Cabot Prime Week Ending July 14, 2017
Cabot Wealth Summit
Have you registered for the Cabot Wealth Summit in September? It’s included in your Prime membership, but you need to register to reserve your seat. Registrations for your guests are just $400 per person. Click here to register now.
Quarterly Prime Market Report
In this Q2 2017 Prime Market Report, Cabot President Timothy Lutts’s read on the stock market, looking back at the most recent quarter.
Quarterly Prime Quarterly Analyst Teleconference
Listen to the Q2 2017 quarterly teleconference where Cabot Analysts answer members’ questions live.
Cabot Weekly Review
In this week’s video, Mike Cintolo talks about the very encouraging action in the Nasdaq and leading stocks during the past week. After raising some cash during the June/early July market consolidation, he’s putting some back to work. Mike reviews the good and bad of the recent rally, and goes through an extensive list of leaders pushing to new highs and other stocks setting up to run.
Cabot Growth Investor
Bi-weekly Update July 12: Our trend-following indicators are still bullish, and we’ve seen the Nasdaq and growth stocks show renewed strength in recent days. The market isn’t completely out of the woods, but there’s enough evidence to do a little new buying. Tonight, Mike is adding PayPal (PYPL) to the Model Portfolio and averaging up in Alibaba (BABA), which will leave us with around 20% in cash.
Bi-weekly Issue July 5: We’re selling Tesla (TSLA), taking our small profit and holding the cash. Mike also writes about what we’re seeing in the market’s recent rotation as well as another batch of studies that portend higher prices for the market down the road. We also dive into all our recommendations and present some of our favorite ideas for the next market upleg.
Update on Other Stocks of Interest July 7: Follow ups to stocks featured February 1, 2017 (issue 1360) to July 5, 2017 (issue 1371). Since they’re not in the Model Portfolio, you don’t see them followed on a regular basis. However, we are monitoring these stocks, and this listing gives their current momentum status.
Cabot Top Ten Trader
Movers & Shakers Weekly Update July 14: It’s been a very encouraging past week (really since last Friday), as the leading Nasdaq and growth stocks have stormed back, with many punching out to new highs in recent days. We wouldn’t call this is major blastoff, but there’s no question the evidence has improved and the odds are increasing that the market’s overall uptrend is resuming after a sloppy consolidation in June and early July.
Weekly Issue July 10: This week’s list (and our overall focus these days) has a few resilient stocks in uptrends, as well as some stocks that have recently emerged from consolidations. Our Top Pick is Medidata Solutions (MDSO), a growth stock that lifted from a two-year base in April and remains in good shape.
Cabot Undervalued Stocks Advisor
Special Bulletin July 13: Christa has five buy ideas, including these portfolio changes: Ameriprise Financial (AMP) joins the Growth & Income Portfolio, and Goldman Sachs (GS) moves from Buy to Hold.
Weekly Update July 11: Just in case any subscribers wants to invest in energy companies, but feel bad that perhaps those companies are cheating America, there are three things Crista would like to point out about ExxonMobil (XOM). No ratings changes.
Special Bulletin July 10: These buy-rated stocks all appear to have broken out of trading ranges: Goldman Sachs (GS) PulteGroup (PHM),
Quanta Services (PWR), Tesoro (TSO), Universal Electronics (UEIC) and XL Group (XL), plus updates on Cavium (CAVM) and Invesco (IVZ).
Monthly Issue July 5: Today’s featured stocks include Bank of America (BAC) and its CCAR results, Dollar Tree (DLTR) and its prognosis in the wake of the Amazon-Whole Foods merger, and a new addition to the Growth & Income Portfolio, Commercial Metals Company (CMC).
Cabot Stock of the Week
Weekly Issue July 11: This week’s stock is Carvana (CVNA), a very aggressive selection. The company is aiming to revolutionize the used car buying experience by bringing it online. The stock is very volatile, but also very strong, with huge potential should things go right. Two ratings changes: Carnival (CCL) and Wynn (WYNN) are now Holds.
Cabot Emerging Markets Investor
Bi-weekly Issue July 13: Chinese stocks have bounced higher this week, giving the Cabot Emerging Markets Timer a much stronger buy signal. The newly strengthened signal is great news, and Paul recommends Chinese internet stock YY Inc. (YY), which should benefit greatly from the support. Melco Resorts (MLCO) moves to Hold, TAL Education (TAL) moves to Buy a Half, and Tencent Holdings (TCEHY) moves to Buy.
Cabot Benjamin Graham Value Investor
Weekly Update July 14: Roy summarizes the latest news for Alliance Resource Partners LP (ARLP), Berkshire Hathaway ‘B’ (BRK.B), Chicago Bridge & Iron (CBI), Eaton Vance (EV), Five Below (FIVE), PowerShares US Dollar ETF (UUP) and WestJet Airlines (WJA.TO and WJAFF). Eaton Vance (EV) reached its Min Sell Price and is a Sell.
