Cabot Prime Week Ending July 6, 2018
2018 Cabot Wealth Summit Registration — August 15-17
What do Cabot’s most successful investors have in common? They come to the Cabot Wealth Summit!
If you haven’t yet registered for the 2018 Cabot Wealth Summit, now’s the time because the hotel rooms sell out. A rich and intense program of stock picks, market analysis, investing tips and techniques and a chance for face-to-face Q&A with Cabot’s experts and analysts. We will also have great social activities! All in beautiful, historic Salem, Mass.
Also, for those that have had the pleasure of meeting Roy Ward in years past, the good news is that he will be joining us again this year! We’re excited and we can look forward to seeing him again!
Register here at super-low Cabot Prime member pricing.
Cabot Weekly Review (Video)
In this week’s stock market video, Paul Goodwin, Chief Analyst of Cabot Emerging Markets Investor, takes a look at both U.S. and emerging markets and sees a “yes, but” situation. Yes, some of the major indexes are above their 25- and 50-day moving averages, but most of them have been range-bound for months, and there’s not really a clear direction to work with. Paul also sings the praises of the Cabot Wealth Summit, which will be held in Salem, MA on August 15–17, and will give people a chance to pick the brains of Cabot analysts with almost 200 years of market experience. Paul concludes with a look at how much information a weekly (as opposed to a daily) chart can give you about a stock’s main direction, using the FANG stocks, the BAT stocks and a few recent favorites.
Next Quarterly Analyst Call July 18, 2018
Free for Prime Members: Register now
Advisory Services
Cabot Growth Investor
Bi-weekly Issue July 3: Mike is standing pat tonight but keeping an open mind. If this was just a brief short-term pullback, there will be many growth stocks to jump on. But right now he’s keeping some relatively tight stops in place in case the sellers punish growth stocks further. From here, Mike is open to anything—prepared to raise more cash if a full-fledged correction gets underway, but he’s more focused on fine tuning our Watch List with vibrant actors.
Bi-weekly Update June 27: Mike says it’s time to raise some cash. The Cabot Tides are on the fence but more importantly, individual stocks have been hammered during the past week. Longer-term we are still in an uptrend, but it’s vital to sell any stocks that breakdown. In the Model Portfolio, Mike sold half of Splunk (SPLK) and all of Alibaba (BABA) on Special Bulletins on Monday, and tonight, Mike is selling the rest of his SPLK, leaving you with around 40% in cash.
Other Stocks of Interest July 6: Follow ups to stocks featured January 31, 2018 (issue 1386) to July 3, 2018 (issue 1397). 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 6: Today, Mike says there remain some yellow flags, but most of the evidence is still bullish, so that’s how he advises you to position your portfolio. Today’s Buy Ideas: Carvana (CVNA), Inogen (INGN), NovoCure (NVCR), Palo Alto Networks (PANW ) and Turtle Beach (HEAR). Mike has one sell: Supernus Pharmaceuticals (SUPN).
Weekly Issue July 2: The selling pressure from two weeks ago carried through to last week, damaging many leading stocks and bringing down the major indexes to key support. It’s not the end of the world, and Mike still believes it’s best to hold your strong, profitable stocks. This week’s list has plenty to choose from, and Mike’s Top Pick is Wayfair (W), which is unusually strong—keep positions small and try to buy on dips.
Cabot Undervalued Stocks Advisor
Monthly Issue July 3: Crista says for now, stay focused on GDP if you’re worried about a recession (which she promises you is nowhere in sight), and literally just glance at a two-year stock market price chart if you’re worried about a bear market. Today, CF Industries Holdings (CF) joins the Growth Portfolio and Delek U.S. Holdings (DK) joins the Buy Low Opportunities Portfolio, both as Strong Buys.
Weekly Update June 26: In today’s update, Crista outlines the reasons why she will have every intention of remaining invested in various oil industry stocks in the foreseeable future. No rating changes to the portfolio but she breaks down each position in full detail.
Cabot Stock of the Week
Weekly Issue July 3: Tim’s recommendation this week is McGrath RentCorp (MGRC), a solid dividend-payer with modest growth prospects as well. It was originally recommended in Cabot Dividend Investor by Chloe Lutts Jensen. Tonight Tim is selling G-III Apparel Group (GIII), moving iQIYI (IQ) from Buy to Hold and Teladoc (TDOC) from Hold to Buy.
