Issues
The latest issue of Cabot Marijuana Investor is now available, with my current advice on the fifteen stocks in the portfolio.
While coronavirus fears infect the broad market, the good news is that marijuana stocks seem to have an immunity, mainly because they already had their correction last year. Many stocks in the sector are looking better, and I’m now recommending averaging up in three stocks already in the portfolio.
These changes will reduce the portfolio’s cash level to roughly 12%, so we will be well positioned to benefit from the sector’s resumption of its big uptrend.
Full details in the issue.
While coronavirus fears infect the broad market, the good news is that marijuana stocks seem to have an immunity, mainly because they already had their correction last year. Many stocks in the sector are looking better, and I’m now recommending averaging up in three stocks already in the portfolio.
These changes will reduce the portfolio’s cash level to roughly 12%, so we will be well positioned to benefit from the sector’s resumption of its big uptrend.
Full details in the issue.
STMicroelectronics is one of the world’s largest semiconductor companies, delivering solutions that are key to the smartphone and automotive markets. Major customers include Apple and Tesla, though the firm (which is based in Switzerland) sports more than 100,000 customers around the globe.
Current Market OutlookThe rapid spread of China’s coronavirus provided the impetus for a selloff that began last Friday and exploded onto the scene today. Where does that leave us? First, the intermediate-term trend of the indexes is still positive but close to the fence; the big-cap indexes look OK, but the broader measures (small and mid caps) are right around their key 50-day lines. Beyond the charts, it’s likely that more time is needed for investors to trim/hedge after four months of straight-up action. As for leading stocks, we’re taking it on a case-by-case basis—some are looking ragged and ripe for a deeper correction, but most are pulling back normally. If you’re heavily invested, our advice is to follow the usual plan: Hold most of your shares in your strong, profitable stocks, while selling or keeping tight leashes on losers and laggards. We’re moving our Market Monitor down to a level 6.
On the buy side, newer names that are holding up well should be near the top of your shopping list. This week features plenty of those, with our Top Pick being Kansas City Southern (KSU), a reliable grower that just reacted well to earnings.
| Stock Name | Price | ||
|---|---|---|---|
| Agios Pharmaceuticals, Inc. (AGIO) | 52.43 | ||
| Bristol-Myers (BMY) | 66.24 | ||
| Datadog (DDOG) | 81.52 | ||
| Kansas City Southern (KSU) | 176.54 | ||
| Sea Limited (SE) | 132.86 | ||
| Snap Inc. (SNAP) | 16.68 | ||
| STMicroelectronics (STM) | 30.09 | ||
| Taiwan Semiconductor (TSM) | 78.41 | ||
| Wix.com (WIX) | 302.53 | ||
| Zillow (Z) | 76.64 |
The long-awaited market correction has finally begun, and while you may be tempted to tie the correction to fundamental events, I don’t find any value in that—because all that news is public information so it has no real value to us. Instead, I prefer to watch the action of the stocks carefully, to judge where the money is flowing. And the result of my observations today is that we will sell four stocks and downgrade another to hold—and then continue watching.
As for this week’s recommendation, it’s a high-potential little medical stock that most investors haven’t heard of. It’s not for everyone, but it does provide diversity to our portfolio and it may be perfect for yours.
Details in the issue.
As for this week’s recommendation, it’s a high-potential little medical stock that most investors haven’t heard of. It’s not for everyone, but it does provide diversity to our portfolio and it may be perfect for yours.
Details in the issue.
This week’s leading issue is the China virus, which is impacting markets.
We will need to keep an eye on this breaking issue. Still, Virgin Galactic jumped another 14% yesterday and is up over 80% in the last month.
Our emerging market timer is clearly positive and today’s recommendation is an emerging country that is the overlooked big winner from the two recent trade deals. It is in a nice uptrend and has fuel to burn going forward, backed by several positive trends.
We will need to keep an eye on this breaking issue. Still, Virgin Galactic jumped another 14% yesterday and is up over 80% in the last month.
Our emerging market timer is clearly positive and today’s recommendation is an emerging country that is the overlooked big winner from the two recent trade deals. It is in a nice uptrend and has fuel to burn going forward, backed by several positive trends.
Global investment bank Morgan Stanley thrilled investors last week by delivering record profit and revenue numbers, beating Wall Street’s fourth quarter 2019 revenue and earnings estimates, and meeting or exceeding all of CEO Jim Gorman’s performance targets.
The market remains in fine health, with all major indexes in strong uptrends and no signs of divergence that typically precede major market tops. Additionally, numerous market-timing indicators tell us the market is likely to be higher months from now. However, as all investors know, corrections will occur, and it’s looking increasingly likely that one is due. So, you should be prepared. This might mean taking profits in stocks that are extended—as many are now. Or it just might mean setting some stops, so that winners don’t turn into losers. In the meantime, there are plenty of fine-looking stocks to buy, and today I’m leaning toward an Asian company that happens to have my favorite fundamental characteristic—accelerating revenue growth.
Details in the issue.
Details in the issue.
Current Market OutlookThe market remains extremely strong, as the combination of a new year and reduced anxiety about China trade has encouraged the bulls and calmed the bears. At the same time, a broad correction is increasingly overdue, as numerous stocks have grown increasingly stretched far above their moving averages. Thus, when you do buy, you need to do so with an eye not just to the potential upside but the potential downside as well.
