Issues
All Explorer positions except Grupo Televisa (TV) advanced this past week and the emerging markets timer (EEM) is positive in an uptrend and above both its 20-day and 50-day moving averages.
Today’s recommendation is a company showing some relative strength that offers a nice blend of emerging growth and Western management. It’s a business with a diversified portfolio of fuel distribution, sugar production, ethanol and electricity, rail transportation and warehousing as well as the distribution of natural gas.
Today’s recommendation is a company showing some relative strength that offers a nice blend of emerging growth and Western management. It’s a business with a diversified portfolio of fuel distribution, sugar production, ethanol and electricity, rail transportation and warehousing as well as the distribution of natural gas.
As we steamroll toward the holidays, the market remains in great shape, and bigger picture, we continue to expect good things in 2020. Near-term, we are finally seeing a few signs of complacency, so some rocky trading is likely at some point; being choosy on the buy side makes sense. But we’re thinking bigger, aiming to hold our strong leaders with the goal of developing some bigger winners.
In tonight’s issue, we’re adding one half-sized position to the Model Portfolio; that will leave us with 19% in cash, which we’re looking to put to work as opportunities arise. We also review three initial lessons learned from this year, highlight some intriguing names that are setting up well and give you our latest thoughts on all our holdings.
In tonight’s issue, we’re adding one half-sized position to the Model Portfolio; that will leave us with 19% in cash, which we’re looking to put to work as opportunities arise. We also review three initial lessons learned from this year, highlight some intriguing names that are setting up well and give you our latest thoughts on all our holdings.
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 |
Updates
Now before you call me crazy concerning today’s newsletter headline, hear me out.
Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”
Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”
The market is digesting the push and pull of higher oil prices, a deeply divided Federal Reserve, prospects for a prolonged blockade of the Strait of Hormuz and fading momentum from the AI trade that helped push markets to all‑time highs earlier this month.
Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.
Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.
Yesterday, four tech giants, Alphabet, Amazon, Meta and Microsoft, representing 22% of the S&P 500’s market value, reported strong quarterly earnings that highlighted the importance of AI.
You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.
You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.
It’s been a glorious April following a miserable March for the market. What happens in May may determine which direction stocks are headed for the rest of the year.
That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.
That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.
What war? This market is moving on. We may not be out of the woods yet, but investors are looking beyond the Iran war.
Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.
Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.
The other day I was paid a visit by a roving ISP salesman who was pitching his company’s fledgling internet service over the local monopoly’s. We struck up a conversation and he asked what I did for a living. When I told him, his eyes lit up and he asked, “Got any good stocks you can recommend?”
Without thinking I blurted out, “Anything AI-related. You can’t go wrong.” The advice was only semi-facetious, for there’s undeniably a degree of truth behind it. My instinctive response to that question also prompted me to consider the question: just how long can the broad market continue its “all things AI” run without broader sector participation
Without thinking I blurted out, “Anything AI-related. You can’t go wrong.” The advice was only semi-facetious, for there’s undeniably a degree of truth behind it. My instinctive response to that question also prompted me to consider the question: just how long can the broad market continue its “all things AI” run without broader sector participation
Note: I’m out of town this week, so I’ll be a bit briefer on the update today—but I’m still checking my laptop a couple of times a day if you have any questions or comments. I’ll be back at my desk come Monday. Cheers.
WHAT TO DO NOW: Remain optimistic. The market and some leaders have hesitated, but all of our market timing indicators are bullish, and most stocks we own or are watching are working. Last Friday, we bought a half-sized stake in Nebius (NBIS) and added a 3% additional stake in ProShares S&P 500 Fund (SSO); earlier this week, we sold our small remaining position in GE Aerospace (GE); and tonight, we’ll buy a half-sized position (5% of the portfolio ) in Cava (CAVA). We’ll still have 46% in cash or so after these moves.
WHAT TO DO NOW: Remain optimistic. The market and some leaders have hesitated, but all of our market timing indicators are bullish, and most stocks we own or are watching are working. Last Friday, we bought a half-sized stake in Nebius (NBIS) and added a 3% additional stake in ProShares S&P 500 Fund (SSO); earlier this week, we sold our small remaining position in GE Aerospace (GE); and tonight, we’ll buy a half-sized position (5% of the portfolio ) in Cava (CAVA). We’ll still have 46% in cash or so after these moves.
Despite all the headline noise lately we’re marching deeper into first‑quarter earnings season with the market’s path of least resistance still pointing higher.
Optimism around the extension of the tentative ceasefire in the Middle East has reduced geopolitical anxiety to a seemingly manageable level. The U.S. economy continues to show resilience, and the corporate earnings outlook points toward meaningful growth in the coming quarters and years.
