Issues
Here is your February Wall Street’s Best Digest issue 838.
Now that we have the presidential inauguration and former president’s impeachment behind us, let’s hope we can get onto the business of business for 2022! Almost 45 million in the U.S. have now been vaccinated against COVID-19, and we can almost see past the pandemic to a time when we can all get back to some semblance of ‘normality.’
Although, some of the trends that surfaced during the pandemic are sure to be with us for many years to come, including more remote workers, Zoom meetings, and home remodeling. Fortunately, for us, those trends should continue to make us money!
For now, the markets are holding up well; there are rumblings of an economic recovery on the way, and both investors and our investment pros remain bullish, as you’ll see in our Advisor Sentiment Barometer, as well as our Market Views.
This month, our Spotlight Stock is the largest commercial mortgage REIT, who managed to remain profitable during the pandemic. My Feature article further highlights that industry as well as some of the unique properties of the REIT.
We offer a host of Growth stocks this month, spread across the automobile, steel, infrastructure, marijuana, online dating, and airline industries. In Growth & Income, you’ll find opportunities in the music publishing, rental, retail, and homebuilding sectors.
Next, Financial stocks are finally beginning to gain ground, and here we include ideas from the insurance, investment, and commercial banking areas. Healthcare brings us two biotech stocks. And in technology—which is continuing to shine—our contributors like semiconductors, hardware, navigation tech, e-commerce, and telecom.
This month, while Utilities have not yet made their mark on 2021, we have one midwestern company that looks very interesting. We also offer you a couple of Low-Priced stocks to put some zing in your portfolio. And our REITs & Preferred Stocks section include companies from the commercial and data center sectors, as well as a preferred issue from an investment bank.
Lastly, our Funds & ETFs are well-diversified, with ideas in healthcare. Utilities, materials, yield, airlines, and small cap arenas.
I wish you a healthy and prosperous ‘rest of the winter’, and look forward to your feedback and questions. My address is nancy@financialfreedomfederation.com.
Happy Investing,
Nancy K. Zambell
Editor and Chief Analyst
Wall Street’s Best Digest
Now that we have the presidential inauguration and former president’s impeachment behind us, let’s hope we can get onto the business of business for 2022! Almost 45 million in the U.S. have now been vaccinated against COVID-19, and we can almost see past the pandemic to a time when we can all get back to some semblance of ‘normality.’
Although, some of the trends that surfaced during the pandemic are sure to be with us for many years to come, including more remote workers, Zoom meetings, and home remodeling. Fortunately, for us, those trends should continue to make us money!
For now, the markets are holding up well; there are rumblings of an economic recovery on the way, and both investors and our investment pros remain bullish, as you’ll see in our Advisor Sentiment Barometer, as well as our Market Views.
This month, our Spotlight Stock is the largest commercial mortgage REIT, who managed to remain profitable during the pandemic. My Feature article further highlights that industry as well as some of the unique properties of the REIT.
We offer a host of Growth stocks this month, spread across the automobile, steel, infrastructure, marijuana, online dating, and airline industries. In Growth & Income, you’ll find opportunities in the music publishing, rental, retail, and homebuilding sectors.
Next, Financial stocks are finally beginning to gain ground, and here we include ideas from the insurance, investment, and commercial banking areas. Healthcare brings us two biotech stocks. And in technology—which is continuing to shine—our contributors like semiconductors, hardware, navigation tech, e-commerce, and telecom.
This month, while Utilities have not yet made their mark on 2021, we have one midwestern company that looks very interesting. We also offer you a couple of Low-Priced stocks to put some zing in your portfolio. And our REITs & Preferred Stocks section include companies from the commercial and data center sectors, as well as a preferred issue from an investment bank.
Lastly, our Funds & ETFs are well-diversified, with ideas in healthcare. Utilities, materials, yield, airlines, and small cap arenas.
I wish you a healthy and prosperous ‘rest of the winter’, and look forward to your feedback and questions. My address is nancy@financialfreedomfederation.com.
Happy Investing,
Nancy K. Zambell
Editor and Chief Analyst
Wall Street’s Best Digest
Stocks seemed to wobble a bit this week and yesterday there was a mild sell-off among some tech stocks. Still, of the 400 S&P 500 companies that have already reported earnings, 80% had beaten analysts’ expectations, according to FactSet. Overall, the Explorer portfolio has performed relatively well with Fisker (FSR) up 17% and Virgin Galactic (SPCE) doubling since the beginning of 2021. This week’s new recommendation is from a sector in an uptrend due to a combination of higher demand and tight supply.
In February’s Issue of Cabot Early Opportunities we dig into the red hot IPO market.
We take a closer look at five recent IPOs that have been on my shopping list. It is not an Issue for the faint of heart. Several of these stocks have made significant moves in their short history as public companies.
