Issues
Like most consumer industries, residential housing construction is declining sharply in the wake of the Covid-19 shutdown. The industry’s recovery, which was accelerating at the beginning of the year, is now reversing rapidly.
In this issue, we review five homebuilders whose valuations appear to overly discount the industry’s recovery prospects.
In this issue, we review five homebuilders whose valuations appear to overly discount the industry’s recovery prospects.
The market rebound continues as the Nasdaq 100 (QQQ) is now in positive territory for 2020 and the S&P 500 is up 32% from its March 23 lows. The Fed continues to insist it will accommodate any liquidity concerns and is now even investing in corporate debt. Japan’s central bank is going so far as to purchase Japan equity ETFs. Today, we follow up last week’s focus on big tech and big data with a cybersecurity theme and two new investment ideas.
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.
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.
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 |
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.
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 stock market also seems to be in wait-and-see-mode, consolidating on low volume for a second week in a row.
Last week, I changed the recommendation on Dollar Tree (DLTR) to Hold, and on Big Lots (BIG), Kraft Heinz (KHC) and WellCare (WCG) to Buy.
The market has been holding up well, and small caps in particular are looking steadfast as we move into the second half of August.
Eleven of my Benjamin Graham companies reported quarterly financial results or other noteworthy news. I have included one sell recommendation: Avnet, Inc. (AVT).
The Emerging Markets Timer is still pointed up, despite the market’s recent consolidation. Our two moves tonight are buying a half position in Alibaba (BABA) and shifting our position in Anglogold Ashanti (AU) to a Hold rating.
Not much has changed in our portfolio, though Home Depot (HD) did report solid earnings on Tuesday.
I’m changing my recommendations on Dollar Tree (DLTR) to Hold; and on Big Lots (BIG), Kraft Heinz (KHC) and WellCare (WCG) to Buy.
Remain bullish. The overall market remains in great shape, and while a pullback of some sort is possible after a nice run during the past few weeks, the evidence points to higher prices in the weeks and months ahead. In the Model Portfolio, we sold Ligand Pharmaceuticals (LGND) on a special bulletin Monday, replacing it with Amazon (AMZN). We’ll stand pat tonight, though with two open slots (cash position near 16%), we’re aiming to do some new buying in the days ahead.
Very conservative stocks like utilities have weakened. The utility sector is still up 17% year-to-date, but what goes up must come down, and we’ll be selling half our position in Xcel Energy (XEL) today. I encourage you to reinvest the profits in stocks with stronger growth potential, like fellow Safe Income tier holdings Home Depot (HD), J.M. Smucker (SJM) or UPS (UPS).
Nobody has missed their chance to buy low and catch a long overdue run-up in some great stocks. There are lots of great opportunities listed in this week’s update.
Sixteen Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news. I include one sell recommendation in today’s update: AMC Networks (AMCX).
The Emerging Markets Timer is still pointed up, despite the market’s recent consolidation. Our only move tonight is shifting our position in TAL Education (XRS) to a Hold rating.
Alerts
This publisher has just made a nice acquisition, boosting its online business.
Tyler reports on the Lockup Expiration of one stock and the Partial Sale of another.
Two stocks in our Portfolio each reported strong earnings beats this morning.
This engineering company is forecast to grow at an annual rate of 50.17% over the next five years.
Our second recommendation is a sale of a previous idea.
Our first idea today is a tech company that beat analysts’ estimates by $0.25 in the last quarter.
Today, we’re selling a stock from the Growth & Income Portfolio.
Five analysts have increased their EPS targets for this software company in the past 30 days.
Stocks opened higher today on the backs of some good earnings reports, but the sellers have again come out of the woodwork and driven growth stocks lower. Looking at the primary evidence, our Cabot Tides remain negative, our Cabot Trend Lines could turn negative tonight depending on how the market closes and most important, stocks and the major indexes have been unable to mount much of a bounce in recent days. It’s best to stay defensive and we are sell the rest of one of our positions.
Four stocks in our portfolio’s have reported earnings.
This consumer finance company beat EPS estimates by $0.04 last quarter, and is expected to grow at a 13% annual rate over the next five years.
Three stocks in our portfolio’s have reported earnings beats.
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.