that appears to benefit from the spread of the coronavirus.
Encouragingly, this week’s list has a bunch of decent-looking growth-oriented names to consider. Our Top Pick is Zoom Video Communications (ZM), which has not only a very strong chart but also a growth story that appears to benefit from the spread of the coronavirus.
| Stock Name | Price | ||
|---|---|---|---|
| Advanced Micro Devices (AMD) | 82.24 | ||
| Carvana (CVNA) | 82.90 | ||
| Domino’s Pizza (DPZ) | 339.47 | ||
| Floor & Décor (FND) | 68.03 | ||
| HealthEquity, Inc. (HQY) | 70.70 | ||
| MercadoLibre, Inc. (MELI) | 980.83 | ||
| SiteOne Landscape Supply (SITE) | 98.49 | ||
| SolarEdge Technologies Inc. (SEDG) | 124.37 | ||
| Zillow (Z) | 76.64 | ||
| Zoom Communications (ZM) | 155.83 |
The market needed a correction and now we have one, or at least the start of one. And the kickoff has been powerful enough to turn our short-term timing indicator negative, which means it’s time to turn a bit defensive, raising cash and leaning toward lower-risk investments. Thus, we sell two more stocks today and downgrade two to hold.As for the new recommendation, it’s a slow and steady telecom company that not only pays a good dividend but also is poised to benefit from the rollout of 5G technology.Full details in the issue.
You might not think that flowers are a global business but American Airlines moved 417 tons of flowers from the Netherlands to America for Valentine’s Day.
The Cabot Global Stocks Explorer portfolio is led by our rocketing Virgin Galactic (SPCE), which has zoomed from 11 to 37 in a wink of the eye. Meanwhile, Sea Limited (SE) and Luckin Coffee (LK) were both up 10% this past week even as our emerging markets timer (EEM) moved to neutral.
Concerns over the impact of coronavirus are deepening as Apple announced revenue will be below expectations. In this issue, we’ll address these concerns, as well as why and how to hedge them, plus I’m putting a European 5G player on my watch list.
The Cabot Global Stocks Explorer portfolio is led by our rocketing Virgin Galactic (SPCE), which has zoomed from 11 to 37 in a wink of the eye. Meanwhile, Sea Limited (SE) and Luckin Coffee (LK) were both up 10% this past week even as our emerging markets timer (EEM) moved to neutral.
Concerns over the impact of coronavirus are deepening as Apple announced revenue will be below expectations. In this issue, we’ll address these concerns, as well as why and how to hedge them, plus I’m putting a European 5G player on my watch list.
I just returned from the Orlando Money Show, where I had an opportunity to see and speak with several of our contributors. The mood was festive, and the advisors were optimistic. And why not? The markets continue to outperform, as we navigate through the nasty election season. Both investors and advisors continue to be very bullish, as you can see from our Advisor Sentiment Barometer, as well as our Market Views.
The economy is very strong, with a healthy housing market, steady employment, and good retail sales. We’ve yet to see if the coronavirus outbreak will have any major and long-lasting effects on the global economy.
But for now, the investment opportunities are plentiful. Read the Issue for more details.
The economy is very strong, with a healthy housing market, steady employment, and good retail sales. We’ve yet to see if the coronavirus outbreak will have any major and long-lasting effects on the global economy.
But for now, the investment opportunities are plentiful. Read the Issue for more details.
I just returned from the Orlando Money Show, where I had an opportunity to see and speak with several of our contributors. The mood was festive, and the advisors were optimistic. And why not? The markets continue to outperform, as we navigate through the nasty election season. Both investors and advisors continue to be very bullish, as you can see from our Advisor Sentiment Barometer, as well as our Market Views.
The economy is very strong, with a healthy housing market, steady employment, and good retail sales. We’ve yet to see if the coronavirus outbreak will have any major and long-lasting effects on the global economy.
But for now, the investment opportunities are plentiful. Read the Issue for more details.
The economy is very strong, with a healthy housing market, steady employment, and good retail sales. We’ve yet to see if the coronavirus outbreak will have any major and long-lasting effects on the global economy.
But for now, the investment opportunities are plentiful. Read the Issue for more details.
In this Month’s Issue of Cabot Early Opportunities I discuss one simple way to measure how much a given stock will move relative to the market. I also feature five stocks, from quite small to larger than we normally go. All have something different going for them. We are tilted toward software names this month, though I round things out with another solar name and an emerging biotech opportunity.
Current Market OutlookNothing much changed with the market’s evidence last week: The trends of the major indexes and most leading stocks remain strongly up, and there’s been very little in the way of intermediate-term abnormal selling action out there. On the other hand, many indexes have yet to hit new post-virus highs, fewer stocks are hitting new highs and the leading big-cap indexes are extended to the upside. As always, we put most of our emphasis on the primary evidence, which is why we remain mostly bullish; in fact, we’re nudging our Market Monitor up to a level 7 this week. But, while we still favor holding your strong, resilient performers, we also think it’s best to be choosy on the buy side, looking for names that have shown some recent power on earnings or have been running for a few months but have dipped to support.
