Issues
Although it is plenty large to be relevant (its economy is the 9th largest in the world and is comparable in size to that of Canada), to many investors Brazil remains a regional backwater mired in political scandals and weak corporate governance. Weak oil prices combined with poor government leadership led to sharp recessions in 2015 and 2016.
However, the country’s fortunes may be turning upward. In this issue, we look at five companies that should benefit from Brazil’s incipient turnaround, and also have appealing turnaround potential in their own right.
However, the country’s fortunes may be turning upward. In this issue, we look at five companies that should benefit from Brazil’s incipient turnaround, and also have appealing turnaround potential in their own right.
The long-awaited correction has begun, and it’s been a doozy, driving the major indexes and many stocks dramatically lower; our Cabot Tides turned negative on Monday, and despite coming into the week with 17% in cash, we’ve been paring back quickly, selling all of Inphi and taking partial profits in both Vertex and Sea Ltd, leaving us with 36% in cash. And going forward, we have a few names on tight leashes should the selling continue.
That said, it’s not all doom and gloom; our Cabot Trend Lines are still positive, and many leading stocks, while dented, are hanging in there (including some we own). The odds favor this correction needing more time to finish up, but the odds also favor the overall bull market still being intact.
In tonight’s issue, we dive into all of our stocks, highlight a few we’re watching, and talk about one sector that, despite this week’s maelstrom, seems to be in position to thrive during the market’s next sustained upmove.
That said, it’s not all doom and gloom; our Cabot Trend Lines are still positive, and many leading stocks, while dented, are hanging in there (including some we own). The odds favor this correction needing more time to finish up, but the odds also favor the overall bull market still being intact.
In tonight’s issue, we dive into all of our stocks, highlight a few we’re watching, and talk about one sector that, despite this week’s maelstrom, seems to be in position to thrive during the market’s next sustained upmove.
We’re now presented with an interesting situation. The broad market, which hit record highs just last week, is now sick, thanks to investors’ perception that the coronavirus will negatively affect global trade. But the marijuana sector, which has been in a correction for more than two years, has many stocks that have been building bottoms.
No one knows how this will shake out in the short term, though clearly, the long-term potential of the marijuana sector remains intact.
Nevertheless, by observing the action of individual stocks and following time-tested procedures, we will come through this in fine shape. Today’s issue includes a few partial sells as well as a handful of downgrades while we wait for the dust to settle.
Full details in the issue.
No one knows how this will shake out in the short term, though clearly, the long-term potential of the marijuana sector remains intact.
Nevertheless, by observing the action of individual stocks and following time-tested procedures, we will come through this in fine shape. Today’s issue includes a few partial sells as well as a handful of downgrades while we wait for the dust to settle.
Full details in the issue.
Real estate stocks are on fire right now, thanks largely to plunging mortgage rates and record lows in housing inventories for sale.
The market needed a correction and now we have one, or at least the start of one. And the kickoff has been powerful enough to turn our short-term timing indicator negative, which means it’s time to turn a bit defensive, raising cash and leaning toward lower-risk investments. Thus, we sell two more stocks today and downgrade two to hold.As for the new recommendation, it’s a slow and steady telecom company that not only pays a good dividend but also is poised to benefit from the rollout of 5G technology.Full details in the issue.
Coronavirus fears re-emerged in a big way over the weekend, causing today’s across-the-board selloff. As we look at the evidence, here’s what we see: The intermediate-term uptrend has been cracked, especially when you look at the broader major indexes, and given that this selling comes after a big run and more than a few yellow flags during the past month, it’s likely we’re in a correction that will take some time to play out. That said, it’s also very unlikely that this is the end of the overall bull market, as the longer-term trends and stance of the indexes and most leading stocks are positive; heck, many stocks look just fine (so far) on their charts. Put it together, and we think it’s time to play a little defense and build up some cash by cutting losers and laggards, though we’re also aiming to hold most of our resilient, profitable performers, giving them a chance to hold up and get going.
Encouragingly, this week’s list has a bunch of decent-looking growth-oriented names to consider. Our Top Pick is Zoom Video Communications (ZM), which has not only a very strong chart but also a growth story that appears to benefit from the spread of the coronavirus.
Encouragingly, this week’s list has a bunch of decent-looking growth-oriented names to consider. Our Top Pick is Zoom Video Communications (ZM), which has not only a very strong chart but also a growth story that appears to benefit from the spread of the coronavirus.
| Stock Name | Price | ||
|---|---|---|---|
| Advanced Micro Devices (AMD) | 82.24 | ||
| Carvana (CVNA) | 82.90 | ||
| Domino’s Pizza (DPZ) | 339.47 | ||
| Floor & Décor (FND) | 68.03 | ||
| HealthEquity, Inc. (HQY) | 70.70 | ||
| MercadoLibre, Inc. (MELI) | 980.83 | ||
| SiteOne Landscape Supply (SITE) | 98.49 | ||
| SolarEdge Technologies Inc. (SEDG) | 124.37 | ||
| Zillow (Z) | 76.64 | ||
| Zoom Communications (ZM) | 155.83 |
I just returned from the Orlando Money Show, where I had an opportunity to see and speak with several of our contributors. The mood was festive, and the advisors were optimistic. And why not? The markets continue to outperform, as we navigate through the nasty election season. Both investors and advisors continue to be very bullish, as you can see from our Advisor Sentiment Barometer, as well as our Market Views.
