Please ensure Javascript is enabled for purposes of website accessibility
Cabot Prime Pro Logo
Cabot Prime Pro

Cabot Prime Pro Week Ending April 13, 2018

Cabot Prime Pro Week Ending April 13, 2018

Cabot Wealth Summit Registration

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 Cabot Wealth Summit, now’s the time because the Extra Early Bird rate expires soon! The Summit is a literal breakfast, lunch and dinner with every one of Cabot’s analysts, a rich and intense program of stock picks, market analysis, investing tips and techniques and a chance for face-to-face Q&A with some of the savviest investors around. We will also have great social activities!

Register here for the August 15-17, 2018 Summit at special pricing for Cabot Prime Pro members.

Cabot Weekly Review

In this week’s stock market video, Paul Goodwin looks at stock markets that don’t really have a definite direction. The major indexes have made up about half of their losses, but haven’t stormed back above their 25- and 50-day moving averages to give us a new buy signal. Fears of a trade war seems to be the biggest worry for investors and the upcoming earnings season is probably the brightest hope. Paul gives some stocks that are either breaking out or building attractive bases.

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 Growth Investor

Bi-weekly Issue April 11: Mike remains cautious, but stay tuned. If the broad market’s resilience leads to a new uptrend, he’ll start putting our cash back to work, but right now he advises patience. There is one change in tonight’s issue: Proofpoint (PFPT) moves from Hold to Buy.

Bi-weekly Update April 4: Remain cautious. Our Cabot Tides and Two-Second Indicator remain negative, but the market’s longer-term trend is still up and, encouragingly, many stocks are holding support. In the Model Portfolio, we have 45% in cash and are standing pat tonight.

Other Stocks of Interest April 13: Follow ups to stocks featured November 8, 2017 (issue 1380) to April 11, 2018 (issue 1391). 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 April 13: Mike tells us the market has had a constructive week. Last Friday’s trade war-related plunge threatened to crack the nascent rally this week, but instead, the buyers have been active, scoring higher-volume gains Tuesday and Thursday. Buy ideas: Coupa Software (COUP), GoDaddy (GDDY), Loxo Oncology (LOXO), Pegasystems (PEGA) and Red Hat (RHT). There’s just one sell this week: Zillow (Z), which plunged through its stop today on huge volume.

Weekly Issue April 9: This week’s list is a mixed bag, with lots of turnarounds and some growth stocks sprinkled in. Mike’s Top Pick is Etsy (ETSY), which, despite a big run, has refused to budge during the market’s latest downdraft.

Cabot Options Trader and Cabot Options Trader Pro

Note that the current week’s Weekly Update, earnings updates, position updates and stocks on watch are posted on the website in the Market Update section, which is deleted each week.
Market Update April 13: Jacob will be unable to watch the market Monday and likely Tuesday. He will send the Monday morning market update, as well as today’s daily order flow list on Monday morning as usual. The typical order flow emails for Tuesday and Wednesday will not be sent. He also sent along an article he wrote a couple years ago in response to a subscribers’ question regarding options and option volatility around earnings. The important takeaway is that if you are going to buy puts or calls ahead of earnings, you need a big move to make big profits, How to Play Earnings with Options.

Trade Alert April 12: Buy Half a Position: Buy Axon Enterprises (AAXN) September 45 Calls (exp. 9/21/2018) for $4.50 or less.

Trade Alert April 12: Sell to Close your Nutanix (NTNX) April 37.5/47.5 Bull Call Spreads for $9.30 or more.

Trade Alert April 12: Sell to Close your Nutanix (NTNX) April 37.5 Calls for $15 or more.

Sector on Watch April 10: Jacob writes that the hot money has come back into the oil sector as the Oil Services ETF (OIH) is up 5.8%, and Schlumberger (SLB) is within striking distance of the level we bought our position.

Weekly Market Update April 9: As Jacob dives a bit deeper into the market moves, he supposes that the VIX is fairly priced. As he explained last week, with the VIX at 21.49 the expectation for S&P 500 movement each day is approximately 1.33%. And with the S&P 500 moving -2.33%, +1.26%, +1.16%, +0.69% and -2.19% last week, three out of the five days it moved less than expected. In retrospect, the two scary down days of over 2% are likely what skewed his belief that the VIX is cheap.

Cabot Undervalued Stocks Advisor

Special Bulletin April 12: Crista has two rating changes today: ConocoPhillips (COP) moves from Strong Buy to Hold and KLX Inc. (KLXI) moves from Strong Buy to Hold. Plus, there’s bullish price action for Skechers (SKX).

Weekly Update April 10: Crista writes that we’re still in the midst of a market correction that began in late January. She considers this correction to be perfectly normal, and unrelated to politics, economics, natural disasters or war. In short, the stock market rose for 15 months without resting, and it was overdue to rest. Sometimes things really are that simple. Here are today’s rating changes: BB&T Corp. (BBT) moves from Strong Buy to Hold and Knight-Swift Transportation (KNX) moves from Strong Buy to Hold.