Monthly Value Model Issue July 13: Roy’s Cabot Value Model contains a wide variety of stocks this month with a slight focus on companies in the Technology and Financial sectors. Roy initiates coverage of a new Buy recommendation, FleetCor Technologies (FLT). There are also several ratings changes: Starbucks (SBUX) to Buy, Facebook (FB) and SPDR S&P Dividend ETF (SDY) to Hold, and Kroger (KR), Oracle (ORCL) and PowerShares US Dollar ETF (UUP) to Sell.
Special Bulletin July 10: Sell PowerShares US Dollar ETF (UUP 24.84) has declined as the euro and other currencies around the world strengthen. Roy recommends selling your UUP shares to avoid further erosion.
Enterprising Model Issue June 15: Roy initiates coverage on Thor Industries (THO), which is thriving in the recreation vehicle sector. Demand far exceeds supply in this industry, and Thor is adding two new manufacturing facilities to meet record new orders which have nearly doubled from a year ago.
Cabot Dividend Investor
Weekly Update July 12: Chloe is making a couple of moves to reduce risk this week, selling Verizon (VZ), which is hitting new lows, for a 10% loss, and Automatic Data Processing (ADP), which has been a perpetual underperformer, for an 8% gain.
Monthly Issue June 28: Chloe is adding Welltower (HCN), a very income-focused play on the healthcare sector, to the High Yield Tier. There are no rating changes in the portfolio, although Verizon (VZ) has weakened and could be sold soon. On the buy side, Broadridge (BR), Carnival (CCL), and Wynn Resorts (WYNN) still look strong, and 3M (MMM), Cummins (CMI) and Pembina (PBA) are offering good buy points.
Wall Street’s Best Investments
Daily Alert July 14: Energy Fuels (UUUU) from The National Investor
Daily Alert July 13: Vertex Pharmaceuticals (VRTX) from Cabot Undervalued Stocks Advisor
Daily Alert July 12: YY Inc. (YY) from Cotton’s Technically Speaking
Daily Alert July 11: PureFunds ISE Cyber Security ETF (HACK) from Positive Patterns
Daily Alert July 10: Facebook (FB) from Cabot Benjamin Graham Value Investor
Monthly Issue June 21: While the Dow Jones Industrial Average has gained some 700 points since our last issue, our contributors and advisors, in general, remain bullish. Our Spotlight Stock is Extreme Networks (EXTR) and Nancy’s feature further examines the networking industry and the phenomenal potential of the company as applications continue to expand for its products and services.
Wall Streets Best Dividend Stocks
Daily Alert July 14: Commercial Metals Company (CMC) from Cabot Undervalued Stocks Advisor
Daily Alert July 13: Regency Centers (REG) from The Prudent Speculator
Daily Alert July 12: Ford Motor (F) from Shortex Market Letter
Daily Alert July 11: Main Street Capital (MAIN) from The Periscope Report
Daily Alert July 10: Sprott (SII.TO) from The National Investor
Monthly Issue July 12: In this Top Picks Mid-Year Update issue, Nancy reports that overall, her contributors did a wonderful job. The number one stock—Lam Research (LRCX), recommended by Richard Moroney of Dow Theory Forecasts—pulled off a stunning return of 37.55%.
This Week’s Q&As
Cabot Top Ten Trader
Question: I’ve been reading some articles on OLED and Apple. Do you expect this to have an impact on LPL or OLED ?
Mike: It should help OLED, not exactly sure about LPL. Right now, it’s likely to come down to the market itself. I think the OLED story is definitely there, but it should hold up around here if all’s ok.
Question: I’ve looked at Yahoo Finance data about LGL and I’ve noted its EPS it foreseen at -33% for the year, so my question is if I’ve well read or not. You are not telling about next (full) year data, but only about next quarter data. Can you help me better understand, and grow as an investor?
Paul: LG display’s EPS is forecast to increase 150% this year (2017), then decline by 34% in 2018. The predicted 2018 decline is just a return to a more normal return after the big windfall of 2017. For perspective, EPS for 2016 was $1.10 and estimates for 2018 are for $1.82. So the decline is only a return to the mean after a particularly profitable 2017.
Cabot Emerging Markets Investor
Question: Would you give me your opinion on Yatra Online (YTRA)?
Paul: The chart is certainly interesting. Jumping from 9 to 12 with a thicket of heavy volume spikes is very positive. The downside is considerable, however. The company, which is an 11-year-old online travel agency like CTRP or EXPE, has never had a profitable quarter and isn’t expected to at least through the end of its fiscal 2018 (which ends in March 2018).
The stock came public at 10 last December and traded up to 10.7 in January, then down to 77 in early March. After a proper post-IPO base building in April and May, the stock caught a short updraft in June, then made another upleg later in the month.
The stock’s trading volume is another concern. I like to see an average of at least 400,000 shares a day traded to insure liquidity, and YTRA has hit that level on just one day in its current rally. Its average is just over 110,000 shares.
