Issues
Last week’s recommendation, Virgin Galactic (SPCE), took off like a rocket and this week we go underground to recommend a premier global company that provides the backbone for future-oriented technologies such as green energy and electric vehicles.
Looking at the big picture impacting global stocks, U.S.-China haggling continues but the NAFTA redo looks like a done deal as we head into the end-of-year rush. As a result, our Emerging Markets Timer (EEM) moved into a stronger bullish position, putting some distance between its 25- and 50-day averages as it moves back towards 44.
Looking at the big picture impacting global stocks, U.S.-China haggling continues but the NAFTA redo looks like a done deal as we head into the end-of-year rush. As a result, our Emerging Markets Timer (EEM) moved into a stronger bullish position, putting some distance between its 25- and 50-day averages as it moves back towards 44.
Big data is big and growing bigger. The market is forecast to reach $103 billion by 2022, with every person generating 1.7 megabytes of data every second, with internet users as a whole expected to generate some 2.5 quintillion bytes of data each day.
The major indexes continue to hit new highs, all Cabot’s market timing indicators remain positive, and our portfolio is solid, overall, with the exception of Designer Brands (DBI), which reported third-quarter earnings this morning; more on that in the update section.
As for today’s new recommendation, it’s a brand new business with a familiar name—a high-risk/high-potential investment. It’s not for everyone, and it will be volatile. But it could change the world!
Details in the issue.
As for today’s new recommendation, it’s a brand new business with a familiar name—a high-risk/high-potential investment. It’s not for everyone, and it will be volatile. But it could change the world!
Details in the issue.
Current Market OutlookThe market hit a little turbulence early last week on renewed trade worries but bounced back nicely, with the major indexes finishing flat (S&P 500 and Nasdaq) to up (small- and mid-cap) on the week. Short-term, though, we wouldn’t be surprised to see some further ups and downs as the market and many stocks/sectors consolidate their two-month runs; we still favor buying pullbacks rather than breakouts at this time. The good news is that we continue to think current pullbacks and consolidations are leading to some good-looking entry points in a variety of leading stocks. All in all, we remain bullish, though it’s still best to be a bit choosier on the buy side at the moment, while giving some stocks that you own breathing room to consolidate if they’ve enjoyed a good run.
This week’s list has many leaders that are retreating toward support or are otherwise showing solid setups. Our Top Pick is Seattle Genetics (SGEN), which looks like a leader in the biotech field, and the stock is now pulling back for the first time after a big run.
| Stock Name | Price | ||
|---|---|---|---|
| Amedisys (AMED) | 174.06 | ||
| The Walt Disney Company (DIS) | 144.76 | ||
| DocuSign (DOCU) | 107.98 | ||
| GSX Techedu (GSX) | 97.59 | ||
| Incyte Corporation (INCY) | 76.98 | ||
| Qorvo (QRVO) | 129.47 | ||
| Seattle Genetics (SGEN) | 150.85 | ||
| Splunk (SPLK) | 207.67 | ||
| TransDigm (TDG) | 599.41 | ||
| Tesla, Inc. (TSLA) | 818.87 |
This month’s Issue of Cabot Small-Cap Confidential features a newly public company that’s trying to do what seems impossible – make the healthcare system work better.
It’s essentially a big data software company for this highly complex market. But it has a services and consulting segment too that’s central to the growth story because so many clients need help getting organized before they can even implement a software system.
Revenue growth tops 30%. And the story remains relatively unknown. All the details are inside the December Issue of Cabot Small-Cap Confidential.
It’s essentially a big data software company for this highly complex market. But it has a services and consulting segment too that’s central to the growth story because so many clients need help getting organized before they can even implement a software system.
Revenue growth tops 30%. And the story remains relatively unknown. All the details are inside the December Issue of Cabot Small-Cap Confidential.
The market has finally begun to consolidate after a heady eight-week run in the major indexes and leading stocks. It’s never fun to see things retrench, and we do think the next couple of weeks (very roughly speaking) could see more choppy, tedious trading. But our focus remains on the intermediate- and longer-term picture, and on that front, the evidence remains bullish, so we remain heavily invested.
