Issues
Note: This is our final issue of Cabot Stock of the Week this year. Next week we get a little “vacation.”
But rest assured we’ll be keeping an eye on the market, where market trends remain very positive as we head toward the end of the year.
Today’s recommendation is a low-risk water company in a foreign country, so it may be the perfect diversification move if you’ve got a lot of U.S. growth stocks.
But to fit it into the portfolio, we’ve got to sell something, and the victim this week is Eli Lilly (LLY), which has brought us a decent profit in a fairly short time.
Full details in the issue.
But rest assured we’ll be keeping an eye on the market, where market trends remain very positive as we head toward the end of the year.
Today’s recommendation is a low-risk water company in a foreign country, so it may be the perfect diversification move if you’ve got a lot of U.S. growth stocks.
But to fit it into the portfolio, we’ve got to sell something, and the victim this week is Eli Lilly (LLY), which has brought us a decent profit in a fairly short time.
Full details in the issue.
The evidence remains mostly bullish, with the major indexes and a growing number of leading stocks acting well. To be fair, it’s not 1999 out there, as many stocks are suffering a lot of choppy action and sentiment is buoyant--that’s no reason to be negative, but we’re continuing with our step-by-step buying spree.
Last week, we started a new half position in CrowdStrike (CRWD), and tonight, we’re filling out our position in Novocure (NVCR), leaving us with around 20% in cash.
Last week, we started a new half position in CrowdStrike (CRWD), and tonight, we’re filling out our position in Novocure (NVCR), leaving us with around 20% in cash.
Hopefully, 2021 will remove some of the uncertainties that the virus has wrought, and the economy can begin to speed up its recovery. And while the markets have done very well this year, there are still pockets that are undervalued, many of which are represented in our pages this month.
In December’s Issue of Cabot Early Opportunities we look back at one of the strangest years in decades and discuss the seemingly counterintuitive strategy that drove huge portfolio gains.
Then we look at a fresh batch of names that seem ripe for the picking now and which could serve us well in the beginning of 2021. Our new stocks span clean energy, PC gaming, biotech, industrial supplies, and payment processing. As always, there should be something for everyone!
Then we look at a fresh batch of names that seem ripe for the picking now and which could serve us well in the beginning of 2021. Our new stocks span clean energy, PC gaming, biotech, industrial supplies, and payment processing. As always, there should be something for everyone!
In this season of good cheer, we have a lot to be thankful for: 1) It looks like we can finally put this election to rest (thank goodness!); 2) the first coronavirus vaccine is being distributed across the country; and 3) hopefully, we’ll soon have another stimulus package.
Despite all the challenges, the markets have held up very well, and the Dow Jones Industrial Average has surpassed the big 30,000 mark several times in the last few weeks.
Unemployment continues to decline, with the rate dropping to 6.7% in November. Consumers are shopping for the holidays, with online Thanksgiving sales up 21.5%, to $5.1 billion. I know my finger is sure hitting the ‘buy’ button a lot more this year!
Hopefully, 2021 will remove some of the uncertainties that the virus has wrought, and the economy can begin to speed up its recovery. And while the markets have done very well this year, there are still pockets that are undervalued, many of which are represented in our pages this month.
We begin with our Spotlight Stock, the largest water company in Brazil, which is expanding to deliver services outside its borders. In my Feature article, I further explore that growth—as well as the rising need—for potable water in Latin America.
Moving on to Growth, our contributors have a number of ideas here, including companies in the e-commerce, ride sharing/food delivery, infrastructure, industrial equipment, and rent-to-own industries. Our Growth & Income picks include an alcoholic beverage manufacturer as well as a gas/chemical company.
In Healthcare, you’ll find stocks from the testing medial technology, biopharma, and cannabis sectors. Technology has been the big winner of 2021, and here we offer ideas in the printing equipment, audio & video, software, and electronics industries.
Our Resources & Utilities section has a couple of gold and utility companies. In High Yield and Preferred Stocks, you’ll find a host of companies offering better-than-market yields, from the banking, energy, franchising, shipping, and natural gas sectors.
This month, we include two Real Estate Investment Trusts, as well as a company offering a nice Special Dividend opportunity. Make sure you check the dates, so that you don’t miss out on this chance for extra cash flow.
Lastly, our Funds & ETFs are well-diversified, with ideas in the midcap value, emerging small caps, low-priced stocks, materials, and energy industries.