Monthly Issue April 3: Today, Comerica (CMA) joins the Growth & Income Portfolio as a Buy, Molina Healthcare (MOH) joins the Growth Portfolio as a Strong Buy and Skechers USA (SKX) joins the Buy Low Opportunities Portfolio as a Strong Buy.

Cabot Stock of the Week

Weekly Issue April 10: Tonight’s recommendation is Axon Enterprises (AAXN), a fast-growing company with a revolutionary product whose stock hit new highs recently and is primed to do so again. Tim has one rating change: BB&T Corp. (BBT) moves from Buy to Hold.

Cabot Emerging Markets Investor

Bi-weekly Update April 12: The iShares EM Fund (EEM) has firmed up over the last few days, but has yet to actually kick out to the upside. Paul has no rating changes tonight.

Bi-weekly Issue April 5: Today, Paul is making one change to the portfolio: Tal Education (TAL) goes from Buy a Half to Hold a Half. His new recommendation is 51Job, Inc (JOBS), a Chinese stock that’s been ignoring the market’s wobbles and etching a great rally.

Cabot Benjamin Graham Value Investor

Weekly Update April 12: Crista has two portfolio changes today: Gentex (GNTX) and Williams-Sonoma (WSM) both move from Buy to Hold.

Cabot Small-Cap Confidential

Weekly Update April 13: Tyler writes that small and large cap indices are up around 2.4% from last Friday’s close and the portfolio is up almost 5%. There are no rating changes today.

Monthly Issue April 6: Tyler is adding MiX Telematics (MIXT), a global provider of fleet management, driver safety and vehicle tracking solutions that are accessed via a Software-as-a-Service (SaaS) delivery model to Cabot Small-Cap Confidential. In the portfolio Tyler is moving AxoGen (AXGN), Everbridge (EVBG) and Q2 Holdings (QTWO) from Hold to Buy.

Cabot Dividend Investor

Weekly Update April 11: Chloe doesn’t have any rating changes today, and continues to recommend you stay fairly conservative, while keeping an eye out for good opportunities to pounce on once the market confirms a new uptrend.

Monthly IssueMarch 28: Chloe is selling another half of our General Motors (GM) shares and placing UnitedHealth Group (UNH) on Hold. This month’s featured buy is Intel (INTC), which will join the Dividend Growth Tier.

Cabot’s 10 Best Marijuana Stocks

Update April 4: Tim’s practice to date has been to make no portfolio changes between quarterly issues, and he see’s no reason to change that policy now. But it is good to keep informed about how the stocks are doing, so this update does just this.

Spring Issue February 15: Tim gives updates on the 10 stocks we’ve been following and two new stocks. The market’s recent correction has brought most of them down to what look like good buying areas.

Wall Street’s Best Investments

Daily Alert April 13: Bloomin’ Brands Inc. (BLMN) from The Buyback Letter
Daily Alert April 12: Capital One Financial Corporation (COF) from
Daily Alert April 11: Wasatch Global Opportunities (WAGOX) from Moneyletter
Daily Alert April 10: Amkor Technology, Inc. (AMKR) from Technology & Opportunity
Daily Alert April 9: Shopify (SHOP) from Cabot Growth Investor
Daily Alert April 9: Smart Global (SGH) from Cabot Top Ten Trader

Monthly Issue March 21: Our Spotlight Stock, MSC Industrial Direct (MSM), is a business in the very fragmented maintenance, repair and operations (MRO) industry—it’s a company that has consistently rewarded its shareholders with stock repurchases and rising dividends. Nancy’s Feature article further explores the company’s opportunities, especially in light of recent tax reforms.

Wall Streets Best Dividend Stocks

Daily Alert April 13: Suncor Energy Inc. (SU.TO) from Dividend Advisor
Daily Alert April 12: Education Realty Trust (EDR) from Forbes Dividend Investor

Monthly Issue April 11: The Spotlight Stock is Southern Company (SO), now the highest-yielding stock in the Dow Jones Utility Average, after dropping 17% from its November 2017 high. Nancy’s Feature explores low beta stocks—companies whose shares are less volatile than the overall market. And this month’s Spotlight Stock, fits that criteria, boasting a beta of 0.3.

Daily Alert April 11: GlaxoSmithKline plc (GSK) from IQ Trends
Daily Alert April 10: Toyota Motor Corporation (TM) from Wall Street Stock Forecaster
Daily Alert April 10: Sell: Frontier Communications Corp (FTR) from Conrad’s Utility Investor
Daily Alert April 9: Canadian Utilities LTD PREF SER (CU-PI.TO) from Income Investor

This Week’s Q&As

Cabot Emerging Markets Investor

Question: What do you think of BZUN?

