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Cabot Prime Pro Week Ending February 12, 2021

Cabot Prime Pro Week Ending February 12, 2021

Stock Recommendation Tracker

The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any changes to our recommendations over the previous week. We include this table at the bottom of the Weekly Summary, and provide a link here at the top to the Stock Recommendations Tracker.

Cabot Weekly Review (Video)

In this week’s stock market video, Tyler Laundon reviews charts of a number of tech companies that have recently reported earnings. While all companies discussed are attractive as long-term investments, Tyler shows which companies knocked it out of the park and should be better positioned to head higher in the coming weeks. Stocks discussed: PINS, SNAP, LYFT, AVLR, DDOG, VRNS, NET, BILL, and MSFT.


Investing in Marijuana Stocks

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Advisory Services

Cabot Growth Investor

Bi-weekly Issue February 11: Two weeks ago, the major indexes and some individual stocks began to flash abnormal action, a couple of key leaders were threatening to break down and some late-in-the-advance type of action (heavily shorted stocks going nuts) was occurring. Importantly, though, the primary evidence—the big-picture price, volume and trend action from the market and leading stocks—never cracked. Thus, we trimmed a bit, but thankfully didn’t let go of much stock. And the action since then—really, it’s hard to have written a better script. Not only have the major indexes rebounded beautifully, but leading stocks have soared (many have exploded back to new highs), and even some of the aforementioned secondary evidence has wowed. Mike has two portfolio changes: Pinterest (PINS) and Twilio (TWLO) to Buy.

Bi-weekly Update February 4: The quick rebound in the major indexes and many growth stocks this week has been very encouraging—it doesn’t completely clear the air from some of the abnormal action last week, but it’s definitely a plus. We remain mostly bullish, though we continue to pick entries carefully, especially with so many stocks reporting earnings in the next couple of weeks. Mike is adding another half-sized position in CrowdStrike (CRWD) and restoring our Buy rating on Uber (UBER). Our cash position will now be around 21%.

Cabot Top Ten Trader

Movers & Shakers February 12: It’s looking like another constructive week for stocks, as the major indexes are trading in the black, led by the strong small-cap area (up nearly 3%). Thanks mostly to last week’s powerful rebound, the intermediate-term trend of the indexes remains firmly up. As for individual stocks, most of the vibes are positive as well—not only have there been very few breakdowns, but the shakeout-and-snapback action in recent weeks generally bodes well. Moreover, we’re actually seeing some fresh breakouts (like Dynatrace in this week’s issue), though we wouldn’t say that’s the norm at this point.

Weekly Issue February 8: The market’s strong snapback to new highs (in the indexes and many leaders) made the prior dip look like a shakeout, which generally bodes well. That said, the action didn’t erase all the yellow flags out there, either, as sentiment is bubbly, many stocks are extended in time and price and, most important, tons of names are set to report earnings in the days ahead, which will be key for the intermediate term. Mike’s Top Pick is Dynatrace (DT), which has just gotten going from a multi-month structure and looks ready for a sustained advance.

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.

Cabot Options Trader Basic & Pro Earnings Update February 11: Of note, LYFT results exceeded expectations and the company also gave upbeat forward guidance. UBER on the other hand posted mixed results, missing revenue expectations but fourth quarter bookings improved. However, Wall Street analysts seem to like what they saw from both reports, as a number of analysts raised price targets for LYFT and UBER shares.

Cabot Options Trader Basic & Pro Trade Alert February 11: Sell Half of Existing Position: Sell Half of your PINS June 80 Calls for $14.50 or more.

Cabot Options Trader Basic & Pro Earnings Update February 11: Today is shaping up to a pretty good day for the Cabot Options Trader/Options Trader Pro portfolios as both PINS and SONO are indicated significantly higher. Last night Reuters reported that recently Microsoft (MSFT) approached Pinterest (PINS) about a potential deal to be acquired. In reaction to this news PINS is indicated higher by $6 this morning. Of note, the Reuters article did go on to say the takeover talks were not currently active.