Happily, this week’s list features many of names that have one of those two chart characteristics. Our Top Pick is Redfin (RDFN), which has been mostly a bust since coming public two years ago but showed overwhelming buying after earnings last week. As with most names, try to enter on some weakness.
| Stock Name | Price | ||
|---|---|---|---|
| Acceleron Pharma (XLRN) | 75.11 | ||
| Alteryx (AYX) | 132.78 | ||
| Amazon.com (AMZN) | 2.00 | ||
| Appian (APPN) | 46.48 | ||
| Envestnet (ENV) | 77.12 | ||
| Invitae (NVTA) | 32.06 | ||
| iRhythm Technologies (IRTC) | 51.15 | ||
| Redfin (RDFN) | 40.40 | ||
| Sunrun (RUN) | 38.40 | ||
| Survey Monkey (SVMK) | 19.97 |
This stock has a good, solid story and a stock that appears to finally be kicking into gear after 16 months of post-IPO meandering.
There’s an old saying that a bull market climbs a wall of worry, and today is a perfect example, with many of our stocks hitting new highs despite the widespread fears of coronavirus. Thus I continue to recommend that you be heavily invested.
However, not all our stocks are strong, and this week three in particular have turned too weak to hold any longer. So out they go.
As for the new recommendation, it’s an insurance company (investment company) that pays a dividend but has great prospects for capital gains. Full details in the issue.
However, not all our stocks are strong, and this week three in particular have turned too weak to hold any longer. So out they go.
As for the new recommendation, it’s an insurance company (investment company) that pays a dividend but has great prospects for capital gains. Full details in the issue.
Updates
A number of our stocks were on the verge of all-time highs last week. They pulled back this week so we’ll have to be a little more patient. There are no ratings changes this week.
Remain bullish, but stay tuned. The market’s recent Brexit-induced dip has put our Cabot Tides back on the fence, though our Two-Second Indicator and Cabot Trend Lines are still bullish. A Tides sell signal would cause us to raise more cash, but tonight we’re mostly standing pat; our only change is moving Facebook (FB) to Hold. The Model Portfolio is holding about 20% in cash.
The broad market pulled back sharply this week, dragging the S&P 500 through the 2,100 level once again. Today’s Fed meeting, the shooting in Orlando over the weekend and the upcoming Brexit vote are all contributing to a heightened sense of uncertainty and a “risk-off” mood on Wall Street.
The S&P 500 index is having an orderly pullback, after rising for three weeks. In that light, we’re not likely to see a lot of portfolio action this week. Looking out over the next four weeks or so, these buy-rated portfolio stocks appear best-positioned to rise 5% or more.
It’s been a good five months for small cap investors after a rough end to 2015 and an extremely tough start to 2016. But since mid-February, the asset class, along with the broader market, has rallied hard. A healthy pullback in the S&P 600 Small Cap Index in early May set the stage for a burst through resistance, and we’re now sitting just 2.7% below the 52-week high.
Seven Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news.
The Emerging Markets Timer has turned positive, and we did some buying in a Special Hotline on Tuesday. We will wait to see how the portfolio reacts before we put our remaining 20% cash to work. We’re shifting CTRP to a Hold rating ahead of next week’s earnings.
I recommend you take rate hike expectations and macro-economic predictions with a grain of salt (they’re fickle things), focus on stocks that are working well, and keep your goals and risk tolerance in mind.
Nine Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news.
The market continues to act well following last week’s whipsaw buy signal. There are still obvious resistance levels for the major indexes to deal with, but all three of our market timing indicators are bullish and more stocks are acting well. We’ll stand pat tonight with our eight stocks and 20% cash position in the Model Portfolio, though further strength (especially among individual stocks) would prompt us to put our remaining cash to work.
Cabot’s market timing indicators show that the intermediate- and longer-term trends of the market are both up, so you can continue to put money to work judiciously. We have one ratings change today—PGX to Hold—but most of our holdings were very quiet over the past week.
Alerts
Three stocks in our portfolio’s have reported earnings beats.
The shares of this music streaming service were just upgraded to ‘Buy’ at Redfern.
This airline beat Wall Street’s estimates by $0.03 last quarter.
Tomorrow’s the day that stores across Canada begin selling marijuana legally, and as I’ve said several times before, I believe the odds are that this will mark an intermediate-term top for many of the stocks in the sector.
This trucking company beat analysts’ estimates by $0.11 last quarter and three analysts have increased their EPS estimates for the company in the past 30 days.
Next, we are cleaning house a bit by selling two previous ideas.
Our first pick today is an Indian IT company who beat EPS estimates by $0.08 last quarter.
This oil company is expected to grow at an annual rate of 30% over the next five years.
Yesterday brought widespread carnage to the markets, which has carried on to today, but some tech stocks have found support. For now we are going to be watching and waiting, but I want to comment on three current holdings.
As we draw closer to October 17, the day cannabis is legal across Canada, there are growing projections that the supply of legal cannabis will be insufficient to meet demand in the early months.
Stocks don’t go straight up, right? Unless you began your stock-investing career two weeks ago, you know that stocks bounce around. They bounce upward during bull markets and they bounce downward during bear markets. We are currently experiencing a price correction during a bull market.
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.