Today’s recommendation is a British outfit that, as its stock symbol suggests, is thriving thanks to offerings that help workplace teams plan, interact, engage, track progress and more, all of which is becoming more difficult as workplaces become more mobile.

The much-needed market correction is now two weeks old and thus still quite young, but as it evolves, and we adapt to its actions, we will continue to cultivate a portfolio of the best stocks by selling our laggards and holding our leaders.

Last week that meant selling four stocks, but this week it means only a couple of downgrades to hold, along with one upgrade to buy.



As for this week’s recommendation, it’s a big old high-tech company that is currently range bound, but whose valuation and chart are attractive, so long-term investment should work out well. Plus it pays a dividend of 4.3%.



Details in the issue.

Current Market Outlook


The market rebounded nicely today, and we won’t pooh-pooh that, as a show of support is always a positive. That said, we need to see more to conclude the sellers have left the building—the intermediate-term trend, for instance, remains on the fence, and while there are no sure things, it’s likely the market will need more than six days to consolidate a four-month advance. Bigger picture, nothing has changed our view that this is a bull market, though, so we’re certainly not advising you to become overly defensive, but we’d stick with the plan of holding some cash, keeping your weakest stock or two on a tight leash and being careful on the buy side, especially when it comes to buying on strength (most moves to new highs are being met with selling). Our Market Monitor will remain at 6 for now, though we’re obviously watching things closely.

Believe it or not, many stocks did well last week, and today’s list features some of them. Our Top Pick is Yeti (YETI), which is set up nicely ahead of earnings in two weeks; you could nibble here, or just wait until you see a powerful breakout.

Stock Name	Price	Buy Range	Loss Limit
Atlassian (TEAM)	182.16	143-147	133-135
Dynatrace (DT)	36.59	28-30	25-26
Fortune Brands Home & Security (FBHS)	81.02	67.5-69.5	63-64
Franco-Nevada (FNV)	125.51	108-111	100-101.5
Momenta Pharma (MNTA)	31.63	27.5-30	23.5-25
Penn National Gaming (PENN)	45.38	28-30	25-26
PulteGroup (PHM)	45.93	43.5-45	40-41
ServiceNow (NOW)	341.86	328-336	303-306
Tandem Diabetes (TNDM)	74.77	73-76	65-67
Yeti Holdings (YETI)	42.80	35.5-37.5	32.5-33.5

With the market near record highs, many stocks are trading well above the $1,000/share price level. Investors tend to dismiss stocks with basement-level prices, so we explored this maligned group in search of neglected value.

In this issue, we look at the several of our recommended stocks in this range.

The long-awaited pullback appears to have arrived, with fears and uncertainty surrounding the coronavirus and its impact on economic growth bringing out the sellers; our Cabot Tides, in fact, are now on the fence. In the near-term, the odds favor some more pain being dished out, not necessarily because of the virus, but as the market consolidates its strong four-month advance. Big picture, though, this is still a bull market, so while we’ve trimmed a bit, we’re aiming to hold our strong, profitable stocks, thinking higher highs are likely once this pullback does its work.

In the Model Portfolio, we took partial profits on DocuSign and ProShares S&P 500 Fund earlier this week, which lifted our cash position to around 20%. And from here, we’ll just take it as it comes, as we explain in tonight’s issue.

The latest issue of Cabot Marijuana Investor is now available, with my current advice on the fifteen stocks in the portfolio.

While coronavirus fears infect the broad market, the good news is that marijuana stocks seem to have an immunity, mainly because they already had their correction last year. Many stocks in the sector are looking better, and I’m now recommending averaging up in three stocks already in the portfolio.



These changes will reduce the portfolio’s cash level to roughly 12%, so we will be well positioned to benefit from the sector’s resumption of its big uptrend.



Full details in the issue.

STMicroelectronics is one of the world’s largest semiconductor companies, delivering solutions that are key to the smartphone and automotive markets. Major customers include Apple and Tesla, though the firm (which is based in Switzerland) sports more than 100,000 customers around the globe.

Current Market Outlook


The rapid spread of China’s coronavirus provided the impetus for a selloff that began last Friday and exploded onto the scene today. Where does that leave us? First, the intermediate-term trend of the indexes is still positive but close to the fence; the big-cap indexes look OK, but the broader measures (small and mid caps) are right around their key 50-day lines. Beyond the charts, it’s likely that more time is needed for investors to trim/hedge after four months of straight-up action. As for leading stocks, we’re taking it on a case-by-case basis—some are looking ragged and ripe for a deeper correction, but most are pulling back normally. If you’re heavily invested, our advice is to follow the usual plan: Hold most of your shares in your strong, profitable stocks, while selling or keeping tight leashes on losers and laggards. We’re moving our Market Monitor down to a level 6.

On the buy side, newer names that are holding up well should be near the top of your shopping list. This week features plenty of those, with our Top Pick being Kansas City Southern (KSU), a reliable grower that just reacted well to earnings.