Cabot Options Trader Basic & Pro Earnings Update February 10: Sonos (SONO) will report earnings today after the close. Ahead of the release, SONO stock is trading at a new 52-week high, and our calls originally purchased for $3.65 are worth $11, or a potential profit of 200%. General Motors (GM) reported earnings this morning that beat expectations, though the company did again warn that the semiconductor chip shortage would weigh on this year’s earnings.

Cabot Options Trader Basic & Pro Earnings Update February 9: General Motors (GM) will report earnings tomorrow before the market open. Ahead of the results, GM stock is trading just short of its 52-week high. This stock strength the past several months in GM has been a big windfall for our positions: Cabot Options Trader’s March 31 Calls originally purchased for $4.30 are now worth $25, or a potential profit of 481%. Cabot Options Trader Pro subscribers Bull Call Spread, with a cost basis of $1.75, is now worth $21, or a potential profit of 1100%, and the potential to be worth much more on March expiration.

Cabot Options Trader Basic & Pro Trade Alert February 8: Buy the Pinterest (PINS) June 80 Calls (exp. 6/18/2021) for $13 or less.

Cabot Options Trader Basic & Pro Trade Alert February 8: Sell Half of Existing Position: Sell Half of your TSM July 130 Calls for $14 or more.

Cabot Options Trader Basic Weekly Update February 8: Volatility was sucked out of the market last week as stocks rose. The Chicago Board of Options Exchange Volatility Index (VIX), after spiking above 37 to end January, declined sharply all five days last week, with the “fear index” plunging 36.9% over the full week to end at 20.87, the lowest level since early December 2020.

Cabot Options Trader Pro Weekly Update February 8: Long positions: FCX, GM, MSFT, SNAP, SONO, XLF, MJ, TSM

Cabot Undervalued Stocks Advisor

Weekly Update February 10: What makes bubbles difficult for value investors is that price and valuation become increasingly disconnected, not just for a few stocks, but for nearly all stocks. Some stock prices become complete strangers to their realistic valuation, like GameStop recently, while others distance themselves to only a casual acquaintance. In most bubbles, the disconnect goes both ways: some stocks become amazingly over-valued, others amazingly under-valued. So, how does a value-focused investor invest during a bubble? Bruce has three rating changes: Columbia Sportswear (COLM) – moving from Hold to Sell, Terminix Global Holdings (TMX) – moving from Hold to Sell and ViacomCBS (VIAC) – moving from Buy to Hold.

Monthly Issue February 3: Investors and commentators seemed a bit troubled by the emerging power of the Reddit crowd, the trade-at-home “renegades” who drive highly-shorted stocks like GameStop (GME), AMC Entertainment (AMC), Koss Corporation (KOSS) and others to prices well beyond the orbit of their troubled underlying fundamentals. Yet, other than a few bruised hedge fund manager egos (and balance sheets), the effect on the broader stock market appears to be fleeting. Even last week’s slippage in the S&P 500 could easily be attributed to temporary and technical knock-on effects. Historically, bubbles don’t pop early. They gradually inflate for years, then tend to go parabolic, prior to bursting. Our current bubble could easily continue for many more years. Investors sense that the easy money will continue to flow, earnings will remain robust and few impediments will crop up. Bruce has no portfolio changes today.

Cabot Stock of the Week

Weekly Issue February 8: The market’s main trend remains up, and thus Tim continues to recommend that you be heavily invested. Tim’s featured stock Progyny (PGNY), is an insurance-related name that’s easy to enthuse about: It appears to be set for years of rapid, reliable growth if management makes the right moves. Tim has four portfolio changes: Coca-Cola (KO) to Hold, Qualcomm (QCOM) to Sell, Spotify (SPOT) to Hold and Uber (UBER) to Buy.

