There are a couple quick things to cover today. First, the introduction in the email that went out introducing yesterday’s Issue was placeholder text from a past update. I apologize for the error and hope it didn’t seem too random.
Second, I’ve received questions about the stocks in the Special Reports that you have access to as subscribers to Cabot Early Opportunities. Since these stocks are not officially part of any Issue, they’re not included in the Previously Recommended Stocks section on page eight. I won’t be able to cover these stocks indefinitely as my focus will need to be centered on all the stocks featured in Issues. But, for now, I don’t want to leave you hanging with stocks that I covered so recently. It’s far more efficient to respond to everybody all at once with updates, so here it goes!
But one final thing first. As a general rule if you’re down around 20% on a stock I’ve recommended in Cabot Early Opportunities, it’s probably time to sell it. As I discussed in the intro to yesterday’s Issue, use of a stop loss is one of the easiest ways to reduce risk in your portfolio.
You may have valid reasons to sell a stock a little earlier or hold on a little longer. But don’t bend the rules too much. When I’m evaluating stocks that I’ve covered, I expect to hold close to that 20% stop loss rule. The idea is to avoid huge hits that are hard to recover from.
On to updates …
Thankfully, none of the stocks featured in the Special Reports are down 20% from when we launched Cabot Early Opportunities on September 18. And with no company-specific negative news (or much news at all for that matter), all featured stocks can still be purchased. Here are a few comments on each of these names.
Zendesk (ZEN) is down around 10% and the trend isn’t great (the stock is 30% off its highs). But I still believe the future is bright here. Earnings, due on October 29, will be telling, and I expect we’ll hear more about softness overseas. That’s part of why shares have been declining. There could be more downside but at these levels it’s still worth averaging in. The company’s Sunshine product has potential to deliver big growth and the recent launch of the Partner Program (this week) should help it move deeper into the enterprise. This won’t occur overnight, and in fact the program has been several years in the making. But it should be meaningful in time.
Coupa (COUP) was whacked yesterday along with a lot of other software stocks but there’s no change in the story at this point. Same goes for Blackline (BL), which will be revealing Q3 results on November 6. Coupa is flat from September 18, and Blackline is down 6%. Then there’s Paylocity (PCTY), which is up 3% since I featured it but still 13% off its highs. Shares have been relatively more stable than other software names, likely because payroll and human capital management solutions are in such steady demand almost regardless of what’s going on in the economy. Paylocity will report on October 30.
Turning to the stocks from my Canadian Special Report, Descartes (DSGX) is 3% from all time highs and 3% above where it was when I covered it. Management has released a few product enhancements but there’s no major news. Shares are still riding the strength of the earnings beat back in early September.
GoEasy (GSY.TO) is also doing well, just 5% off its highs. Management recently announced a digital lending pilot program with Mogo (MOGO), a micro-cap fintech company based in Vancouver, to provide loans of up to $15,000 for five years.
Finally, Eco Atlantic Oil & Gas (EOG.V) is down around 8% from where I covered it on no new news. The oil explorer has had some success offshore Ghana and now investors are just waiting to hear more specifics about the path forward. This is a speculative stock that’s going to move purely based on drilling results, financing needs and/or deals and speculation about how future drilling results will come in. It’s exciting, but not for the faint of heart.
The punchline with all these stocks is that they’re moving around a little but no major jumps or drops, and no earnings results have come out since I’ve covered them. Therefore, they can all still be bought. As mentioned above, be sure to average in, and to mind a stop loss strategy. And remember that I’ll cover these stocks as I can in the future. But as our position count grows with each new Issue of Cabot Early Opportunities I’ll have less and less time to devote to all of them.