There are strategies to mitigate the risks, however. And as we scan the universe of attractive stories today it is not hard to envision several of these stocks trading significantly higher a year from now.
Sit back and enjoy.
We take a closer look at five recent IPOs that have been on my shopping list. It is not an Issue for the faint of heart. Several of these stocks have made significant moves in their short history as public companies.
There are strategies to mitigate the risks, however. And as we scan the universe of attractive stories today it is not hard to envision several of these stocks trading significantly higher a year from now.
Sit back and enjoy.
The stock market added to its gains last week up for a second straight week with the S&P 500 up 1.2% while the Nasdaq jumped 1.7%. Of note, February expiration is upon us this week. And all three of our February positions (Alcoa, Kohl’s and Snap) are in great shape, and likely to expire for full profits. But rest assured I will send you a full breakdown of these positions on Friday morning prior to expiration.
Current Market OutlookWith the major indices in record territory and the leading growth stocks showing strength, it’s hard to be anything less than bullish right now. Even at these elevated levels, the market has provided us with a few attractive entry points recently. But with earnings season well underway and sentiment still elevated, the potential for near-term volatility has increased. Thus, it’s imperative not to throw caution to the wind in this news-sensitive environment. Given the weight of evidence, being selective when buying is the preferred tactic. The dominant intermediate-term trend is clearly up, though, so you don’t want to be too defensive. We’ll keep our Market Monitor at 7 and see how things go from here.
This week’s list has a nice mix of stocks across several industries benefiting from different trends. Our Top Pick this week is CarParts.com (PRTS), which recently had a high-volume breakout from a huge basing pattern.
| Stock Name | Price | ||
|---|---|---|---|
| Agilent Technologies (A) | 128 | ||
| Analog Devices (ADI) | 160 | ||
| CarParts.com (PRTS) | 21 | ||
| Chegg (CHGG) | 112 | ||
| eXp World Holdings (EXPI) | 80 | ||
| Freeport-McMoRan Inc. (FCX) | 33 | ||
| Johnson Controls International plc (JCI) | 53 | ||
| Pinterest (PINS) | 89 | ||
| Square, Inc. (SQ) | 276 | ||
| Twitter (TWTR) | 74 |
The bull market is alive and well, though frothiness and investor exuberance are reminders that you shouldn’t leave your brain at the door. Always remember to manage your risk.
Speaking of risk, today’s recommendation is more speculative than most of our recommendations, so if you invest, start small. The sector it’s working in is hot, the story is interesting, and the stock’s chart is solidly positive, without being overextended, so I’m intrigued.
As for our current holdings, I’m selling one stock that achieved its target (good) and one that continues to decline and is now our biggest loser (bad).
Details inside.
Speaking of risk, today’s recommendation is more speculative than most of our recommendations, so if you invest, start small. The sector it’s working in is hot, the story is interesting, and the stock’s chart is solidly positive, without being overextended, so I’m intrigued.
As for our current holdings, I’m selling one stock that achieved its target (good) and one that continues to decline and is now our biggest loser (bad).
Details inside.
Put simply, the market’s snapback from the selloff two weeks ago has been extremely impressive, and while it doesn’t erase all of the yellow flags, it’s certainly a positive sign. Because we didn’t drastically change our stance during the weakness (a little trimming), we’re not doing anything drastic during the rebound — at least not yet. We filled out our position in CrowdStrike last week and are placing Pinterest and Twilio back on Buy.
If all goes well, we could have a new addition or two soon, with our top choices written about in tonight’s issue. But tonight, we’ll stand pat and see how the market acts as earnings season continues.
If all goes well, we could have a new addition or two soon, with our top choices written about in tonight’s issue. But tonight, we’ll stand pat and see how the market acts as earnings season continues.
Market performance for the rest of the year will depend upon a full recovery brought on by the vaccines the removal of lockdowns and restrictions. If that doesn’t happen, look out. But I’m confident it will.
Of course, the pricey market indexes don’t apply to many individual stocks. Some stocks are very overvalued while others remain undervalued. At this point, the more conservative play is to target stocks with cheap valuations to buy, especially while many of those bargain stocks also have newfound momentum.
In this issue, I highlight a blue-chip energy stock. It sells at a dirt-cheap valuation while paying a high and safe dividend. It also has strong momentum ahead of what is likely to be a year of vastly improved profits.
Of course, the pricey market indexes don’t apply to many individual stocks. Some stocks are very overvalued while others remain undervalued. At this point, the more conservative play is to target stocks with cheap valuations to buy, especially while many of those bargain stocks also have newfound momentum.
In this issue, I highlight a blue-chip energy stock. It sells at a dirt-cheap valuation while paying a high and safe dividend. It also has strong momentum ahead of what is likely to be a year of vastly improved profits.
Today, we are recommending a mini conglomerate.
The stock is near a 52 week high, but there is at least 50% upside for the stock.
This company’s characteristics include:
All the details are inside this month’s Issue. Enjoy!