Cabot Global Stocks Explorer

Bi-weekly Update February 11: While the market continues to move forward, The “Buffett Indicator,” which takes the broadest Wilshire 5000 Index and divides it by the annual U.S. GDP, is now at a record high. In doing the math, the Buffett Indicator stands at about 194%. This figure is well above the 159% seen just before the dot-com bubble. So it’s not just the big tech stocks that look a bit ahead of themselves. Over the past year, the combined revenue of the five biggest U.S. tech companies grew by 20% to reach $1.1 trillion. Their aggregate profit rose by 24%, and their combined market cap soared by half to $8 trillion. Incredible.

Bi-weekly Issue February 4: In 2020, There are four powerful trends in the market that the Explorer is trying to tap into these days. The first trend is clean energy and clean tech, which has received a boost from the new administration, concerns over climate change, as well as aggressive emission standards in Asia and Europe. The second trend, which has been accelerated by the pandemic, is financial technology, better known as fintech. The third trend is the continued growth of advanced medicine and medical devices, which is driven both by scientific advances and the growth of the global middle class. The last trend is infrastructure, which is clearly on the rise both in America and around the world. Carl’s new recommendation Fisker (FSR), is an electric vehicle maker. Carl has one portfolio change: NeoGenomics (NEO) Moves from Buy to Hold

Cabot Small-Cap Confidential

Special Bulletin February 12: Since reporting earnings earlier this week shares of Avalara (AVLR) have retreated modestly, despite a solid quarter. Tyler has one portfolio change: Avalara (AVLR) moves to Hold.

Weekly Update February 11: Suffice to say we are in a bull market. Areas of it are most definitely frothy. But stepping back and thinking about where we are in a bigger cycle Tyler continues to feel as though we are entering a more sustained economic recovery and (hopefully) sustained market run-up broadly similar to what happened coming out of other major shocks, like the dot-com bubble and Great Financial Crisis. Tyler has one portfolio change: Porch Group (PRCH) Moved To Hold

Special Bulletin February 11: Avalara (AVLR) reported results after the close yesterday that handily beat expectations on virtually all metrics. Q4 revenue was up 35% to $144.8 million (beating by $11.4 million) while adjusted EPS of $0.09 beat by $0.15. Billings of $167 million were up 38%. Adjusted gross margin increased from 71% to 74% and free cash flow increased from $14.2 million to $28.6 million. Avalara ended the quarter with $674 million in cash.

Special Bulletin February 8: Cerence (CRNC) reported this morning that Q1 revenue was up 22.6% to $95 million (beating by $7.1 million) while adjusted EPS of $0.59 was up 103% (beating by $0.08). There are a lot of initiatives at Cerence and management had a lot to say, but Tyler will just mention a few things that jumped out at him.

Monthly Issue February 4: Tyler’s new recommendation, Profound Medical (PROF) is an Ontario, Canada-based company that has developed a platform of customizable, incision-free therapeutic systems for the ablation of diseased tissue. The company has a market cap of roughly $500 million. Management believes it is the only company offering therapies of its kind, which merge three powerful technologies: real-time Magnetic Resonance Imaging (MRI), thermal ultrasound and closed-loop temperature feedback control. The company began generating revenue in 2017. In 2019 sales rose by 112% to $4.2 million. Through the first three quarters of 2020 revenue is up 115% to $4.3 million. In Q3 2020 revenue was up 338% to $2.2 million. That follows Q2 revenue growth of 100% (to $1 million) and Q1 revenue growth of 5% (to $1.1 million).

Cabot Dividend Investor

Monthly Issue February 10: The bull market keeps raging. All three major indexes just made still new all-time highs. The S&P 500 is up about 20% since the end of October and 78% since the low of last March. How long can this keep going? The short answer is that it will likely continue higher over the course of the year, albeit at a much slower rate. Of course, a pullback or correction would be entirely normal and healthy after such a steep run higher. And it wouldn’t be surprising in the coming weeks and months. But the year looks solid. In this issue, Tom highlights Chevron Corporation (CVX), which is one of the world’s largest fossil fuel pushers. The reason for the purchase is simple. Right now, it is a play on the vaccine and full recovery, which is a good bet. The stock has momentum and a long way to go to get to pre-pandemic prices. CVX has significant upside in just recovering from this pandemic.