The economy is very strong, with a healthy housing market, steady employment, and good retail sales. We’ve yet to see if the coronavirus outbreak will have any major and long-lasting effects on the global economy.
But for now, the investment opportunities are plentiful. Read the Issue for more details.
The economy is very strong, with a healthy housing market, steady employment, and good retail sales. We’ve yet to see if the coronavirus outbreak will have any major and long-lasting effects on the global economy.
But for now, the investment opportunities are plentiful. Read the Issue for more details.
You might not think that flowers are a global business but American Airlines moved 417 tons of flowers from the Netherlands to America for Valentine’s Day.
The Cabot Global Stocks Explorer portfolio is led by our rocketing Virgin Galactic (SPCE), which has zoomed from 11 to 37 in a wink of the eye. Meanwhile, Sea Limited (SE) and Luckin Coffee (LK) were both up 10% this past week even as our emerging markets timer (EEM) moved to neutral.
Concerns over the impact of coronavirus are deepening as Apple announced revenue will be below expectations. In this issue, we’ll address these concerns, as well as why and how to hedge them, plus I’m putting a European 5G player on my watch list.
The Cabot Global Stocks Explorer portfolio is led by our rocketing Virgin Galactic (SPCE), which has zoomed from 11 to 37 in a wink of the eye. Meanwhile, Sea Limited (SE) and Luckin Coffee (LK) were both up 10% this past week even as our emerging markets timer (EEM) moved to neutral.
Concerns over the impact of coronavirus are deepening as Apple announced revenue will be below expectations. In this issue, we’ll address these concerns, as well as why and how to hedge them, plus I’m putting a European 5G player on my watch list.
Updates
There are no ratings changes today. My stance is cautiously optimistic, and favors resisting the temptation to chase stocks. Action is going to pick up next week as we have Blackbaud (BLKB), LogMeIn (LOGM) and Mitek (MITK) reporting. I’m expecting good things from all.
Fourteen Cabot Benjamin Graham Value Investor companies reported financial results in the past week. Six reports were outstanding, including BJ’s Restaurants, Danaher, General Motors, Johnson Controls, Southwest Airlines and UnitedHealth Group.
Continue to lean bullish. From a top-down perspective, there’s little negative to say about the overall market—all of our indicators remain positive, and the indexes refuse to give up any gains, a sign of strength. Individual stocks are more hit and miss, but we’re looking forward to earnings season to reveal some new leadership. We have no changes in the Model Portfolio tonight—we’re holding seven stocks and a cash position near 30%.
A correction is still possible, but the overall trend of the market is clearly up. I have no rating changes today, although I’m watching U.S. Bancorp (USB) closely after the bank reported mixed results this morning.
Most stocks in our portfolios were the subject of research articles from high-profile financial media outlets, this past week: Forbes, Barron’s, TheStreet and others. We have one dividend increase today: Carnival Corp. (CCL), and I’m lowering the rating on Federated Investors (FII) to Hold.
We have a few nuggets of news this week. And in two weeks, earnings season will kick in with three of our software stocks reporting. There are no ratings changes this week. And we should tip our hats to PFSweb (PFSW), which earned top gun honors with its 15% rally.
Recent gains in the stock market are impressive. Ms. Market seems very determined to climb a wall of worry. Economic growth in the U.S. continues to barely inch ahead, while employment is robust.
The Cabot Emerging Markets Timer continues to give a Buy signal, so we’re looking for opportunities to increase our exposure. Today, however, we have no changes to our portfolio.
Most of our stocks have spent the past week either pulling back or trading sideways, providing a good opportunity for members who are underinvested to start new positions. We’re putting Wynn Resorts (WYNN) back on Buy today after the company wowed investors with plans for a new resort last week.
Housing sector stocks—including homebuilders, raw materials, and appliances—look stronger right now than any other major industry group. Their charts are bullish, with many of them showing signs of near-term upside breakouts. In that light, I’m expecting good things from Boise Cascade (BCC), D.R. Horton (DHI), Vulcan Materials (VMC) and Whirlpool (WHR) this month.
This was another week of relatively scant stock-specific news. Action will heat up in three weeks once our companies start reporting Q1 results. Alcoa (AA) will get things going on Monday. There are no ratings changes this week.
You should continue to lean bullish, as our Cabot Tides and Two-Second Indicator, along with some secondary indicators (like the S&P 500 blastoff signal), remain positive. We’re adding one new name to the Model Portfolio tonight—Five Below (FIVE)—but will still have about 30% in cash as we wait for the longer-term trend and growth stocks to kick into gear.
Alerts
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.
Five analysts have increased their EPS forecasts in the past 30 days, for our first recommendation, a lending company.
Two analysts have increased their EPS forecasts for this mining company in the past 30 days and RBC Capital has recently upgraded its shares to ‘Outperform’.
Berenberg and Raymond James also like this medical device company, boosting its ratings to ‘Buy’ and ‘Outperform’, respectively.
Wall Street is raising its earnings estimates for this cloud company after its $0.04 earnings beat for its latest quarter.
This tech company beat analysts’ earnings estimates by $0.37 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.