Paul: Mike asked me to give you a few well-chosen words on why I don’t have BZUN in the portfolio. In the fewest words possible, the answer is bad timing. I’ve had BZUN in the portfolio twice in the past couple of years, first from September 8, 2016 to November 1, 2016. A look at the chart shows that the stock made a big run in August and September and I got in at 13.7. But after a quick run to 17, the stock rolled over and continued to correct through the end of the year, bottoming at 11.5. The stock’s performance through the first four weeks of 2017 weren’t anything remarkable. The stocks that I was buying in early 2017 (BABA, MOMO) were much stronger in relative terms. Maybe my tendency to buy high bit me on the ankle that time.

The second recent buy was on May 19, 2017, when I got in at 21.9 after the stock staged a quick rally from 15 to 24. The correction to under 22 looked like a good opportunity. But the stock went sideways, and I sold it on June 15. Here’s what I said in the Portfolio Review section of the June 15 issue: “Baozun (BZUN) is looking like it big up move on June 8 was a false breakout. The stock hasn’t taken out its May support, but we need to reduce our portfolio’s exposure in this increasingly hostile environment. So we will move aggressively by selling BZUN and holding the cash. SELL.”

That was a bad move, of course, as the stock went ballistic in July.

Had I waited a little longer and participated in the stock’s run up to 35 in July, I might have been able to hang on through the subsequent seven-month consolidation and gotten the benefit of BZUN’s gap up on monster volume on March 6. Maybe.

I like the Baozun story and fundamentals. But I haven’t yet had any luck finding the right moment to buy. It’s a stock that the market uses to show that it’s smarter than I am.

Cabot Options Trader

Question: I have (10) of NTNX Apr20 2018 40.0 calls remaining. What happens if I just let options expire on Friday Apr 20? Will I receive the Bid or Ask price or something in between? I am pretty sure you are still sitting on your remaining contracts as well. I own the April 37.5 calls. But that doesn’t matter for this question.

Jacob: So depending on if you have the cash in your account to buy the stock, or your setup with your broker, if you do nothing on expiration, you will be long 1,000 shares of stock at 40. However, if you don’t have the cash, or that relationship, they may sell the calls for you ahead of expiration. At some point in the next week and a half I will send an alert to sell the position. I love the way the stock looks, but am less thrilled with the market.

Cabot Dividend Investor

Question: What’s your take on buying HSBC for dividend?

Chloe: HSBC doesn’t have an exceptional dividend history. The bank pays four dividends a year, one of which is larger and variable. After slashing the dividend in 2008 (not a huge red flag, since almost all banks had to) HSBC started slowly building the dividend back up, mostly through increases in the variable fourth quarter dividend. However, neither the regular nor the variable dividends have been increased for three years. The stock’s payout ratio is 106% -- it’s coming down from a peak of 243% in 2016 when net income fell by something like 90%. It’s recovering, but the trend still isn’t good, and revenue is expected to grow by less than 5% this year and next. In other words, HSBC doesn’t do well on any of the tests I usually use to find good dividend stocks.

Cabot Undervalued Stocks Advisor

Question: What do you think might happen this year with Walgreen Boots Alliance (WBA)?

Crista: What I see with Walgreen Boots Alliance (WBA) is that earnings growth is relatively attractive in 2018 and 2019, the P/E is low, and the dividend and debt levels are attractive. The price chart is bearish. The share price doesn’t appear to be ready to surge back to its January high, any time soon. There’s upside price resistance at 71, so when the stock rises, that’s likely to be where it pauses and rests.

Cabot Small-Cap Confidential

Question: Do you follow the political situation in South Africa? If the anti-whites get more militant, can MIX Telematics easily pick up and more to another country?

Tyler: I haven’t followed it extremely closely in the past (though my wife lived there for a short spell and we’ve talked about how sketchy it is) but have more since becoming interested in MIXT. As you likely know it doesn’t sound like a great situation. I think that creates a bit of a double-edged sword for MITX. On the one hand any political/social instability is bad. But on the other, it also feeds into demand for their solutions, and their consumer hardware/subscriptions appear to be quite popular in country. As do products for energy customers. One question an investor could ask is this; If you were managing a fleet of 100 cargo or oil trucks, where would you be more likely to want monitoring, communications, and video surveillance equipment/subscriptions? In one of the world’s more remote and dangerous areas? Or one of the safest? I think a salesman has an easier pitch in the first scenario. As far as moving, I believe the CEO lives in the U.S., and he has mentioned moving the company’s HQ to the U.S. and using the U.S. Dollar as the official reporting currency. I don’t know how serious he is, how much the investment banks/analysts that have been involved w/the company would approve/disapprove of that (I assume approve, though to what degree is open to speculation). But on the last quarterly conference call it was discussed.

Guide to Cabot Prime Pro

This Guide to Cabot Prime Pro will help you make the best use of your Prime membership to create a strong personal portfolio.