Weekly Update February 3: It’s earnings season.The fourth quarter earnings season is well under way and the results have been somewhat spectacular so far, and much better than expected. Tom is not surprised. The economy has exceeded expectations in every phase of the recovery so far.Wall Street types and media people tend to have a negative bias when it comes to the economy. But the market gets it. Better than expected results and an optimistic market provide confidence for a robust and full recovery later this year. The market rally on the expectation of a full recovery with loads of stimulus and low interest rates is likely correct. Click here to listen to the podcast. Tom has no portfolio changes.

Cabot Marijuana Investor

Weekly Update February 10: So, today the portfolio will sell one-half of its positions in these stocks: Cresco Labs (CRLBF), Curaleaf (CURLF), Green Thumb (GTBIF), GrowGeneration (GRWG), TerrAscend (TRSSF). And the portfolio will sell one-third of its positions in these stocks: Canopy Growth (CGC), Innovative Industrial Properties (IIPR), Trulieve (TCNNF), Turning Point Brands (TPB) and Village Farms (VFF). After these sales, the portfolio will be roughly 42% in cash.

Monthly Issue January 27: The long-term strategy is to develop core holdings of the companies that will lead this fast-growing industry five and 10 years from now—but as I explained in a recent update, there’s no certainty who those leaders will be. Thus, our short-term strategy is to listen to the stocks, owning those with the strongest charts and the best fundamentals, and then switching incrementally to stocks that grow stronger or to cash as various stocks roll over and underperform. Tim recommends staying heavily invested but keeping an eye on the exit. It’s tempting to look at this morning’s selloff and declare that the uptrend is over and it’s time to sell—but just as one swallow doesn’t make a summer, one down day doesn’t make a bear market. Read the issue for updates on each position. Tim has one portfolio change: Village Farms (VFF) to Buy.

Cabot Early Opportunities

Special Bulletin February 12: Datadog (DDOG) reported Q4 results yesterday afternoon that surpassed expectations but were light in terms of 2021 EPS guidance. Cloudflare (NET) reported Q4 results that beat expectations too. Revenue was up 50% to $126 million (beating by $7.6 million) while adjusted EPS of -$0.02 beat by $0.02. We jumped into Nevro (NVRO) in September and are up around 26% since, with the stock trading right near all-time highs. This looks like a good time to book the gain. Tyler recommends selling NVRO and a quarter of NET.

Special Bulletin February 10: Lyft (LYFT) reported Q4 2020 earnings after the close yesterday and the results were better than expected even though the numbers look just terrible (thanks pandemic!). We jumped into Lawson Products (LAWS) in December as we began to hunt for recovery plays and stocks that we could jump into for low risk, quick profits. With the stock jumping to near multi-week highs at 54 yesterday, where it has hit resistance for the third time, it looks like a good time to step aside for a modest profit of around 7%. We’ve had TFFP Pharmaceuticals (TFFP) since last August and are up over 45%. After a great Q4 report on Monday Varonis (VRNS) announced it would launch a $400 million secondary yesterday. Tyler is moving Lawson Products (LAWS) and TFFP Pharmaceuticals (TFFP) to SELL.

