Issues
In this Month’s Issue of Cabot Early Opportunities we take a closer look at recent recommendations and evaluate their Q3 earnings reports. I also show why I think the Small cap index is going higher in the near term. Finally, I feature five early-stage growth stocks going after totally different markets that look poised to deliver big gains in 2020 and beyond.
There is a brand new industry just coming of age.
New industries only come along once in a while and they almost always present an array of investments that will be superstars of tomorrow. We dream of going back in time and buying Microsoft (MSFT) or Starbucks (SBUX) or Netflix (NFLX) when they were new, upstart companies. But we might get another bite of a similar apple in 2020.
New industries only come along once in a while and they almost always present an array of investments that will be superstars of tomorrow. We dream of going back in time and buying Microsoft (MSFT) or Starbucks (SBUX) or Netflix (NFLX) when they were new, upstart companies. But we might get another bite of a similar apple in 2020.
We’ve had a decent month in the markets—despite all the impeachment hoopla. It looks like the China trade issue is improving, housing starts and building permits are healthy, and unemployment remains low. Sounds like the making of a great holiday season!
We begin this issue with our Spotlight Stock, a company that has been in business for 67 years, residing in the defense and aerospace sectors. As I note in my Feature article, both of those arenas are experiencing fantastic growth, which bodes well for our Spotlight Stock.
We begin this issue with our Spotlight Stock, a company that has been in business for 67 years, residing in the defense and aerospace sectors. As I note in my Feature article, both of those arenas are experiencing fantastic growth, which bodes well for our Spotlight Stock.
Precious metal stocks (and their underlying commodities) have become a mixed bag, especially with some global uncertainties seemingly cleared up, but this stock is pushing ahead nonetheless thanks to some company-specific catalysts in addition to higher gold and silver prices.
The major indexes continue to hit new highs, all Cabot’s market timing indicators remain positive, and our portfolio is solid, overall, though I’m downgrading three stocks to Hold today for various reasons.
As for today’s new recommendation, it’s a very familiar name—a dividend-paying Wall Street Blue Chip—that Mike Cintolo says now has great growth potential because of its new business.
Details in the issue.
As for today’s new recommendation, it’s a very familiar name—a dividend-paying Wall Street Blue Chip—that Mike Cintolo says now has great growth potential because of its new business.
Details in the issue.
Current Market OutlookAs we steamroll toward the end of the decade, the overall market remains in good shape—the intermediate-term trend is firmly up, the number of stocks hitting new highs is expanding and many longer-term studies tell us that 2020 is likely to be another solid year. That said it’s not all peaches and cream out there—short-term, huge number of new highs often leads to some retrenchment, and we’re also seeing a bit more divergent action among individual stocks, with some growth titles hitting potholes while investors rotate elsewhere. None of that is “bad,” per se, but it is a reminder to honor and update your stops as time goes by, and to take a couple of partial profits if you score a decent profit.
This week’s list has a wide variety of newer names, from construction to precious metals to biotech to chips. Our Top Pick is Synaptics (SYNA), which has the makings of an intriguing turnaround as it’s riding a few powerful growth trends.
| Stock Name | Price | ||
|---|---|---|---|
| Aecom Technology (ACM) | 0.00 | ||
| GDS Holdings Limited (GDS) | 80.15 | ||
| Inphi (IPHI) | 120.16 | ||
| Pan American Silver (PAAS) | 27.28 | ||
| Planet Fitness (PLNT) | 0.00 | ||
| PTC Therapeutics (PTCT) | 0.00 | ||
| Reata Pharmaceuticals (RETA) | 0.00 | ||
| Shopify (SHOP) | 585.00 | ||
| Skyworks Solutions (SWKS) | 0.00 | ||
| Synaptics (SYNA) | 0.00 |
Last week’s recommendation, Virgin Galactic (SPCE), took off like a rocket and this week we go underground to recommend a premier global company that provides the backbone for future-oriented technologies such as green energy and electric vehicles.
Looking at the big picture impacting global stocks, U.S.-China haggling continues but the NAFTA redo looks like a done deal as we head into the end-of-year rush. As a result, our Emerging Markets Timer (EEM) moved into a stronger bullish position, putting some distance between its 25- and 50-day averages as it moves back towards 44.
Looking at the big picture impacting global stocks, U.S.-China haggling continues but the NAFTA redo looks like a done deal as we head into the end-of-year rush. As a result, our Emerging Markets Timer (EEM) moved into a stronger bullish position, putting some distance between its 25- and 50-day averages as it moves back towards 44.
Big data is big and growing bigger. The market is forecast to reach $103 billion by 2022, with every person generating 1.7 megabytes of data every second, with internet users as a whole expected to generate some 2.5 quintillion bytes of data each day.
The major indexes continue to hit new highs, all Cabot’s market timing indicators remain positive, and our portfolio is solid, overall, with the exception of Designer Brands (DBI), which reported third-quarter earnings this morning; more on that in the update section.
As for today’s new recommendation, it’s a brand new business with a familiar name—a high-risk/high-potential investment. It’s not for everyone, and it will be volatile. But it could change the world!
Details in the issue.
As for today’s new recommendation, it’s a brand new business with a familiar name—a high-risk/high-potential investment. It’s not for everyone, and it will be volatile. But it could change the world!
