Cabot Prime Pro Week Ending July 21, 2017
Cabot Wealth Summit
Have you registered for the Cabot Wealth Summit in September? It’s included in your Prime Pro 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 Analyst Teleconference
Listen to the Q2 2017 quarterly teleconference where Cabot Analysts answer members’ questions live.
Cabot Weekly Review
Paul Goodwin’s message in this week’s stock market video is simple: It’s a bull market. The major indexes are well above their moving averages, and emerging market indicators are similarly strong. Of course, there are always reasons to be cautious—earnings season is in full swing, for instance—but it’s a great time to buy great growth stocks. I list a couple of U.S. stocks and a few emerging-market stocks that combine big stories with excellent charts. Just be sure you know when your stocks are reporting and have a loss limit in place.
Cabot Growth Investor
Update on Other Stocks of Interest July 21: Follow ups to stocks featured February 15, 2017 (issue 1361) to July 19, 2017 (issue 1372). 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.
Bi-weekly Issue July 19: The markets and major indexes have made a show of strength that has put fears about a larger pullback to rest. We’re moving Universal Display (OLED) back to a Buy rating, give a detailed explanation of the market’s moves and our portfolio’s holdings, and write about the puzzling failure of the average investor to take part in the equity rally and how to handle stocks around their Initial public offerings.
Cabot Top Ten Trader
Movers & Shakers Weekly Update July 21: Many stocks we’ve covered have moved out to new highs, so we’re going to soft-pedal that group. The stocks in this week’s Buy Ideas are ones that have been moving sideways in orderly consolidations. You can either buy some here or wait for a breakout, perhaps on a good reaction to earnings: Autohome (ATHM), Global Payments (GPN), Lending Tree (TREE), Take-Two Interactive (TTWO), Teladoc (TDOC) and Wayfair (W).
Weekly Issue July 17: Mike is bumping the Market Monitor up a notch and will follow the market’s cues from here. This week’s list focuses on stocks that have attracted buyers as the market has shown renewed strength. Mike’s Top Pick is Western Digital (WDC), a well-known tech name that’s lifted to new highs just a few days after pre-announcing positive quarterly results.
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.
Position Update July 21: Bank of America (BAC) is our only position expiring today that’s “in play.” After trading right at 24 earlier this morning, this afternoon, BAC is trading at 23.85. Jacob will let the position play itself out today and not adjust the stock or option position.
Position Update July 21: Jacob looks at why he bought the Micron Technology (MU) position yesterday, instead of waiting until Monday, when the selling pressure would have passed.
Trade Alert July 20: Sell Half of Existing Position: Sell HALF your Cypress (CY) September 15 Calls for $0.95 or more.
Position Updates July 20: Updates on our MGM (MGM), Bank of America (BAC), Anheuser Busch (BUD), ON Semiconductor (ON) and Square (SQ) positions.
Trade Alert July 20: Buy Micron (MU) October 33 Calls (exp. 10/20/2017) for $2.40 or less or Buy Micron (MU) October 33 Calls (exp. 10/20/2017) and Sell October 38 Calls for $1.55 or less.
Earnings Updates July 20: Microsoft (MSFT), Visa (V) and General Electric (GE).
Market Update July 19: Micron (MU) is on the top of Jacob’s watch list for a new position. However, there’s a VERY interesting situation happening right now in MU options.
Earnings Updates July 18: International Business Machines (IBM) and Morgan Stanley (MS).
Earnings Update July 18: Bank of America (BAC) reported earnings and revenues that easily beat expectations. In early pre-market trade, BAC is trading lower by $0.20 at 23.82. Our short volatility buy-write is in good shape with the stock at these levels headed into expiration on Friday.
Stock on Watch July 17: Micron (MU) reported earnings two weeks ago that beat expectations, but the stock fell from 32 to 28.5 in the days that followed. However, the stock has begun to recover in the last several days, and has hit Jacob’s options radar the last two days.
Earnings Updates July 17: Netflix (NFLX) and Bank of America (BAC).
Weekly Market Update July 17: For the bulls, it was another strong week. The Dow and S&P 500 broke to new highs, and the Nasdaq rebounded from selloffs earlier this month to close Friday approximately 0.5% away from its highs.
Daily Watch List: These are recent large order flows that Jacob has spotted, plus two covered call ideas. Order Flow Reading is a strategy Jacob uses to follow the biggest hedge funds or traders into their trades.
Cabot Undervalued Stocks Advisor
Special Bulletin July 20: Updates on three of our stocks: Blackstone Group (BX) reported second quarter results this morning, XL Group (XL) moves from Strong Buy to Buy, and Vertex Pharmaceuticals (VRTX) rose 21% yesterday. Also, Crista names three excellent stocks to buy now: Ameriprise Financial (AMP), Dollar Tree (DLTR) and KLX (KLXI).
Special Bulletin July 19: Updates on Vertex Pharmaceuticals (VRTX) following its July 18 breakthrough drug announcement, and Chipotle Mexican Grill (CMG), which is in the news again due to the closing of a Virginia restaurant location. Both stocks are Holds.