Special Bulletin February 9: Nuance (NUAN) reported Q1 fiscal 2021 results yesterday that beat expectations on the top and bottom lines. That said, the numbers don’t look that great due to a large, non-strategic coding government contract that did not renew (management previously disclosed on the Q4 fiscal 2020 conference call) and the ongoing transition to a subscription model. Varonis (VRNS) reported Q4 yesterday with great numbers. Revenue was up 31% to $95 million (beating by $11.2 million) while adjusted EPS of $0.32 beat by $0.22. Corsair Gaming (CRSR) reported Q4 results yesterday that beat on both the top and bottom lines. Revenue was up 70% to $556 million (beating by $26 million) while adjusted EPS rose by 151% to $0.53 and beat by $0.07. Tyler is moving CRSR to a Sell.

Monthly Issue January 21: Overall, Tyler recommends staying invested but proceeding cautiously with respect to new buying. A pullback or deeper correction could be right around the corner, or months away. To balance out the risks be sure to average into new positions and accumulate a full position over time. Today’s Top Pick is Castle Biosciences (CSTL), develops diagnostic and prognostic tests for skin cancers that inform personalized treatment plans based on tumor-specific genomic information. While the company has a market cap of less than $2 billion, it has come a long way since it was formed in 2008. Progress has accelerated over the last year too. Entering 2020 Castle had an addressable market in the U.S. of $540 million. With two new tests launched over the last twelve months (DecisionDx-SCC and DecisionDx DiffDx-Melanoma), Castle’s addressable market has grown to over $2 billion.

Cabot Profit Booster

Update February 12: Because of President’s Day, our offices will be closed next Monday, February 15 — so your next Cabot Profit Booster issue will be published Wednesday, February 17. “I got an email from my broker that my account has been assigned 1 SONO Mar 19 $30 call. Why is that? IT IS NOT MARCH 19 YET!! And what does it mean?” This is actually a rare, but fantastic situation. Here is the headline, and then I will go into greater detail ... Essentially you have locked in your full 17.5% profit one month ahead of time!

Weekly Issue February 9: The stock market enjoyed a big upside reversal last week, snapping back strongly from the recent slump. The DJIA rose 3.9% for the week while the S&P 500 gained 4.6%. Big-tech stocks reasserted a leadership role thanks in part to blow-out earnings from Amazon (AMZN) and Alphabet (GOOGL), propelling the Nasdaq to a 6% advance for the week. Jacob’s new stock recommendation is Dynatrace (DT).

Cabot Micro-Cap Insider

Special Bulletin February 11: Zedge (ZDGE) has appreciated a lot faster than I had anticipated. It is up over 100% since we profiled the name last month and is trading above my fair value estimate of $9.80. The price strength was driven by a recent press release highlighting 158% subscriptions growth as well as a broker upgrade. The subscription growth is indeed excellent, but it’s not anything new (Zedge reported that growth last quarter). Rich is moving Zedge to a Sell and locking in 114% profit in a month.

Monthly Issue February 10: Depending on who you follow to get your financial news, you may be aware that the U.S. stock market is quite expensive and there are several warning signs that prospective returns could be weak. For example, the S&P 500 Index recently hit an all-time high Price to Sales multiple at 2.9x, as shown in the issue. Rich’s new recommendation IDT Corporation (IDT), is a mini-conglomerate run by Howard Jonas, one of the best value creators in the world. The stock is trading at a big discount to its sum-of-the-parts valuation, but the imminent spin-off of one or more of its high growth technology subsidiaries will unlock that value.

Weekly Update February 3: Our performance in aggregate remains strong. In total, our open recommendations are up 66% on average. But our stocks did pull back a little this week. However, it’s nothing to worry about. In fact, typically the S&P 500 performs poorly in February and March when there is a new party in the White House. This week, there was not much news on our recommendations. Rich is increasing the buy limit for FlexShopper (FPAY) to Buy under 3.00 given strong performance yet a reasonable valuation.

Cabot Income Advisor

Weekly Update February 10: This market looks like it never wants to stop going higher. The S&P 500 just made yet another in a long series of new all-time highs. Investors are banking on a full recovery later this year as the vaccine brings an end to the restrictions. I hope that happens (it better). There’s also trillions in stimulus and low interest rates. The market likes what it sees ahead. Although a pullback is possible at anytime, and probably overdue after such a sharp run higher, the prospects for the rest of the year are bright. It’s also great news for income investors that high dividend paying stocks in sectors that took it on the chin during the pandemic have really come alive. In this update, we highlight selling a call on refiner stock Valero Energy (VLO).

