Issues
Finally, the coronavirus news is improving, and so is the market. We’re now up about 12% on the Dow since our issue last month. Our Adviser Sentiment Barometer is mixed; still mostly bearish, but our contributors—as well as our analysts here at Cabot Wealth feel we are near a bottom on the markets. That, of course, is dependent upon how well we do when our economy begins to reopen.
So far, around 17 million unemployment claims have been filed, and it will take awhile for the unemployment number to recover. But, as you know, the markets generally move ahead of the economy, gathering the good news in first, so we are feeling optimistic.
As you know, I’ve been adding a lot of dividend stocks to my newsletter in the past month or so, so that you could, at least, enjoy some cash flow while we await the recovery. I’m beginning to go back to growth, so you’ll see more of those recommendations in the next few weeks.
And our Spotlight Stock this month, certainly fits the growth category.
Full details in the Issue.
So far, around 17 million unemployment claims have been filed, and it will take awhile for the unemployment number to recover. But, as you know, the markets generally move ahead of the economy, gathering the good news in first, so we are feeling optimistic.
As you know, I’ve been adding a lot of dividend stocks to my newsletter in the past month or so, so that you could, at least, enjoy some cash flow while we await the recovery. I’m beginning to go back to growth, so you’ll see more of those recommendations in the next few weeks.
And our Spotlight Stock this month, certainly fits the growth category.
Full details in the Issue.
The market rebound from its lows has been impressive as the unprecedented amount of stimulus injected by the Fed and Congress has overwhelmed any forward-looking concerns about the real economy.
The key now is to build, day by day, a more normal trading pattern. Cabot Global Stocks Explorer positions have kept pace with the market with outlier Virgin Galactic (SPCE) coming back 75% in two weeks. Our emerging markets (EEM) timer needs a bit more time to come out of its negative position. Today’s new recommendation is a high-quality, debt-free robot maker that is trading at close to a 10-year low.
The key now is to build, day by day, a more normal trading pattern. Cabot Global Stocks Explorer positions have kept pace with the market with outlier Virgin Galactic (SPCE) coming back 75% in two weeks. Our emerging markets (EEM) timer needs a bit more time to come out of its negative position. Today’s new recommendation is a high-quality, debt-free robot maker that is trading at close to a 10-year low.
inally, the coronavirus news is improving, and so is the market. We’re now up about 12% on the Dow since our issue last month. Our Adviser Sentiment Barometer is mixed; still mostly bearish, but our contributors—as well as our analysts here at Cabot Wealth feel we are near a bottom on the markets. That, of course, is dependent upon how well we do when our economy begins to reopen.
So far, around 17 million unemployment claims have been filed, and it will take awhile for the unemployment number to recover. But, as you know, the markets generally move ahead of the economy, gathering the good news in first, so we are feeling optimistic.
As you know, I’ve been adding a lot of dividend stocks to my newsletter in the past month or so, so that you could, at least, enjoy some cash flow while we await the recovery. I’m beginning to go back to growth, so you’ll see more of those recommendations in the next few weeks.
And our Spotlight Stock this month, certainly fits the growth category.
So far, around 17 million unemployment claims have been filed, and it will take awhile for the unemployment number to recover. But, as you know, the markets generally move ahead of the economy, gathering the good news in first, so we are feeling optimistic.
As you know, I’ve been adding a lot of dividend stocks to my newsletter in the past month or so, so that you could, at least, enjoy some cash flow while we await the recovery. I’m beginning to go back to growth, so you’ll see more of those recommendations in the next few weeks.
And our Spotlight Stock this month, certainly fits the growth category.
While the market has rallied roughly 25% off its closing low from March it’s not exactly a roaring bull market. We are where we are because the Fed and Treasury are lobbing money-filled grenades in all directions. Near-term market fundamentals are weak, but looking out a few quarters (or more) things should improve drastically, and that’s what the market is trying to factor in. On balance, it’s time to be conservative, but to take shots here and there. This month’s Issue of Cabot Early Opportunities offers up five options that look good right now.
This industry is very recession-resistant (sales grew steadily even through 2008-2009) and this stock is leading the charge to its move online (25% of sales online by 2022, up from 14% in 2017) thanks to its product selection (45,000 of them!) and fulfillment (can reach all of the U.S. within two days).
Current Market OutlookOur thought that March 23 would prove to be a workable low was correct, and the past three weeks have seen the major indexes recoup 40% to 55% of their crash declines (depend on the index). It’s obviously been good to see, as is the continued constructive action in many stocks; it appears the wheat is separating from the chaff. Still, we think the next week or two will be the key juncture—if the major indexes can ramp from here, the intermediate-term trend would turn up and could coincide with some powerful breakouts. On the flip side, if the sellers reappear, a deeper pullback or a retest of the lows could be on tap. Right now, we’re optimistic, but we never anticipate signals; today, with the trend still down, you should remain defensive.
Happily, we continue to see a lot of stocks that want to go higher if bulls do retake control. Our Top Pick this week is Inphi (IPHI), which is already at new closing highs as demand for its high-speed goods improves. Start small and/or aim for dips.
| Stock Name | Price | ||
|---|---|---|---|
| Amazon.com (AMZN) | 2.00 | ||
| American Tower Corporation (AMT) | 252.32 | ||
| Bilibili (BILI) | 28.71 | ||
| Chewy (CHWY) | 43.92 | ||
| Ciena (CIEN) | 44.25 | ||
| Inphi (IPHI) | 120.16 | ||
| Veeva Systems (VEEV) | 180.23 | ||
| Wheaton Precious Metals (WPM) | 34.43 | ||
| Wingstop (WING) | 121.52 | ||
| ZTO Express (ZTO) | 28.84 |
Market volatility remains high, and the good news is that since the bottom three weeks ago, most of the volatility has been to the upside. But don’t get complacent; conditions remain ripe for a substantial pullback as the market works to raise the fear level among investors.
