Issues
Since the market bottomed five weeks ago, the charts have been impressive, not only for the broad market but for the marijuana sector as well, which has finally shaken loose from its bear market’s two-year grip.
Of course, some companies didn’t survive the hard times, but those that did are battle-hardened, so now, more than ever, it’s easier to identify the future winners of the industry—and the stocks that can bring you big profits in the years ahead.
So today I’m doing a bit of buying for the Cabot Marijuana Investor portfolio, adding four stocks (three of which we’ve owned before).
Additionally, you’ll find a Special Report with this issue, profiling all the publicly traded, vertically integrated multistate operators (MSOs) in the U.S. The report can be found in the Special Reports section of the website.
Full details in the issue.
Of course, some companies didn’t survive the hard times, but those that did are battle-hardened, so now, more than ever, it’s easier to identify the future winners of the industry—and the stocks that can bring you big profits in the years ahead.
So today I’m doing a bit of buying for the Cabot Marijuana Investor portfolio, adding four stocks (three of which we’ve owned before).
Additionally, you’ll find a Special Report with this issue, profiling all the publicly traded, vertically integrated multistate operators (MSOs) in the U.S. The report can be found in the Special Reports section of the website.
Full details in the issue.
Welcome to Cabot Micro-Cap Insider!
This inaugural issue is a little different than future editions.
In this issue, I’ve profiled my initial five recommendations. In future issues, I will profile one new idea in depth, and provide updates on all open recommendations.
Because I’m including five new ideas today, the write-ups are more concise than you can expect going forward.
Before you read this issue, I recommend that you read my Cabot Micro-Cap Insider Guide. It will help you get the most out of your Cabot Micro-Cap Insider membership, and make your investing decisions easier and more profitable. It will also explain much of the shorthand we use in Cabot Micro-Cap Insider, and explain our ratings.
If you have any questions about any of my recommendations, I encourage you to reach out to me directly at rich@cabotwealth.com.
Now let’s get into the stocks that you should start buying today.
This inaugural issue is a little different than future editions.
In this issue, I’ve profiled my initial five recommendations. In future issues, I will profile one new idea in depth, and provide updates on all open recommendations.
Because I’m including five new ideas today, the write-ups are more concise than you can expect going forward.
Before you read this issue, I recommend that you read my Cabot Micro-Cap Insider Guide. It will help you get the most out of your Cabot Micro-Cap Insider membership, and make your investing decisions easier and more profitable. It will also explain much of the shorthand we use in Cabot Micro-Cap Insider, and explain our ratings.
If you have any questions about any of my recommendations, I encourage you to reach out to me directly at rich@cabotwealth.com.
Now let’s get into the stocks that you should start buying today.
This stock was one of 2019’s biggest turnaround stories, and while it stalled out in the second half of last year, it’s making waves again thanks to a blowout Q1 report.
Current Market OutlookLast week featured a lot of dramatic news items (including negative oil prices!), but it ended up being a quiet week in the major indexes, which we take as constructive—the action allowed some stocks to settle down a bit, which is often a sign of accumulation. Thus, we’re optimistic, but the key from here is to take things day by day and to stay in gear with the market’s evidence. Right now, with the intermediate-term trend still up and many stocks acting well, you should be putting some money to work, and then see what comes—further upside (especially if we see many bullish earnings gaps) would be a sign to do some follow-on buying, while a couple of sharp, big-volume selloffs in the market would tell you to hold off. As we wrote above, we’re optimistic the path of least resistance is up, but we’ll stay flexible and take it as it comes.
This week’s list again has plenty of good-looking names to choose from. Our Top Pick is Pinduoduo (PDD), which has turned powerful after a five-month rest. You can start a position here or (preferably) on dips of a couple of points.
| Stock Name | Price | ||
|---|---|---|---|
| Alnylam Pharmaceuticals (ALNY) | 143.58 | ||
| Boston Beer Company (SAM) | 459.16 | ||
| DocuSign (DOCU) | 107.98 | ||
| Exelixis (EXEL) | 27.35 | ||
| Freshpet (FRPT) | 107.99 | ||
| MarketAxess (MKTX) | 439.96 | ||
| Netflix, Inc. (NFLX) | 423.92 | ||
| PayPal (PYPL) | 147.00 | ||
| Pinduoduo (PDD) | 87.53 | ||
| Snap Inc. (SNAP) | 16.68 |
The market’s rebound continues and our stocks, as a whole, continue to perform well. Someday, however, a correction will begin and it will pay to be alert—and to react—when it does.
In the meantime, I will keep recommending the best stocks, a system that has worked quite well in recent weeks. This week, we continue to diversify with a recommendation of a marijuana stock, a group that went through a two-plus year correction and in the process got relatively cheap.
As for the rest of the portfolio, it’s acting well and thus the only change today is a downgrade of one stock from buy to hold.
Full details in the issue.
In the meantime, I will keep recommending the best stocks, a system that has worked quite well in recent weeks. This week, we continue to diversify with a recommendation of a marijuana stock, a group that went through a two-plus year correction and in the process got relatively cheap.
As for the rest of the portfolio, it’s acting well and thus the only change today is a downgrade of one stock from buy to hold.
Full details in the issue.
Our Cabot Tides buy signal earlier this week has prompted us to put some cash back to work; we now own seven stocks, though we still have a good-sized cash position of around 46%. As always, we’ll just take it as it comes, but so far leading growth stocks and the major indexes remain in good shape.