The Model Portfolio has been steadily putting money to work, including filling out two positions last week. We now have eight stocks and a cash position of around 14%.
In tonight’s issue, we give our latest thoughts on all our positions and write about yet another unique, longer-term bullish occurrence that bodes well going forward.
As US trade disputes spread to Latin America, Europe and a China deal may be pushed into 2020, markets struggled early in the week but rebounded yesterday.
Hong Kong retail sales were hammered in October but China’s manufacturing finally turned upward. Our emerging market signal is positive with EEM trading just above its 50-day moving average.
We will continue to diversify the portfolio and today rise above worldly concerns with a new recommendation that just may capture your imagination and make you money in 2020.
Hong Kong retail sales were hammered in October but China’s manufacturing finally turned upward. Our emerging market signal is positive with EEM trading just above its 50-day moving average.
We will continue to diversify the portfolio and today rise above worldly concerns with a new recommendation that just may capture your imagination and make you money in 2020.
Download the new report Cabot’s 10 Best Stocks to Buy and Hold for 2020 (subscribers only)
A stock joins the Buy Low Opportunities Portfolio today and another one rejoins the Growth Portfolio. Additionally, we say goodbye toone stock, which continues to have a slightly-improving price chart, but the 2020 earnings growth prospects are too dismal to remain in the Growth Portfolio.
Open today’s issue to read additional features and changes with three more stocks.
A stock joins the Buy Low Opportunities Portfolio today and another one rejoins the Growth Portfolio. Additionally, we say goodbye toone stock, which continues to have a slightly-improving price chart, but the 2020 earnings growth prospects are too dismal to remain in the Growth Portfolio.
Open today’s issue to read additional features and changes with three more stocks.
Heading into the last month of the year, the prospects for the market remain very good, with a plethora of technical indicators telling us the market will be higher in the years ahead, and thus I continue to recommend that you be heavily invested.
Forget tariffs, forget trade negotiations, forget politics, and forget all the “problems” of the outside world. Just hold a portfolio of carefully selected high-potential stocks, and all will be well.
Today’s recommendation is a fast-growing company that’s a major participant in the 5G communications revolution.
Details in the issue.
Forget tariffs, forget trade negotiations, forget politics, and forget all the “problems” of the outside world. Just hold a portfolio of carefully selected high-potential stocks, and all will be well.
Today’s recommendation is a fast-growing company that’s a major participant in the 5G communications revolution.
Details in the issue.
Updates
Cannabis company earnings season is back. In the past two weeks, virtually all of our model portfolio companies have reported first-quarter results.
To save you the time of listening to lengthy earnings calls and plowing through press releases and filings, I recently did this for you to distill out the major trends that could benefit us as cannabis investors. Below are the top 10 sector trends in the space and what they mean for you, the cannabis investor.
To save you the time of listening to lengthy earnings calls and plowing through press releases and filings, I recently did this for you to distill out the major trends that could benefit us as cannabis investors. Below are the top 10 sector trends in the space and what they mean for you, the cannabis investor.
The market’s record run is starting to show signs of fatigue. After powering higher since the March 30 lows, momentum has stalled and breadth has narrowed as a combination of rising yields, higher energy prices and renewed geopolitical uncertainty begins to weigh on sentiment.
The 10‑year Treasury yield has climbed from roughly 4.23% in mid‑April to 4.48% as of mid-morning today (matching the March high, and highest level since last July), meaning that financing costs are going up just as inflation concerns resurface. April’s CPI and PPI inflation reports both came in hotter than expected.
The 10‑year Treasury yield has climbed from roughly 4.23% in mid‑April to 4.48% as of mid-morning today (matching the March high, and highest level since last July), meaning that financing costs are going up just as inflation concerns resurface. April’s CPI and PPI inflation reports both came in hotter than expected.
The market hit another new high this week. But earnings season is mostly over, and the war just won’t go away.