The stock is near a 52 week high, but there is at least 50% upside for the stock.
This company’s characteristics include:
- A cheap valuation (0.3x revenue)
- One of the best value creators of all time on the management team
- Several hidden assets that will be spun off in the next year to unlock value
- High insider ownership.
All the details are inside this month’s Issue. Enjoy!
The stock market enjoyed a big upside reversal last week, snapping back strongly from the recent slump. The DJIA rose 3.9% for the week while the S&P 500 gained 4.6%. Big-tech stocks reasserted a leadership role thanks in part to blow-out earnings from Amazon (AMZN) and Alphabet (GOOGL), propelling the Nasdaq to a 6% advance for the week.
Updates
As we move forward we’ll look to focus capital on companies with both solid growth profiles and encouraging price charts. One without the other hasn’t been working (and in fact many of these stocks are trending down), so there’s not much incentive to hold underperformers and hope for a quick turnaround.
Our Emerging Markets Timer has turned negative, but its action of the past two months looks more like a trading range than a downtrend. Overall we continue to take things on a stock-by-stock basis; we have several stocks that are teetering on the edge of being kicked out of the portfolio, but we’re inclined to be patient unless a stock’s decline forces our hand.
U.S. stock markets continue to work their way through the 2018 stock market correction. It’s not a bear market—it’s just a correction. And fortunately, the correction did not arrive due to a bearish economic situation, war or a California earthquake. The market simply rose too far, too fast without resting in 2017. As such, most stocks are down from very recent highs while the market digests that gourmet dinner.
Unless you’re a brand new subscriber to Cabot Undervalued Stocks Advisor, you’re aware that as we entered 2018, I had been advising investors to raise cash so that they could buy low during the yet-to-occur-but-overdue stock market correction. There was nothing amiss with U.S. stocks, in my estimation, other than that the markets rose continuously since the November 2016 general election.
Most of the stocks in our portfolio that are holding up well (and in many cases moving higher) are either rated buy or hold, and those that aren’t have already been sold, or are rated hold, and being watched extremely closely.
As I bring you up to date on the remaining Benjamin Graham Value portfolio stocks, I’m aware that some subscribers are not entirely aware of the recent change at Cabot. The Cabot Benjamin Graham Value Investor (BGV) publication has been discontinued (please check your inbox from March 12), and I’ll be writing about its portfolio stocks until such a time as it seems prudent to sell them, one at a time, for better investing opportunities.
I noted last week that the outperformance in growth stocks was contributing to some underperformance in our portfolio. That situation has now been flipped on its head. Growth stocks started lagging in the middle of last week, and for the week, the S&P 500 lost 1.24%, the Dow dropped 1.54% and the Nasdaq fell by 1.04%. Utilities and REITs—year-to-date laggards—were the week’s best-performing sectors.
The market’s slide this week has put our Cabot Tides back on the fence. That said, most leading growth stocks continue to act very well. All together, we’re holding our strong, profitable stocks and looking at new buys, while honoring our stops and keeping a bit of cash on the sideline.
2018 banking regulatory reform will lead to 2019 earnings boosts, benefiting four of our stocks.
This week’s update is more of a review of the most notable news, which is Arena Pharmaceuticals’ (ARNA) quarterly results.
The iShares EM Fund (EEM) bounced strongly in early March, which returns the Emerging Markets Timer to a positive reading. Granted, it’s not the strongest signal we’ve ever seen, but it counts. Quarterly reports are winding up, and we’ll take the Timer’s advice and return one stock to a Buy rating.
Crista Huff begins transitioning Cabot Benjamin Graham Value Investor holdings to her undervalued investing strategy with updates on all stocks and several ratings changes.
Alerts
The good news is that many cannabis companies have been releasing their second quarter reports and the results have been excellent.
In the past 30 days, eight analysts have raised their earnings estimates for this tech company.
Four stocks in our portfolios reported earnings this week.
The top five holdings in this fund are: Total System Services Inc (TSS. 3.93% of total assets); VeriSign Inc (VRSN, 3.62%); Roper Technologies Inc (ROP, 2.75%); Fiserv Inc (FISV, 2.43%); and WellCare Health Plans Inc (WCG, 2.22%).
The market has opened higher today following yesterday’s nice upside reversal. Recent support combined with some positive action among some growth stocks is encouraging.
This software company is forecasted to grow at an annual rate of 51% over the next five years.
One of the portfolio stocks is being sold.
Another sell recommendation whose quarterly earnings disappointed.
Our other two recommendations are to sell two previous ideas whose quarterly earnings disappointed.
Our first idea today, an aviation services company, beat analysts’ earnings estimates by $0.02 last quarter, and is forecasted to grow at an annual rate of 16.61% over the next five years.
Three portfolio stocks report earnings.
This tech company beat earnings estimates by $0.07 last quarter.
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.