India is an underdeveloped market for online services like travel, and it’s good to see any Indian stock coming public and augmenting the thin population of ADRs from there.
YTRA looks like an interesting speculation, but I would need to see more revenue growth and trading volume before I would consider it for inclusion in the Cabot Emerging Markets Investor’s portfolio.
Question: I have a question. What about buying during earnings season? Are there some rules of thumb?
Paul: The general rule of thumb is, DON’T. In the modern era, quarterly reports are unpredictable, with few or no clues from trading volume or price action ahead of the event.
With that said, you can sometimes get a sense of how earnings season is going in general, which may give you a hint as to whether the company you’re considering will beat or be beaten.
Personally, I don’t much like the idea of having my short-term results determined by a coin flip, so I don’t buy within a week or so before of the report date. But if you want to give it a try, just keep your investment small and keep a tight stop on the position.
Cabot Benjamin Graham Value Investor
Question: Do you think it is good time to buy Greenhill (GHL) now?
Roy: Greenhill & Co. (GHL 20.35) Max Buy Price 19.56; Min Sell Price 31.98 dropped from 30 in mid-March down below 20 in June. GHL is beginning to form a base within the 19 to 21 range, which is good timing if the company reports better than expected second-quarter sales and earnings. Management hinted that results will be good, so I have held the stock based on their assessment.
Analysts lowered their second-quarter estimates down to $0.30 from $0.45 during the past 30 days, which is troublesome, but the low forecast should be easy for Greenhill to beat. The company’s sales and earnings tend to swing wildly as merger and acquisition activity ebbs and flows. The current slow period is caused by companies delaying mergers and acquisitions to wait for regulatory and tax policies in the U.S. and U.K. to gel. Greenhill’s balance sheet is in solid shape which will enable the company to gain a competitive advantage.
I recommend buying a small position now, and adding shares if the second-quarter report is good. Quarterly financial results are due to be released on July 24.
Question: I recall you recently mentioned (6/15/17) to wait for a pullback to purchase ULTA. Is the knife still falling or time now to buy? What is the time period for your estimated upside of 392? 24 months?
Roy: Ulta Beauty (ULTA 257.40) is down more than 5% today, July 11, partly as a result of today’s article in The Wall Street Journal about recent discounting of cosmetics in department stores such as Macy’s. The WSJ article points out that Ulta and Sephora have been gaining market share from department stores, and now Macy’s et al are fighting back by offering discounts. However, this tactic could backfire because department stores are already discounting apparel and other items to draw customers in the door. The discounting could be a short-term fix.
Earnings estimates for Ulta have been rising after the company easily beat first-quarter forecasts. For the year ended January 31, 2018, Ulta will likely post EPS of $8.25, a 27% increase from a year ago. The consensus forecast for January 2019 is $9.85, with $12.00 possible in 2020. ULTA shares still aren’t cheap at 35.8 times current EPS, but sales and earnings are slated to surge 20% or more in each of the next three to five years. My new Max Buy Price (as of July) is 253.10, with upside potential to 390.32. Buying at the bottom when a stock is falling is always difficult, but I highly recommend buying Ulta in the 250 to 255 range.
Wall Street’s Best Investments
Question: I’m rather new to actual investing in the U.S. stock market and just subscribed to the WSBI. Reading your latest monthly newsletter, I’m just wondering how to use it. Perhaps a more accurate question, when should I go in and when should I sell? Only some have some guidance on buying range and also selling range (as stop loss), but no real target price. I’m in Singapore and trading day is when I sleep. :) A bit of guidance for me would be helpful, if you can. Thank you!!
Nancy: Welcome aboard! Our mission at Wall Street’s Best newsletters is three-fold: 1) To deliver ideas for stocks that are new to our subscribers; and 2) To give you the opportunity to learn about other stocks that may reside in the same sector as some of your holdings (as a point of comparison or a new idea); and 3) To present our contributors’ valuation of stocks you may already own, as a back-up opinion, or as a reason to buy more or to sell.
As to the actual entry and selling points, it depends on your risk aversion, your holding period, and whether you want to book short-term gains, or hold for investment--not trading purposes.
Here are a few articles that I wrote that will help you get started. I believe the first one is an essential step to successful investing. It will help you determine the investing risk with which you are comfortable. And that determination will then help you decide your ideal holding period. https://cabotwealth.com///daily/how-to-invest/investor-profile-survey/This piece explains how to set your own price targets. As you’ve noticed, not all of our contributors to Wall Street’s Best offer specific entry and exit points. This report will help you make that decision yourself, which I believe is more preferable. It allows you more control over your investments. https://cabotwealth.com///daily/how-to-invest/setting-price-targets/And this piece discusses setting stop losses to help you mitigate your risk: https://cabotwealth.com///daily/how-to-invest/stop-losses-don’t-leave-home-without-them/
Please don’t hesitate to contact me with any additional questions.