I hope you and your families enjoy a wonderful and safe holiday. I’m sticking close to home this year, but hope to enjoy some traveling in 2021. As always, please don’t hesitate to email me with your feedback and questions. My address is nancy@financialfreedomfederation.com.
Despite all the challenges, the markets have held up very well, and the Dow Jones Industrial Average has surpassed the big 30,000 mark several times in the last few weeks.
Unemployment continues to decline, with the rate dropping to 6.7% in November. Consumers are shopping for the holidays, with online Thanksgiving sales up 21.5%, to $5.1 billion. I know my finger is sure hitting the ‘buy’ button a lot more this year!
Hopefully, 2021 will remove some of the uncertainties that the virus has wrought, and the economy can begin to speed up its recovery. And while the markets have done very well this year, there are still pockets that are undervalued, many of which are represented in our pages this month.
We begin with our Spotlight Stock, the largest water company in Brazil, which is expanding to deliver services outside its borders. In my Feature article, I further explore that growth—as well as the rising need—for potable water in Latin America.
Moving on to Growth, our contributors have a number of ideas here, including companies in the e-commerce, ride sharing/food delivery, infrastructure, industrial equipment, and rent-to-own industries. Our Growth & Income picks include an alcoholic beverage manufacturer as well as a gas/chemical company.
In Healthcare, you’ll find stocks from the testing medial technology, biopharma, and cannabis sectors. Technology has been the big winner of 2021, and here we offer ideas in the printing equipment, audio & video, software, and electronics industries.
Our Resources & Utilities section has a couple of gold and utility companies. In High Yield and Preferred Stocks, you’ll find a host of companies offering better-than-market yields, from the banking, energy, franchising, shipping, and natural gas sectors.
This month, we include two Real Estate Investment Trusts, as well as a company offering a nice Special Dividend opportunity. Make sure you check the dates, so that you don’t miss out on this chance for extra cash flow.
Lastly, our Funds & ETFs are well-diversified, with ideas in the midcap value, emerging small caps, low-priced stocks, materials, and energy industries.
I hope you and your families enjoy a wonderful and safe holiday. I’m sticking close to home this year, but hope to enjoy some traveling in 2021. As always, please don’t hesitate to email me with your feedback and questions. My address is nancy@financialfreedomfederation.com.
This Friday is the expiration of our December covered calls, and I am happy to report that all five of our positions are in good/great shape. As is always the case, expect an email from me Friday morning breaking down where we stand with each position.
Market trends remain very positive as we head toward the end of the year, so I continue to recommend that you remain heavily invested—but with one eye on the exit door. The fact is, sentiment is very high, which means risk is growing—but I can’t argue with trends.
Today’s recommendation is a fast-growing cybersecurity stock with a special focus on the cloud, and great upside potential. Aggressive investors should like it.
But to fit it into the portfolio, I’ve got to sell something, and the victim is another hot growth stock, recommended just five weeks ago and now being sold for a quick 39% profit.
Full details in the issue.
Today’s recommendation is a fast-growing cybersecurity stock with a special focus on the cloud, and great upside potential. Aggressive investors should like it.
But to fit it into the portfolio, I’ve got to sell something, and the victim is another hot growth stock, recommended just five weeks ago and now being sold for a quick 39% profit.
Full details in the issue.
Current Market OutlookWe could pretty much cut our intro from the past couple of weeks and paste it in this week—the primary evidence (trends and overall action of the market and leading stocks, fresh breakouts, blastoff-type green lights from mid November) remains very encouraging, with most of the major potholes seen lately coming from very speculative situations. The main worry is that few investors are worried (in stark contrast to earlier this year, when the market was kiting higher but few believed it), which tells us that risk is rising. Thus, we remain bullish and think putting money to work is the best course of action, but it’s also important to keep your feet on the ground and focus on the best-looking stocks while trailing stops higher and taking partial profits as things stretch higher.