Optimism around the extension of the tentative ceasefire in the Middle East has reduced geopolitical anxiety to a seemingly manageable level. The U.S. economy continues to show resilience, and the corporate earnings outlook points toward meaningful growth in the coming quarters and years.
The old saying, “History doesn’t repeat itself, but it rhymes,” is an apt one for the stock market these last two years.
In early 2025, the S&P 500 raced to new all-time highs before peaking in late January/early February, only to get dragged down in March and April by a geopolitical crisis (tariffs/Liberation Day), before rallying in a V-shaped pattern as the severity of the crisis abated.
In early 2025, the S&P 500 raced to new all-time highs before peaking in late January/early February, only to get dragged down in March and April by a geopolitical crisis (tariffs/Liberation Day), before rallying in a V-shaped pattern as the severity of the crisis abated.
The market turned on the afterburners. The S&P 500 made up all the March losses and catapulted to a brand new high in a remarkably short time. It’s a market that sure looks like it wants to go higher. But stocks are being held back this week by more war uncertainty.
The current ceasefire with Iran expires on Wenesday night. Talks may not happen, and war talk is growing. The resumption of the war will almost certainly prompt a decline in the market. Aside from that near-term threat, investors are clearly looking past this war. Hopefully, it won’t last much longer.
The current ceasefire with Iran expires on Wenesday night. Talks may not happen, and war talk is growing. The resumption of the war will almost certainly prompt a decline in the market. Aside from that near-term threat, investors are clearly looking past this war. Hopefully, it won’t last much longer.
The market came roaring back to new highs last week after a tough March. But the war isn’t over yet, and there could be more bouncing around in the weeks ahead.
Investors are clearly already looking past this war, as there is a high degree of optimism that hostilities will soon end. There is probably still a big rally or two left in the tank when the war actually ends. Sure, there is still headline risk in the meantime. But the war is clearly fading as the biggest market catalyst and giving way to earnings.
Investors are clearly already looking past this war, as there is a high degree of optimism that hostilities will soon end. There is probably still a big rally or two left in the tank when the war actually ends. Sure, there is still headline risk in the meantime. But the war is clearly fading as the biggest market catalyst and giving way to earnings.
The old adage that markets trade on expectations, not news, was certainly validated in the wake of President Trump’s announcement last weekend of his intention to block the Strait of Hormuz.
Although the announcement was initially made as a categorical threat against any and all incoming vessels, it was later softened to a more targeted blockade in which the U.S. and other non-Iran-bound ships are generally allowed to transit the Strait.
Although the announcement was initially made as a categorical threat against any and all incoming vessels, it was later softened to a more targeted blockade in which the U.S. and other non-Iran-bound ships are generally allowed to transit the Strait.
Alerts
This owner of financial exchanges beat earnings estimates by $0.03 last quarter, and four analysts have increased their EPS forecasts for the company in the past 30 days.
This online travel service company beat Wall Street’s earnings estimates by $1.30 per share last quarter
The markets remained under heavy selling pressure today, with stiff losses in both the Golden Dragon ETF (PGJ) that tracks Chinese ADRs and the iShares MSCI EM ETF (EEM) that represents the broader emerging markets. As a result, we are selling one of our stocks tonight.
One of our stocks has lackluster performance and pattern of lower lows and lower highs, it’s time for us to move on and sell. Our capital will be better invested in the new pick, and I have several viable candidates on my watch list!
This low-priced stock has had its ups and downs, but takeover possibilities are attractive.
Both of these stocks had excellent quarters; the first remains a Buy
The major indexes were mixed on Friday, with the Dow rising 119 points and the Nasdaq falling 20 points, though many growth stocks took it on the chin as money rotated toward beaten-down names. As a result, we have one sale and two rating changes.
The markets came under heavy selling pressure today, as investors finally began to grapple with the possible effects of genuine trade war, one that included not just China, but many U.S. allies as well. As a result, we are selling two positions and moving two positions to hold.
The major indexes were mixed on Friday, with the Dow rising 119 points and the Nasdaq falling 20 points, though many growth stocks took it on the chin as money rotated toward beaten-down names. As a result, we have one sale and two rating changes.
This biotech stock was recently upgraded to ‘Outperform’ by Evercore ISI Group: In-Line.
On June 21, 2018, the world learned the shocking news that Intel Corp.* (INTC – yield 2.3%) CEO Brian Krzanich was required to step down from his position at Intel due to a relationship with an employee that violated company policy.
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 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.