Details in the issue.
Current Market OutlookThe market hit a little turbulence early last week on renewed trade worries but bounced back nicely, with the major indexes finishing flat (S&P 500 and Nasdaq) to up (small- and mid-cap) on the week. Short-term, though, we wouldn’t be surprised to see some further ups and downs as the market and many stocks/sectors consolidate their two-month runs; we still favor buying pullbacks rather than breakouts at this time. The good news is that we continue to think current pullbacks and consolidations are leading to some good-looking entry points in a variety of leading stocks. All in all, we remain bullish, though it’s still best to be a bit choosier on the buy side at the moment, while giving some stocks that you own breathing room to consolidate if they’ve enjoyed a good run.
This week’s list has many leaders that are retreating toward support or are otherwise showing solid setups. Our Top Pick is Seattle Genetics (SGEN), which looks like a leader in the biotech field, and the stock is now pulling back for the first time after a big run.
| Stock Name | Price | ||
|---|---|---|---|
| Amedisys (AMED) | 174.06 | ||
| The Walt Disney Company (DIS) | 144.76 | ||
| DocuSign (DOCU) | 107.98 | ||
| GSX Techedu (GSX) | 97.59 | ||
| Incyte Corporation (INCY) | 76.98 | ||
| Qorvo (QRVO) | 129.47 | ||
| Seattle Genetics (SGEN) | 150.85 | ||
| Splunk (SPLK) | 207.67 | ||
| TransDigm (TDG) | 599.41 | ||
| Tesla, Inc. (TSLA) | 818.87 |
Updates
Today I’m putting CVS Health (CVS) and Home Depot (HD) on Hold because of the broad market, taking profits in half of our Costco (COST) position and selling half of Novo Nordisk (NVO) with plans to unload the rest in the coming days.
In recent days, several portfolio companies reported quarterly and/or full-year 2015 results. General Motors (GM), Robert Half (RHI), Royal Caribbean Cruises (RCL) and Vulcan Materials (VMC) all surpassed market earnings per share (EPS) expectations.
The Cabot Emerging Markets Timer remains negative, counseling us to stay defensive. We have two changes in the portfolio today; Baidu (BIDU) is changed from Hold a Half to Sell and Sinovac Biotech (SVA) is shifted from Watch to Drop.
We have one portfolio change today: I’m selling half of Nordic American Tankers (NAT) from the High Yield tier based on the stock’s lousy technical action. But there are still plenty of strong performers in our portfolio, including our newest buys, Mattel (MAT) and CVS Health (CVS). Read on for details on recent earnings reports and more.
Yesterday, Johnson Controls (JCI) reported an agreement to purchase Tyco International (TYC). We had strong earnings reports from three portfolio stocks last week: Delta Air Lines (DAL), D.R. Horton (DHI) and E*Trade Financial (ETFC), and many more portfolio companies will report earnings this week. Today, I’m upgrading Chemtura (CHMT) to a Buy rating.
The chart of the S&P 500 is showing us that the index may be finishing a double-bounce pattern; bouncing at the same low of approximately 1,880 where it touched down twice during the late summer 2015 market correction.
Today, I’m changing the rating on many Smart Investing stocks to Hold. These rating changes are only about share price. Other than Axiall, none of these stocks are experiencing earnings downgrades or corporate troubles. They are all undervalued growth stocks.
There’s a lot more to “buying low” than just identifying falling prices.
2015 is almost over, thank the Lord! The stock market lacked momentum, trading sideways virtually the entire year.
How do you know if you own a “good” stock that will bring you capital gains?
I have two rating changes in the portfolios today: Intuit (INTU) in the Buy Low Opportunities Portfolio moves from Hold to Buy, due to the capital gain opportunity presented by the price pullback, and Priceline (PCLN) in the Growth Portfolio moves from Hold to Buy, due to the capital gain opportunity presented by the price pullback.
There’s been lots of news on our portfolio stocks in recent days: upside earnings surprises, downside earnings surprises, share buybacks, dividend increases and M&A activity.
Alerts
Wall Street is raising its earnings estimates for this cloud company after its $0.04 earnings beat for its latest quarter.
This tech company beat analysts’ earnings estimates by $0.37 last quarter.
Coverage of the shares of this insurance company was just initiated at Credit Suisse with an ‘Outperform’ rating.
The top five holdings of this fund are: Amazon.com Inc (AMZN, 23.60% of assets); The Home Depot Inc (HD, 7.51%); Walt Disney Co (DIS, 5.57%); Comcast Corp Class A (CMCSA, 5.42%); and Netflix Inc (NFLX, 4.84%).
Change out an international fund for a worldwide fund.
Here’s a recommendation to change out an international fund for a worldwide fund, in which the majority of assets are invested in the United States.
This human resources solutions provider beat analysts’ earnings estimates by $0.20 last quarter.
This is an unscheduled interim update to let you know that the next full issue of Cabot’s 10 Best Marijuana Stocks will be published Thursday, August 30.
One of the stocks in our portfolio popped after it reported Q1 earnings but, for the most part, has been trending down since.
Three analysts have increased their EPS estimates for this energy firm.
This tech company is a new spin-off and just received a contract to provide the U.S. Postal Service with maintenance and development support of its over 700 applications.
Three of our portfolio stocks reported earnings this week.
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.