In the meantime, the action of the best growth stocks remains impressive, and one of the leaders, with a great story about internet security, is today’s recommendation.
As for the rest of the portfolio, it’s acting well (with a couple of very strong stocks in the mix), and thus I have no changes today.
Full details in the issue.
In the meantime, the action of the best growth stocks remains impressive, and one of the leaders, with a great story about internet security, is today’s recommendation.
As for the rest of the portfolio, it’s acting well (with a couple of very strong stocks in the mix), and thus I have no changes today.
Full details in the issue.
The market has done about as good a job as could be expected rebounding off its March 23 low, and that makes for an interesting setup next week: If the major indexes can continue to strengthen, we could get a Tides buy signal, and that could also coincide with some bullish blastoff signals, too. To this point, though, the trends have yet to turn up, so we advise a defensive stance -- but we’re certainly keeping our eyes peeled for further unusual strength.
After a better than 30% plunge at record speed, the market has staged an epic rally from the bottom. The S&P 500 has moved more than 20% higher from the lows in late March. It is likely sensing an end to the economic shutdown sooner rather than later.
That’s good news, and the market usually gets it right. But even if the economy opens back up in May and June, there is a good chance of more trouble ahead. Terrible earnings and economic reports will come and consumers will be wounded for a while.
While I believe the economy and the markets will recover, there is a good chance of another down leg in the market. In this issue, I seek to take advantage of that possibility by targeting great companies to buy and below current prices. These are fantastic companies to own that are only ever cheap in bear markets like this.
The market will come back, but probably not yet. Taking advantage of another down move is a fantastic way to profit from the market’s eventual recovery.
That’s good news, and the market usually gets it right. But even if the economy opens back up in May and June, there is a good chance of more trouble ahead. Terrible earnings and economic reports will come and consumers will be wounded for a while.
While I believe the economy and the markets will recover, there is a good chance of another down leg in the market. In this issue, I seek to take advantage of that possibility by targeting great companies to buy and below current prices. These are fantastic companies to own that are only ever cheap in bear markets like this.
The market will come back, but probably not yet. Taking advantage of another down move is a fantastic way to profit from the market’s eventual recovery.
Updates
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.
For now, based on S&P trends, economic growth and the proliferation of easily identifiable undervalued growth stocks, I remain bullish on U.S. stock markets. I’m raising the rating on Big Lots (BIG) to Strong Buy, raising the rating on FedEx (FDX) to Buy, and lowering the ratings on Cardinal Health (CAH) and Intuit (INTU) to Hold.
Small caps made a heck of a move over the past week to close just below 700 on the S&P 600. That 4.3% move was led by growth (up 4.6%). Sector wise, tech led the charge with a 6.2% rally.
Continue to hold your best stocks, but also hold some cash until our market timing turns positive. This week’s action has been encouraging, but with our Emerging Markets Timer still negative, we have to wait a bit longer before putting cash to work. Tonight, we’re selling our remaining half position in Volaris (VLRS), leaving us with about 35% cash in the portfolio.
There’s a lot of talk about the Federal Reserve potentially increasing the Fed funds rate in June or July. Such a move would be positive for most financial stocks because they’d earn increased fees on their customers’ deposits, thereby boosting EPS. There are two financial stocks that are affected by rising interest rates in the Cabot Undervalued Stocks portfolios: E*Trade (ETFC) and Federated Investors (FII)
Six Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news.
This is one of those periods where it’s impossible to know what’s going to happen next given all the variables. So it’s better to look at the big picture trends and not try to get too cute in the short-term. For us, that means sticking with what we have been doing, since nothing is fundamentally or technically broken.
Pull in your horns a bit. In last night’s Special Bulletin, we cut our loss in Kate Spade and moved our Five Below and Sabre to Hold. Our Cabot Tides are now on the fence, though our Cabot Trend Lines and Two-Second Indicator remain positive. We now have 30% cash in the Model Portfolio, with our next move depending on whether the major indexes can hold support.
Alerts
The shares of this railway company were recently upgraded at Cowen & Co. to ‘Outperform’.
During the last 30 days, Colfax has received 10 upward earnings estimate revisions for both its current year and fiscal 2019.
Several catalysts have brought the price of gold down; here are a couple of ways to get in at discounted prices.
One of our stocks reported a great second quarter and moves from Strong Buy to Buy and moves from Buy Low Opportunities Portfolio to Growth & Income Portfolio.
The top five holdings of this socially-responsible fund are: Microsoft Corp (MSFT, 6.61% of assets); Facebook Inc A (FB, 3.52%); Alphabet Inc C (GOOG, 3.26%); Alphabet Inc A (GOOGL, 3.12%); and Intel Corp (INTC, 1.92%).
Today, there are two rating changes for portfolio stocks. And, news on three other stocks.
Analysts expect this robotic company to grow at a rate of 20% this year.
This auto financing company beat analysts’ estimates by $1.23 last quarter, and 10 analysts have increased their EPS forecasts for the company in the past 30 days.
This is an unscheduled interim update to give you some guidelines to help you deal with the current strength—one of my readers used the word “craziness’—in marijuana stocks.
Apple (AAPL) has several product upgrades and there are new details on the spin-off and merger for one of the portfolio stocks.
The top five holdings of this natural gas fund are: EOG Resources Inc (EOG, 7.90%); Anadarko Petroleum Corp (APC, 6.60%); Schlumberger Ltd (SLB, 6.49%); Occidental Petroleum Corp (OXY, 5.40%); and Devon Energy Corp (DVN, 5.06%).
Our second idea is taking some profits in a previous pick.
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.