The ideal buy for many of today’s stocks might be on a brief pullback that finds support. Stocks in this issue range from global giants like Morgan Stanley and Match to smaller, faster-growing technology companies like touch-screen expert Synaptics and chipmaker-for-Apple Cirrus Logic. Our Top Pick this week is iQiYi (IQ), a fast-growing Chinese media/technology company that has its tentacles in numerous fields and is succeeding at many of them.
| Stock Name | Price | ||
|---|---|---|---|
| Cirrus Logic Inc. (CRUS) | 0.00 | ||
| iQIYI (IQ) | 0.00 | ||
| Match (MTCH) | 0.00 | ||
| Morgan Stanley (MS) | 0.00 | ||
| Novocure (NVCR) | 0.00 | ||
| Synaptics (SYNA) | 0.00 | ||
| Teladoc, Inc. (TDOC) | 127.95 | ||
| Thor Industries (THO) | 104.76 | ||
| Toll Brothers Inc. (TOL) | 0.00 | ||
| Vertex Pharmaceuticals (VRTX) | 230.36 |
Updates
This week we had three of our stocks report, and we become incrementally more defensive. Two stocks are moved to Sell. Two more are moved to Hold.
The market is retesting its January 20 lows this week, and some minor positive divergences could lead to another short-term bounce attempt. But the market’s major trends remain down, and our three key market-timing indicators are all bearish. Thus, you should remain mostly on the sideline as we patiently wait for a new bull move to develop. In the Model Portfolio, we sold Amazon (AMZN) on a special hotline Monday morning, leaving us with just two stocks and a cash position near 80%.
Today I’m putting CVS Health (CVS) and Home Depot (HD) on Hold because of the broad market, taking profits in half of our Costco (COST) position and selling half of Novo Nordisk (NVO) with plans to unload the rest in the coming days.
In recent days, several portfolio companies reported quarterly and/or full-year 2015 results. General Motors (GM), Robert Half (RHI), Royal Caribbean Cruises (RCL) and Vulcan Materials (VMC) all surpassed market earnings per share (EPS) expectations.
The Cabot Emerging Markets Timer remains negative, counseling us to stay defensive. We have two changes in the portfolio today; Baidu (BIDU) is changed from Hold a Half to Sell and Sinovac Biotech (SVA) is shifted from Watch to Drop.
We have one portfolio change today: I’m selling half of Nordic American Tankers (NAT) from the High Yield tier based on the stock’s lousy technical action. But there are still plenty of strong performers in our portfolio, including our newest buys, Mattel (MAT) and CVS Health (CVS). Read on for details on recent earnings reports and more.
Yesterday, Johnson Controls (JCI) reported an agreement to purchase Tyco International (TYC). We had strong earnings reports from three portfolio stocks last week: Delta Air Lines (DAL), D.R. Horton (DHI) and E*Trade Financial (ETFC), and many more portfolio companies will report earnings this week. Today, I’m upgrading Chemtura (CHMT) to a Buy rating.
The chart of the S&P 500 is showing us that the index may be finishing a double-bounce pattern; bouncing at the same low of approximately 1,880 where it touched down twice during the late summer 2015 market correction.
Today, I’m changing the rating on many Smart Investing stocks to Hold. These rating changes are only about share price. Other than Axiall, none of these stocks are experiencing earnings downgrades or corporate troubles. They are all undervalued growth stocks.
There’s a lot more to “buying low” than just identifying falling prices.
2015 is almost over, thank the Lord! The stock market lacked momentum, trading sideways virtually the entire year.
How do you know if you own a “good” stock that will bring you capital gains?
Alerts
Two of our stocks reported earnings last night.
Three analysts have raised their EPS forecast for this global telecom in the past 30 days.
Growth stocks imploded again today as buyers were nowhere to be found. Our Cabot Tides are now on the fence, as the recent selling has driven small caps, mid caps and the Nasdaq to, or slightly below, their 50-day lines. Following up our sale from this morning, we are also selling one other position and moving a few to Hold.
One of our positions fell nearly 7% after reporting earnings Friday, and the stock started today with further losses. With the lack of support, it means more downside is the most likely near-term scenario here and it’s time to sell.
The market fell sharply on Friday on no particular news, with growth stocks again taking the hardest hits. Our trend-following market timing indicators are still positive, and that is a good reason not to get overly pessimistic. We are selling one of our positions though, which dropped after earnings on Friday.
A name change and a stock upgrade to ‘Overweight’ at Barclays, and a $0.28 earnings beat are all giving this turnaround stock a boost.
This poultry producer just posted its second quarter results. Its net income was $1.58 per share and revenue came in at $815.9 million.
Shares of our little hearing aid and continuous glucose monitor stock are rocketing higher today after the company turned in a far better quarter than expected.
Eight of our stocks reported earnings recently.
This healthcare tech company’s shares were recently initiated at Berenberg to ‘Buy’ and upgraded at Craig-Hallum to ‘Buy’.
This tech company beat analysts’ estimates by $0.06 last quarter and Wall Street is forecasting that the company will grow at a 54.64% annual rate for the next five years.
It was a volatile and divergent day in the market, with the Dow rising 198 points but the Nasdaq fell one point and growth stocks got hit very hard, registering one of their worst days of the year. As a result, we are selling 1/3 of a position and moving another position to hold.
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.