Stock Name	Price	Buy Range	Loss Limit
Agios Pharmaceuticals, Inc. (AGIO)	52.43	50.5-52.5	45.5-47
Bristol-Myers (BMY)	66.24	62-64	59-60.5
Datadog (DDOG)	81.52	39.5-41.5	36.5-38
Kansas City Southern (KSU)	176.54	162-165	150-152
Sea Limited (SE)	132.86	42.5-44.5	38-39
Snap Inc. (SNAP)	16.68	18-19	16-16.5
STMicroelectronics (STM)	30.09	27.5-28.5	25-25.5
Taiwan Semiconductor (TSM)	78.41	57-58.5	53-54
Wix.com (WIX)	302.53	137.5-141	127.5-129
Zillow (Z)	76.64	46-48	42.5-44

The long-awaited market correction has finally begun, and while you may be tempted to tie the correction to fundamental events, I don’t find any value in that—because all that news is public information so it has no real value to us. Instead, I prefer to watch the action of the stocks carefully, to judge where the money is flowing. And the result of my observations today is that we will sell four stocks and downgrade another to hold—and then continue watching.

As for this week’s recommendation, it’s a high-potential little medical stock that most investors haven’t heard of. It’s not for everyone, but it does provide diversity to our portfolio and it may be perfect for yours.



Details in the issue.

The Cabot Emerging Markets Timer is flashing a warning signal, and even good earnings results are no guarantee of big advances. We are trimming the portfolio by selling Sibanye Gold and dropping YY Inc.

Most of our portfolio holdings are acting similarly healthy, and if you feel underinvested, you can add positions judiciously here. I’m switching Smucker (SJM) back to Buy today based on the solid technical support the stock demonstrated over the past week.

In this update, we take a look at recent news and earnings reports from our portfolio stocks, and raise the ratings on Boise Cascade (BCC), Delta Air Lines (DAL) and D.R. Horton (DHI) to Buy.

Sixteen Cabot Benjamin Graham Value Investor companies reported quarterly financial results. Four produced outstanding sales and earnings: AMC Networks, IntercontinentalExchange, Priceline and Scripps Networks, and four reported rather weak results: Maiden Holdings, McKesson, Prudential and WestJet Airlines. I will review all of the quarterly reports soon and offer sell recommendations if necessary.

Stand pat. The market has been pulling back for the past two weeks, but our market timing indicators are still bullish and most of our stocks are acting well. That said, there’s not enough evidence for us to put more money to work, so except for two small changes (we’re switching Sabre (SABR) to a Hold rating and putting Facebook (FB) back on Buy), we’ll keep our seven stocks (and a cash position of 30%) and watch how things unfold.

We’re switching Target (TGT) and ConEd (ED) from Buy to Hold today. The rest of our ratings remain unchanged.

We had three stocks report this week. Two of them, LogMeIn (LOGM) and Mitek (MITK), are surging higher. There are no ratings changes today. Next week, we’ll hear from NanoString (NSTG) and Primo Water (PRMW). Overall, my stance remains cautiously optimistic.

Twenty Cabot Benjamin Graham Value Investor companies reported quarterly financial results. Five produced outstanding results: AbbVie, Harman, Lear, LKQ and Penske, while five reported rather weak results: Apple, Avnet, Ensco, Gilead and Synaptics. I will review all the quarterly reports within the next few days and offer Sell recommendations if necessary.

The Cabot Emerging Markets Timer continues to give a Buy signal, but many stocks in both emerging and developed markets are trading sideways. We have no changes to our portfolio today.

Beginning next week, Smart Investing in Turbulent Times will receive a new name: Cabot Undervalued Stocks Advisor. But don’t worry! Everything below the title remains the same. All of the portfolio stocks will remain intact, with weekly updates on excellent value stock opportunities. In today’s Update, there are a few noteworthy portfolio stock news items.

There are no ratings changes today. My stance is cautiously optimistic, and favors resisting the temptation to chase stocks. Action is going to pick up next week as we have Blackbaud (BLKB), LogMeIn (LOGM) and Mitek (MITK) reporting. I’m expecting good things from all.

Fourteen Cabot Benjamin Graham Value Investor companies reported financial results in the past week. Six reports were outstanding, including BJ’s Restaurants, Danaher, General Motors, Johnson Controls, Southwest Airlines and UnitedHealth Group.

Growth stocks took another massive hit today, as money rotated to safer areas. Our Cabot Tides remains on the fence, growth-oriented indexes have either already broken down or, in the case of the Nasdaq, are looking iffy. As a result of today’s action, we are selling 1/3 in two of our positions.

The market opened higher yesterday thanks to good news on the trade front, but sellers were active after the open, especially with growth stocks. Our longer-term indicators are still up, but the intermediate-term indicator is on the fence. We’re going to sell one position today and place another on hold.

Our second is a sale of a previous recommendation.

Our first idea today is a medical device company that beat analysts’ estimates by $0.10 last quarter.

Analysts expect this security device maker to grow 32.1% this year.

U.S. stocks make up more than 50% of this global equity fund.

This media/entertainment company saw huge increases in revenues and income in its last quarter, and has been buying back shares, reducing share count by more than 6% in the past year.

We’re moving one stock from Strong Buy to Buy.

The shares of this athletic apparel manufacturer were recently upgraded by Susquehanna, to Positive and PiperJaffray, to Overweight, and were initiated at Morgan Stanley, to Overweight.

Our other recommendations are selling previous ideas, with some profit-taking.

Our other recommendations are selling previous ideas, with some profit-taking.

Shares of our first idea today jumped overnight on news that the company received good results on a drug for central nervous system disorders. You might want to watch for a bit of a pullback before buying.

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.