Special Bulletin July 18: Goldman Sachs (GS) and Bank of America (BAC) each reported strong second quarter earnings beats this morning. Crista comments on their earnings reports and provides an earnings report calendar for our stocks through July.
Weekly Update July 18: Three of Crista’s financial stocks, plus Vertex Pharmaceuticals (VRTX), could easily hit their price targets in the coming weeks. Ratings changes: Blackstone Group (BX) moves from Buy to Hold, and Legg Mason (LM) moves from Strong Buy to Hold.
Special Bulletin July 17: Bank of America (BAC) will report earnings tomorrow morning, July 18. Buy BAC and Dollar Tree (DLTR) now.
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 18: Weekly Issue July 18: This week’s featured stock is Autohome (ATHM), a fast-growing Chinese stock that dominates its mass-market business segment. Tim upgrades three stocks to Buy: Carnival (CCL), Facebook (FB) and Square (SQ), and downgrades one to Sell: Wynn Resorts (WYNN).
Cabot Emerging Markets Investor
Bi-weekly Update July 20: The iShares EM Fund has bolted higher since July 10, giving us a robust and unambiguous Buy signal. Paul has two portfolio moves tonight: He’s selling LG Display (LPL) and upping our position in YY Inc. (YY) to a full Buy.
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 21: Earnings season has begun, and initial quarterly reports have spawned some volatile action in individual stocks. Some of the wide swings are warrantied and some aren’t. Roy sorts through the maze and offers his advice on nine companies: Alliance Data Systems (ADS), Blackstone Group LP (BX), Danaher (DHR), Home Depot (HD), Lowe’s (LOW), Schlumberger (SLB), Scripps Networks (SNI), Travelers Companies (TRV) and UnitedHealth (UNH).
Enterprising Model Issue July 20: Roy’s new stock in this month’s Cabot Enterprising Model is Canadian Tire (CTCA.TO), a diversified retailer with $13 billion in sales. Ratings changes: Big Lots (BIG) to Buy, Chicago Bridge & Iron (CBI) to Buy, Five Below (FIVE) to Hold, LKQ Corp. (LKQ) to Hold and Ulta Beauty (ULTA) to Hold.
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.
Cabot Small-Cap Confidential
Weekly Update July 21: Amid all the debate around health care, and despite the on-again-off-again repeal-and-replace effort, small-cap healthcare is still the number-one performing sector this year. Our two medical device stocks, BioTelemetry (BEAT) and AxoGen (AXGN), are rated Buy, and both are trading at or near 52-week highs.
Monthly Issue July 7: Tyler’s selection this month is a small company in the health care space, given the strength in this group of stocks. The company, AxoGen (AXGN), has a very specific focus on products to treat peripheral nerve injuries, and it’s growing revenue north of 50% annually. One ratings change today: Q2 Holdings (QTWO) moves from Hold to Sell Half.
Cabot Dividend Investor
Weekly Update July 19: Volume remains light, so don’t go wild, but if you have some cash to put to work, you can invest opportunistically here. Our strongest Buy-rated stocks today are 3M (MMM), Carnival (CCL), Cummins (CMI), and, for high yield investors, Pembina Pipeline (PBA). On the flipside, Wynn Resorts (WYNN) gapped down last week, and I’m moving the stock to Hold until it regains some strength.
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 21: DST Systems (DST) from 2 for 1 Stock Split Newsletter
Daily Alert July 21: SELL Columbia Sportswear (COLM) from 2 for 1 Stock Split Newsletter
Monthly Issue July 19: In this Mid-Year Top Picks issue, Nancy features the top five picks year to date, which averaged 54.85% gains, plus updates on all our Top Picks. Going forward, analysts expect the three industries to grow the fastest in the remainder of the year to be energy, information technology and financials, and we have plenty of ideas in each of those sectors.
Daily Alert July 20: Fidelity OTC (FOCPX) from Moneyletter
Daily Alert July 19: LightPath Technologies (LPTH) from The Inger Letter
Daily Alert July 18: MannKind (MNKD) from Nate’s Notes
Daily Alert July 17: Alibaba Group Holding (BABA) from Cabot Emerging Markets Investor
Wall Streets Best Dividend Stocks
Daily Alert July 21: Oriental Financial Group (OFG) from The Turnaround Letter
Daily Alert July 20: Teva Pharmaceutical (TEVA) from Jack Adamo’s Insiders Plus
Daily Alert July 20: Sell Capital Product Partners (CPLP) from Top Stocks under $10
Daily Alert July 19: SPDR S&P Dividend ETF (SDY) from Pearson Investment Letter
Daily Alert July 18: Tekla Life Sciences (HQL) from Nate’s Notes
Daily Alert July 17: Algonquin Power & Utilities (AQN) from The Income 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 Undervalued Stocks Advisor
Question: You recommended KeyCorp. (KEY), but its not listed in any of your portfolios, why is that?