Monthly Issue January 27: The S&P 500 is making yet another new all-time high. The index has risen 72% since last March and over 17% just since the beginning of October. That’s amazing performance in a short amount of time. While Tom is positive on the market for the rest of this year, he is increasingly cautious in the near term. The income strategy has been keeping us honest in an expensive market. Several portfolio positions have been called away in recent weeks as the market values have exceeded the strike prices at expiration. Recently called stocks include AbbVie (ABBV), Altria (MO), Enterprise Product Partners (EPD), and U.S. Bancorp (USB). Tom has one new featured stock Digital Realty Trust (DLR) and multiple portfolio changes.

Cabot Turnaround Letter

Weekly Update February 12: All ratings and price targets remain unchanged, except: we are raising the price targets on Western Digital (WDC) from 59 to 69 and Signet Jewelers (SIG) from 42 to 49. A number of other stocks are trading above our price targets so we are reviewing these. Click here to listen to the podcast.

Monthly Issue January 27: While momentum-driven concept stocks make the headlines, stocks of companies that are firmly grounded in cash flows and tangible assets, like energy pipelines, remain out of favor. There may be an opportunity emerging in this group from their contrarian status and a favorable secular change. Bruce’s has one buy recommendation: Viatris, Inc. (VTRS) and one sell recommendation: DuPont (DD).

Ask the Experts

Cabot Profit Booster

Question: I see that you have set a stop loss on DT (today’s record) at 47.50. How do you determine the stop loss value?

Jacob: We take the lower end of Mike’s Top Ten Stop Loss range. So in this case, with DT, his suggested stop loss limit was 47.5 - 49. I go with the lower end, 47.5, as we are collecting a covered call premium, which helps offset any stock losses.

Quarterly Cabot Analyst Meeting

The recording of the Cabot Prime Members Meeting with the Analysts from January 20, 2021 is now available for you to listen to at your convenience—click here for access. This private call with our analysts is one of your exclusive Cabot Prime Pro member benefits.

Stock Recommendations Tracker

The table below lists all of the stocks held in any Cabot portfolio.
Updated or revised recommendations from the past week are in purple text.
Stocks added to a portfolio are highlighted in green text.
Closed stock positions in the past week are highlighted in red text.

StockCabot Small-Cap ConfidentialCabot Global Stocks ExplorerCabot Growth InvestorCabot Marijuana InvestorCabot Stock of the WeekCabot Undervalued Stocks AdvisorCabot Dividend Investor
ABBVHold 2/3
APT.AXHold 1/2
BFTBuy 1/2
BIPBuyBuy 2/3
BMYStrong Buy
BSCLBuy 1/2
CGCSee Advisory
CRLBFSee Advisory
CRWDBuy Another HalfBuy
CURLFSee Advisory
FIVEHold 2/3
FVRRHold 3/4
GRWGSee Advisory
GSHDHold 3/4
GTBIFSee Advisory
HALOBuy Another 1/2
IIPRSee AdvisoryHold 2/3
INSPHold 3/4
JUSHFSee AdvisoryHold 2/3
LGIQBuy 1/2
LLYHold 2/3
NEEHoldHold 1/2
NETHold 1/2
NVCRBuyBuy Another 1/2Buy
PGXHold 1/2
QCOMSellHold 2/3
ROKUHold 3/4
SEHold 1/2Hold
SOLOBuy 1/2
SPCEHold A HalfTake Partial Profits
STAGHold 1/2
TCNNFSee AdvisoryHold
TPBSee Advisory
TRSSFSee Advisory
TSMBuy 1/2
XELBuyBuy 2/3