This week’s list is relatively split between growth situations and those benefiting from cyclical/turnaround buying. Our Top Pick is Axon Enterprise (AAXN), which continues to gain sponsorship and has just tightened up nicely for five weeks.
| Stock Name | Price | ||
|---|---|---|---|
| Adient (ADNT) | 34.99 | ||
| Align Technology (ALGN) | 504.11 | ||
| Ambarella (AMBA) | 90.94 | ||
| AAXN (AAXN) | 127.31 | ||
| Baker Hughes Company (BKR) | 21.72 | ||
| fuboTV Inc. (FUBO) | 27.15 | ||
| The Michaels Companies (MIK) | 11.68 | ||
| Micron Technology, Inc. (MU) | 71.54 | ||
| PagerDuty (PD) | 44.18 | ||
| Stitch Fix (SFIX) | 64.06 |
Updates
After a dismal airline profit situation in 2017, in which only two of the 10 U.S. airlines in today’s research saw a profit increase, the industry is looking forward to a decisive turnaround in 2018. One company’s numbers will soar above all its peers. That stock is joining the Growth Portfolio today.
The iShares EM Fund (EEM) has rebounded sharply and is well above both its 25- and 50-day moving average. That keeps the Buy signal in the Cabot Emerging Markets Timer shining brightly. We have one rating change tonight.
The stock market finally experienced a big shakeout last Wednesday, and the S&P 500 closed down more than half a percent for the first time in 50 days. But the major indexes bounced Thursday to end the week about flat, and yesterday saw another big rally.
Many of the undervalued growth stocks that I follow have neutral or bearish price charts right now. No doubt they’re tuckered out from the bullish price action in 2017!
In light of the House tax reform bill, one thing you can do is hold onto a bunch of small-cap stocks, since they have a far higher average tax rate than large caps, and stand to benefit more from a corporate tax cut.
The year-over-year (YoY) increase in inflation in October was 2%, slightly below the 2.2% YoY increase in September, as the cost of gasoline and fuel oil eased after the hurricane-related production glut. One of our stocks reported earnings this week.
Remain bullish. There are some cracks in the market’s armor, with some major indexes softening and the broad market under more and more pressure. However, our two trend-following indicators are positive and most leading growth stocks are acting fine. While we’re keeping a close eye on our stocks and will take action if necessary, we’re not making any major moves tonight.
I don’t have any ratings changes today, but read on for updates on all our holdings, most of which are still rated Buy.
I’m plucking my Bank of America (BAC) stock review out of the Growth Portfolio section, and putting it right here in the editorial section of the weekly update. That’s because good news affecting BAC will also affect virtually all bank stocks.
Broadly speaking, the market has been sketchy. Small caps have been trending down since early October, and the pace of the decline accelerated over the past week. In the grand scheme of things, this isn’t surprising. The September advance was incredibly strong, and a pull-back to the small cap index’s 50-day line isn’t remotely alarming.
The iShares EM Fund (EEM) is holding above its 50-day moving average, which keeps the Cabot Emerging Markets Timer positive. And we’re encouraged by the rebound in Chinese stocks as a group. Five stocks in the portfolio are scheduled to report earnings in the next couple of weeks (and the sixth likely will as well). We have no changes tonight.
REITs have strengthened since our last update, despite the near-certainty that the Fed will hike rates next month. The strongest performers include residential, data center and storage REITs, and a select group of retail REITs. Utilities, industrials and health care stocks have also had a good week, while financials and materials stocks have stumbled.
Alerts
This Chinese internet company is expected to grow at an annual rate of 26.9% over the next five years.
There are five large holdings in this capital appreciation fund.
Six analysts have increased their EPS estimates for this childcare company in the past 30 days.
The market has been up for six straight days, marijuana stocks look good, overall, and while we don’t quite have a buy signal from our intermediate-term trend-following indicator, we are very close. Today we are averaging up in three stocks.
This industrial company is forecasted to grow at an annual rate of 20% over the next five years.
This solar business is forecasted to grow by 51% annually over the next five years, and the company just beat earnings estimates by a whopping $0.80!
This stock gets crushed on earnings.
This bank recently split its stock 2-fo-1, and is seeing its EPS forecasts on the rise.
The broad market has advanced nicely since mid-day Monday when news that the Fed might lower interest rates sparked a wave of buying. Long-term, the future is bright. But short-term, the portfolio is happy holding a cash level of 23%, deferring new buying.
This recent IPO stock was just named and IBD (Investor’s Business Daily) Breakout Stock, which highlights stocks in or near a buy zone.
The top five holdings of this fund are: Mastercard Inc A (MA, 3.64%); Microsoft Corp (MSFT, 3.43%); PayPal Holdings Inc (PYPL, 3.36%); Visa Inc Class A (V, 3.11%); and Bank of America Corporation (BAC, 2.70%).
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.