Cabot Emerging Markets Investor
Bi-weekly Update July 5: Emerging market stocks have been attempting to find a bottom after a month of accelerating declines. The week has been fairly calm, with the iShares EM Fund (EEM) and many of our stocks showing some signs of basing. Paul has no changes to the portfolio.
Bi-weekly Issue June 28: This issue’s featured stock is JD.com (JD), a stock Paul recommended numerous times before, but it’s on watch for now given the recent market action. In response, Paul has raised cash- he sold 58.com (WUBA) and our remaining half position in Tal Education (TAL) on a Special Bulletin on Monday, and yesterday let go of Momo (MOMO), which has fallen sharply. We’ve also placed most of our stocks on Hold. All in all the portfolio is now sitting on a large 50% in cash, which gives us a cushion to withstand further declines, as well as buying power when the next uptrend gets underway.
Cabot Benjamin Graham Value Investor
Weekly Update July 5: Crista has one rating change today, LKQ Corp. (LKQ) moves from Hold to Buy.
Cabot Dividend Investor
Weekly Update July 5: Chloe writes that there’s been more action in the bond market, where treasury yields are gradually declining. The 10-year Treasury yield is back to first quarter levels, and has erased the big leap toward 3% triggered by the suggestion of a fourth rate hike in April. There are no rating changes today.
Monthly Issue June 27: This month’s featured buy, Occidental Petroleum (OXY) is is a large oil and gas company with a 3.7% yield, a 15-year history of dividend growth, and rapidly rising earnings. It’s being added to the Dividend Growth tier. Chloe is selling half of Intel (INTC), and replacing Invesco BulletShares 2018 High Yield Corporate Bond ETF (BSJI) with Invesco BulletShares 2022 High Yield Bond ETF(BSJM).
Cabot’s 10 Best Marijuana Stocks
Update June 14: Tim recently attended the Cannabis World Conference and Business Expo in New York City. His main takeaway from that conference was that the trend continues to gain strength, at a faster rate than expected. He also updates the 10 stocks in the portfolio.
Summer Issue May 24: With this issue, Tim is replacing two of the portfolio stocks—Emerald Health (EMHTF) and CannaRoyalty (CNNRF)—with new recommendations—Hydropothecary (HYYDF) and iAnthus Capital (ITHUF).
Wall Street’s Best Investments
Top-Picks Mid-Year Daily Alert July 6: BOK Financial Corporation (BOKF) from Positive Patterns
Top-Picks Mid-Year Daily Alert July 5: CIT Group (CIT) from Cabot Undervalued Stocks Advisor
Top-Picks Mid-Year Daily Alert July 3: Osisko Gold Royalties (OR) from Adrian Day’s Global Analyst
Daily Alert July 2: Square Inc (SQ) from The Chartist
Monthly Issue June 20: Our June Spotlight Stock is, SVB Financial Group (SIVB), financial services company, as well as a bank holding and a financial holding company. Nancy’s Feature article discusses the correlation between venture capitalists and the Spotlight Stock.
Wall Streets Best Dividend Stocks
Top-Picks Mid-Year Daily Alert July 6: Baker Hughes, a GE company (BHGE) from Cabot Undervalued Stocks Advisor
Top-Picks Mid-Year Daily Alert July 5: Altagas Ltd (ALA.TO, OTC: ATGFF) from Energy & Income Advisor
Top-Picks Mid-Year Daily Alert July 3: Altria Group, Inc. (MO) from Positive Patterns
Daily Alert July 2: HP Inc. (HPQ) from Argus Weekly Staff Report
Monthly Issue June 13: The Spotlight Stock is Community Healthcare Trust (CHCT), a real estate investment trust (REIT) paying a high yield, that operates in non-urban locales—a pretty rare find, indeed—as most REITs concentrate their holdings in large cities. Nancy’s Featured article is Equity REITs aren’t Afraid of Rising Rates
Premium Reports
Cabot’s 10 Best Buy and Hold Stocks for 2018
Update June 12, 2018: On June 11, 2018, USG Corporation (USG) announced that its Board of Directors agreed for the company to be acquired by Gebr. Knauf KG for $44 per share in cash. Crista suggestion is that investors sell USG now, rather than wait for the remaining $0.96 per share to accrue from the special dividend and the remaining potential capital appreciation.