In tonight’s issue, we review a little about how we run our ship, as well as dig deeper into Cabot’s Aggression Index, which can also provide some clues for the overall market. And, of course, we dive into all of our stocks and some fresh ideas should the buying pressures grow.
In tonight’s issue, we review a little about how we run our ship, as well as dig deeper into Cabot’s Aggression Index, which can also provide some clues for the overall market. And, of course, we dive into all of our stocks and some fresh ideas should the buying pressures grow.
Despite the self-induced recession, the stay-at-home economy is booming thanks to companies that are letting employees work from home—and even after things go back to normal, it’s likely some of this new workplace flexibility will be here to stay.
Current Market OutlookWhile the day to day volatility remains extreme, the market’s intermediate-term trend has turned up (according to our measures), which argues for a more constructive stance toward stocks. Of course, that doesn’t mean you should dive in headfirst—there remain plenty of headwinds, including the fact that most stocks are still below their 50-day and 200-day moving averages (i.e., plenty of potential selling to chew through on the upside). But there’s no question the evidence has improved, so it’s a good idea to slowly put money to work, and then use the market for feedback; If you develop some solid profits, you can become more aggressive, but if the uptrend decisively cracks (would take a 6% to 7% drop from here), you want to hold off further buying and honor your stops.
This week’s list continues the trend we’ve seen of many high-potential stocks spiking back toward their old highs. Our Top Pick is Okta (OKTA), which has rejoined the leadership ranks after nine-months of correcting and consolidating.
| Stock Name | Price | ||
|---|---|---|---|
| ACADIA Pharmaceuticals (ACAD) | 47.84 | ||
| Advanced Micro Devices (AMD) | 82.24 | ||
| ASML Holding (ASML) | 350.01 | ||
| CrowdStrike (CRWD) | 105.02 | ||
| Franco-Nevada (FNV) | 125.51 | ||
| Immunomedics (IMMU) | 34.23 | ||
| Okta, Inc. (OKTA) | 148.41 | ||
| Sea Limited (SE) | 132.86 | ||
| Shopify (SHOP) | 585.00 | ||
| Tradeweb Markets (TW) | 51.44 |
The good news is that four weeks of upside action has brought a new buy signal from Cabot’s intermediate-term market timing indicator. But this doesn’t mean you can jump in with both feet yet; there’s still reason for caution.
One way Cabot Stock of the Week exercises caution is by diversifying widely, not only among industries but also among investment strategies. Today’s recommendation, a big undervalued robotics company in Japan, is an excellent example.
As for the rest of the portfolio, it’s acting well and thus the only change today is a downgrade of one stock—which has got a bit high—from buy to hold.
Full details in the issue.
One way Cabot Stock of the Week exercises caution is by diversifying widely, not only among industries but also among investment strategies. Today’s recommendation, a big undervalued robotics company in Japan, is an excellent example.
As for the rest of the portfolio, it’s acting well and thus the only change today is a downgrade of one stock—which has got a bit high—from buy to hold.
Full details in the issue.
Updates
The U.K. has voted to leave the E.U. in a close vote with 52% saying leave and 48% saying stay. Few people really thought the vote would turn out this way.
Six Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news.
The Emerging Markets Timer is technically positive, but the intermediate-term trend remains mostly neutral.
Most of our holdings are healthy, and several are hitting new highs or positioned to do so soon. Several more names are well positioned to begin new rallies if the market gets in gear. One dark cloud is CVS Health (CVS), which I’m putting on Hold today as the stock’s slump intensifies.
The S&P 500 index traded up near all-time highs in early June, then had an orderly pullback, partly encouraged by investor worries over the Brexit vote. The index seems to have completed its correction, and could easily retrace recent highs. Many of our portfolio stocks mirrored that pullback and are also rebounding.
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.
Alerts
Analysts expect this biotech company to grow at an annual rate of 23.9% over the next five years.
This ETF goal is to provide investment results that correspond to twice (200%) the inverse of the daily performance of the Bloomberg WTI Crude Oil SubindexSM.
Two of our medical device stocks have begun to look a little shaky and today we’ll pull back on the reins and move these stocks from buy to hold, at least until the path forward becomes more clear.
The top five sectors of this small cap fund are: Industrials, 28.7% of assets; Technology, 18.0%; Health Care, 16.1%; Financials, 13.6%; and Consumer Discretionary, 11.3%.
This is an unscheduled interim update with three goals. Most importantly, keep in mind this is a marathon not a sprint.
Our second recommendation is a sale of an RV stock that is suffering from industry woes.
Our first idea today is a tech company that beat Wall Street’s estimates by $0.19 last quarter.
Analysts are looking for 30% annual growth for this cloud-based education company over the next five years.
The top five holdings of this small cap fund are: Emin Russell 2000 Jun18 Rtym8 N/A (0.63% of assets); Nektar Therapeutics Inc (NKTR, 0.59%); GrubHub Inc (GRUB, 0.41%); bluebird bio Inc (BLUE, 0.39%); and Aspen Technology Inc (AZPN, 0.30%).
Our second recommendation is a sale on a company that is not living up to its promise.
Though the shares of this marijuana-related company have retreated a bit, its new collaboration offers an opportunity to participate in this growing sector at a discounted value.
This is an unscheduled interim update to give you some guidelines to deal with the current strength of marijuana stocks.
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 Momentum 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 Momentum Trader features.