While there is still headline risk, investors are looking beyond the war. The earnings season has been great. According to FactSet, the average S&P 500 earnings growth rate, with 89% of companies having reported, is 27.7%.
While there is still headline risk, investors are looking beyond the war. The earnings season has been great. According to FactSet, the average S&P 500 earnings growth rate, with 89% of companies having reported, is 27.7%.
If you have the feeling that this year’s boom in the tech sector—and the corresponding record highs in the major averages—isn’t being felt on a market-wide basis, you’re not imagining it.
As it turns out, the record lift in the Nasdaq and S&P is being driven by a troublingly small number of stocks. The result of this narrowing market is that value-focused investors like us have been forced to exercise patience while waiting for the boom to visit our corner of the market (more on that in a minute).
As it turns out, the record lift in the Nasdaq and S&P is being driven by a troublingly small number of stocks. The result of this narrowing market is that value-focused investors like us have been forced to exercise patience while waiting for the boom to visit our corner of the market (more on that in a minute).
WHAT TO DO NOW: Big picture, the market and most leaders look great, and our market timing indicators are in fine shape. Near-term, though, there’s little doubt things have gotten a bit giddy, with many names and indexes extended to the upside. Tonight, we’re placing Cava (CAVA) on Hold as that stock has been caught up in some group weakness; we’ll hold our 45% cash position for now, but stay tuned, as we’d like to add some new names (or add to existing names) in the near future.
What a difference a month can make! What an April! The S&P rose 9.6% in April, making it the best single month for the market in six years. It hit an all-time high on Friday.
Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of some skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings. And for good reasons.
Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of some skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings. And for good reasons.
The results are in for the month of April. It was fabulous. The S&P rose 9.6%, making it the best single month for the market in six years. It hit an all-time high on Friday.
Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of minor skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings.
Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of minor skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings.
Now before you call me crazy concerning today’s newsletter headline, hear me out.
Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”
Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”
The market is digesting the push and pull of higher oil prices, a deeply divided Federal Reserve, prospects for a prolonged blockade of the Strait of Hormuz and fading momentum from the AI trade that helped push markets to all‑time highs earlier this month.
Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.
Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.
Yesterday, four tech giants, Alphabet, Amazon, Meta and Microsoft, representing 22% of the S&P 500’s market value, reported strong quarterly earnings that highlighted the importance of AI.
You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.
You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.
It’s been a glorious April following a miserable March for the market. What happens in May may determine which direction stocks are headed for the rest of the year.
That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.
That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.
What war? This market is moving on. We may not be out of the woods yet, but investors are looking beyond the Iran war.
Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.
Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.
Alerts
This oil company beat analysts’ estimates by $0.04 last quarter, and eight analysts have increased their EPS estimates for the company in the past 30 days.
This agriculture company turned in a stellar quarter, with adjusted EBITDA of $61.9 million in 1Q18, a 38.4% increase, year over year.
This largest manufacturer of iron-ore pellets in North America may see renewed interest due to steel tariffs.
This fintech company beat earnings estimates by $0.03 last quarter, and it is forecasted to grow 22.3% this year.
This semiconductor measurement systems company was recently recommended by Zacks, based on an 84% estimated earnings growth rate for this year.
The following is a brief unscheduled update—not only on developments in the marijuana investing sector but also on my thinking about the investment prospects in the industry going forward. I hope you find it useful.
This restaurant business beat analysts’ earnings estimates by $0.07 last quarter.
This morning, our longest and most-profitable holding, came under attack by Muddy Waters, a firm that specializes in publishing negative research on a company and selling its stock short.
The top three sectors for this fund are: Real Estate, 52.83%; Financial, 24.8%; and Consumer Cyclical, 14.17%.
The top five holdings are in the ETF mentioned today.
The shares of this retailer were recently initiated at Wells Fargo with an ‘Outperform’ rating, and upgraded at Oppenheimer to ‘Outperform’, PiperJaffray to ‘Overweight’, and Goldman Sachs to ‘Buy’.
The shares of this energy company were recently upgraded by Bank of America to ‘Buy’.
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.