Cabot’s 10 Best Takeover Stocks
Special Report May 3: There are a variety of reasons that a corporation might want to purchase another company. They might want to acquire a company’s patents or products to enhance their product lines; access the company’s distribution network and sales relationships; or simply aim to increase their earnings growth rate by purchasing a very profitable company within a related industry. After all, stronger earnings growth leads to better share price appreciation—a topic that boards of directors care very much about. Crista’s investment strategy, which combines both growth and value criteria, inadvertently identifies potential takeover targets. That’s because big companies and she often seek the same thing: stock investments in undervalued, financially thriving companies that can deliver profits to investors. The ten companies are all undervalued growth stocks. What’s more, they’re small enough that big competitors and peers within their sectors could easily finance their acquisitions, often through current cash flow.
Cabot’s 10 Best Covered Calls on Dividend Stocks
Special Report April 12: With interest rates just coming off of historically low levels, income investors have been desperately searching for alternative sources of yield. Dividend stocks are the obvious answer. But there’s an even better way to create yield: by executing a covered call strategy on stocks that pay dividends.
Cabot’s 10 Best Small-Cap Cloud Computing Stocks to Buy Now
Special Report Updated June 18: If you’re a growth investor, you need to own cloud software stocks. It’s just that simple. Cloud computing is changing the world. It’s powering massive growth in companies across sectors, empowering digital transformations, enabling new generations of connected technologies and changing how people live their lives. Tyler Laundon lays out the landscape and names his 10 best small-cap cloud computing stocks.
A Richer Retirement
Special Report This handbook is designed to help you secure a better, longer, richer retirement for yourself by making the most of your savings both before and during retirement.
Ask the Experts
Cabot Dividend Investor
Question: I have a question about the bond ladder in your Safe Income Tier. You say we should now sell the 2018 fund, BSJI, and replace it with BSJI, maturing in 2021. Should I rollover the proceeds from the sale of BSJI to buy the new fund or establish a new 1/2 position?
Chloe: It’s up to you, our capital gain in BSJI was pretty small so in our case it wouldn’t make too much difference. In general though I’d say if you have a noticeable capital gain in the bond fund you’re selling, invest it elsewhere, so the “rungs” in your bond ladder all stay roughly the same size.
Question: Have you ever reviewed CQP (Cheniere Energy Partners) for inclusion in your recommendations? I love that steady 6% dividend, and the potential upside. I know that Mike has recommended LNG (Cheniere Energy) a couple of times, but they operate at a loss every year and pay no dividends although the stock has been rising.
Chloe: I took a look at CQP for you. Interesting stock. It’s an MLP of course, so you have to deal with the tax issues around that (see your MLP report, available on the subscriber website, if you want a refresh.)
They’re finishing some major new infrastructure at their LNG exporting facility, so net income is rising quickly as they bring each piece online. After paying a 43 cent dividend for the last 10 years, they’ve raised it in each of the last three quarters. That’s great growth, but it makes it a little hard to evaluate the long-term scenario here, since the company as it stands now is almost brand new.
In addition, CQP doesn’t publicly report Distributable Cash Flow (DCF), which is the number I usually use to asses MLP income trends. I can normally do a rough calculation of it myself by subtracting interest and capital spending costs from EBITDA, but CQP doesn’t report capital spending totals either. Not having DCF also means I can’t calculate a distribution coverage ratio. That opacity is not only puzzling, it also means I don’t have enough information to evaluate the stock. If I were to theorize about why CQP isn’t reporting this pretty standard information, it’s because 1) they’re still expanding quickly, and capital spending is very high, and 2) they have plenty of financial support from their “real” owners, LNG (the General Partner) and Blackstone. Blackstone owns 29% and the GP owns 57% or so, so public unitholders are a small minority and maybe not worth spending too much time on. That also, to go on a bit of a digression, plays into CNQ’s IDR (incentive distribution rights) schedule. A certain percentage of CNQ’s distribution goes to the GP; the level is based on the amount of the quarterly distribution to unitholders. At the current level, 55 cents, CNQ has to pay 25% to the GP (so another 14 cents). If they increase the distribution to unitholders above $0.638, they have to double the IDR payments to the GP. That’s not super important but let’s just say I’m not sure management’s or the majority owners’ incentives are aligned with the public unitholders’ here. That being said, it could be a fine company that simply prefers to keep things private at this stage. Net income is growing quickly, and so is the dividend! But without the data I need, there’s no way for me to tell how sustainable that it, so you’d be on your own here.
Guide to Cabot Prime
This Guide to Cabot Prime will help you make the best use of your Prime membership to create a strong personal portfolio.