Answer: There are dozens of stocks that I like that aren’t listed in my portfolios, simply because I can’t write about all of them each week. In addition, I already have two bank stocks and many other financial stocks in the portfolios. So it’s really just a juggling situation between current portfolio stocks, and others waiting in the wings.
I love KeyCorp. (KEY), and I absolutely would buy it today.
Question: I’m overwhelmed! There are so many Strong Buys! Could you point me to your favorite portfolio stock?
Answer: KLX (KLXI) looks like it’s going to break past 52.50 and begin a new run-up any day now.
Cabot Stock of the Week
Question: Tim, as you must know, our ADS stock went down 9.5% today. What do you think about that and do you have any suggestions, buy, sell, hold? You’ve been doing a great job! My portfolio is growing and I appreciate what you are doing. Let me know about ADS.
Tim: Alliance Data Systems (ADS) was bought on the strength of Roy Ward’s value system, and he has announced no changes yet, so I am sitting tight. The drop is obviously not good, but to put a positive spin on it, the reason for the selling is known, and the stock has support at 235.
Here’s what Roy wrote in his July 21 Weekly Update:
“Alliance Data Systems (ADS 238.62) reported disappointing sales and EPS. Sales rose 4% and EPS advanced 4%, after increasing 12% and 2% in the prior quarter. Ed Heffernan, president and chief executive officer of Alliance, stated that sales will remain solid during the remainder of 2017, but $0.40 of EPS will be delayed until 2018. Analysts had been expecting accelerating sales and earnings growth in 2017. ADS shares dropped 9.5% after sales and earnings were released.
Management, however, remains quite optimistic about 2018. Sales are forecast to climb 12% and EPS are expected to jump 19% to $21.50. Since 2018 is less than six months away, I advise you to stay on board. In fact, if your ADS holding is small, you can add shares. If you don’t own Alliance Data Systems, I advise buying at the current low price. Buy at 258.55 or below.”
Cabot Emerging Markets Investor
Question: Can you please comment on China Lodging Group (HTHT)? When they report earnings, do you expect them to raise guidance?
Paul: The probability that HTHT’s management will raise guidance isn’t something I worry about. Watching the reaction to the total revenue/earnings/cash-flow/guidance package gives me all I need to handle a stock. Given the strictness of insider trading rules, I don’t know of a reliable source for speculation about what’s in management’s head.
Cabot Benjamin Graham Value Investor
Question: I’m trying to buy Canadian Tire CTCA.TO at TD Ameritrade but they do not have that symbol. They do have CDNAF and CNDTF and the pricing seems different so your Max Buy doesn’t seem to correspond? (From subscriber S.L.)
Roy: Canadian Tire (CTCA.TO 143.92; CDNAF 114.50) is traded both on the TSX (Toronto Stock Exchange) and on the U.S. Over-the-Counter market. Investors cannot trade Canadian stocks on the TSX without a Canadian brokerage account. In my experience, U.S. citizens are not allowed to open a Canadian brokerage account without dual citizenship. Therefore, U.S. investors must purchase Canadian Tire shares through a U.S. broker on the U.S. Over-the-Counter market. The U.S. symbol for Canadian Tire is CDNAF.
Volatility can be extreme, though, because CDNAF shares trade sparsely with average daily volume of 4,400 shares. On some days, CDNAF doesn’t trade at all. The difference in Canadian Tire’s stock prices quoted on the TSX compared to the U.S. Over-the-Counter is spread between the Canadian dollar and the U.S. dollar. The Canadian dollar is currently worth 0.7946 U.S. dollars. CDNAF is currently trading at a $0.15 premium. Buy at or below 149.74 Canadian (CTCA.TO) or at or below 116.95 U.S. (CDNAF).
Cabot Small-Cap Confidential
Question: I’m thinking about buying some Asure Software (ASUR)—any idea why the big drop today? I haven’t seen any news.
Tyler: Good question. I believe the drop in ASUR is due to the news the CFO is departing to join a private equity firm (disclosed in SEC filing, haven’t seen a press release). It’s not great news since there is a lot going on with the acquisitions. And you always wonder why somebody leaves a company when things appear to be going well. But, we don’t have any concrete reason to believe there’s a negative aspect to his departure—he probably just had a great opportunity, so he took it. I haven’t moved the stock back to buy on this news, but I am watching it and thinking it over.
Question: Was your 7/14 update sent prior to BEAT’s jump, and, if so, do you have a new buy range in mind?
Tyler: The BioTelemetry (BEAT) pop came after my update was written. It’s due to the fact that the GOP healthcare bill doesn’t appear to be going anywhere (confirmed today), and due to a price target hike by Lake Street Capital (from 35 to 50) put out on Friday. The move in BEAT was big, but I also saw good sized moves in other health care related stocks (AXGN enjoyed a pop last Friday too). I’ve kept at buy. I think the breakout above 34 is a good sign, as is the closing of the acquisition. If I were looking to add exposure, I might consider splitting the second tranche up into several smaller ones just in case it keeps rising. But, if it falls, then adding on a pullback will help to offset any purchases made around this level.