Cabot Prime Pro Week Ending November 10, 2017
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.
Cabot Prime Pro Quarterly Market Report
In this Cabot Prime Pro Quarterly Market Report, Cabot President Timothy Lutts offers his read on the stock market, looking back at Q3 2018.
Cabot Prime Pro Quarterly Analyst Teleconference
Watch the October 18 Quarterly Prime Pro Teleconference, in which Cabot Analysts answer members’ questions live.
Cabot Weekly Review
In this week’s stock market video, Paul Goodwin sees the market as a “yes, but …” proposition. The main trends are all higher, but a substantial number of exceptions and warning signs are also present. With U.S. earnings season winding down (but emerging markets earnings just getting into high gear), the results have been good, on balance. It’s a time to be heavily invested but also to keep your sell disciplines oiled and ready. Paul also mentions the Professional Stock Evaluation Contest that’s offering a lucky winner a report on any stock.
Cabot’s 10 Best Marijuana Stocks
Special Update (emailed to Prime Pro members on October 30) Today, Constellation Brands (STZ), with a market capitalization of $42 billion, announced that it had acquired 10% of industry leader Canopy Growth (TWMJF). Canopy stock jumped 18% on the news (on high volume) and is now up 68% since Tim’s August recommendation.
October Update (emailed to Prime Pro members on October 9): If you bought a basket of Tim’s 10 Best Marijuana Stocks when the report was originally published on August 22, you’re off to a good start. Since that report was written, the average of the 10 stocks is up 21%, with the best up 49% and the worst down just 6%.
Cabot Growth Investor
Other Stocks of Interest November 10: Follow ups to stocks featured June 7, 2017 (issue 1369) to November 8, 2017 (issue 1380). 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 November 8: In tonight’s issue, we write about the fact that big moves take time to play out, so it’s important not to get too impatient. Plus, we review all our stocks, telling you which ones look like good buys, which ones don’t, and which ones could be ripe for some partial profit taking.
Cabot Top Ten Trader
Movers & Shakers Weekly Update November 10: We finally started to see some selling pressures emerge during the past few days, though the damage has been very limited and nothing has changed with our top-down view: The intermediate- and longer-term trends of the market remain up, and Top Ten stocks are generally moving higher and most are reacting well to earnings. Thus, we remain bullish.Buy ideas: 58.com (WUBA), ASML Holding (ASML), First Solar (FSLR), Michael Kors (KORS), Universal Display (OLED) and Valero (VLO).
Weekly Issue November 6: This week’s list has many small- and mid-sized companies from a variety of industries, including a bunch that have recently gapped up on earnings. Our Top Pick is Universal Display (OLED), a leading glamour stock that soared after quarterly numbers blew away expectations.
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 November 10: For the past month, a trader has been buying Macerich (MAC) March 65/75 Bull Call Spreads. The trader would buy 5,000 one day, and up to 16,000 the next. And while Jacob loved the option activity, he chose to not buy MAC calls, as the stock looked awful, and he had seen this activity fail in MAC before.
Market Update November 9: The market is getting hit today, especially growth stocks. Big picture, a drop of 1.5% in the Nasdaq after a 4% run higher in the last month is not a big deal. However, I have my eye on the VIX (11.35) and option order flow (mixed) to get a feel if this is the start of a bigger fall.
Earnings Update November 9: Nvidia (NVDA) will report earnings today after the close. The $16 expected move seems extremely expensive to Jacob, but looking back at previous earnings, that size move is definitely not out of the question.
Earnings Update November 9: Johnson Controls (JCI) reported earnings this morning that met expectations, and revenues that exceeded estimates.
Earnings Update November 9: Johnson Controls (JCI) reported earnings this morning that met expectations and revenues that exceeded estimates, but forecasted 2018 EPS slightly below expectations.
Earnings Updates November 8: Jacob describes the options trades he’s seeing for Square (SQ), which reports today after the close, and Johnson Controls (JCI), which reports tomorrow before the open.
Stocks on Watch November 7: Jacob is watching Altaba (AABA) and Waste Management (WM), which are attracting big call options trades.
Trade Alert November 7: Buy Corning (GLW) May 33 Calls (exp. 5/18/2018) for $1.75 or less.
Weekly Market Update November 6: The VIX closed the week at 9.14, lower by 7% and again approaching recent lows—though the situation in Saudi Arabia this weekend may temporarily worry international investors and cause the VIX to again trade above 10.
Daily Watch List: Order Flow Reading is a strategy Jacob uses to follow the biggest hedge funds or traders into their trades. These are recent large order flows that Jacob has spotted, plus two covered call ideas.
Cabot Undervalued Stocks Advisor
Monthly Issue November 7: Today’s featured stocks include two new additions to the portfolios—WestRock Company (WRK) and Delek US Holdings (DK)—and Cavium (CAVM), which has ostensibly become a takeover target.
Special Bulletin November 6: Andeavor (ANDV), Dollar Tree (DLTR) and Molina Healthcare (MOH) have reached their target prices and move from Hold to Sell. Cavium (CAVM) might be acquired by Marvell Technology Group. CAVM rose to new all-time highs as investors snapped up shares prior to a definitive merger announcement so Crista is moving the stock from Strong Buy to Hold.
Cabot Stock of the Week
Weekly Issue November 7: The market sold off broadly today, reminding those who’d forgotten that this is a two-way street, but the main trend remains up. For today’s selection, Tim turned away from the U.S. market because it was looking a bit overextended short-term, and selected an emerging markets stock with a lower-risk entry point, Baidu (BIDU).
Cabot Emerging Markets Investor
Bi-weekly Update November 9: The iShares EM Fund (EEM) is holding above its 50-day moving average, which keeps the Cabot Emerging Markets Timer positive. And we’re encouraged by the rebound in Chinese stocks as a group. Paul has no changes tonight.
Bi-weekly Issue November 2: Emerging market stocks in general strengthened this week, keeping our Cabot Emerging Markets Timer firmly on the positive side. Our new stock is ZTO Express (ZTO), an express delivery company with a China-wide network that covers 96% of China cities and towns. We have ratings changes on two of our stocks, Alibaba (BABA) from Hold to Buy and Baidu (BIDU) from Buy to Hold.
Cabot Benjamin Graham Value Investor
Monthly Issue November 9: Azmath presents his outlook on the investment climate and the economy, adds two new stocks to the portfolio, Discovery Communications (DISCA) and Signet Jewelers (SIG), and gives updates on our existing stocks.
Cabot Small-Cap Confidential
Weekly Update November 10: Small caps have been trending down since early October, and the pace of the decline accelerated over the past week—not surprising, given that the September advance was incredibly strong, and a pull-back to the small cap index’s 50-day line isn’t remotely alarming. Two rating changes: PrimoWater (PRMW) and Q2 Holdings (QTWO) from Hold to Buy.
Special Bulletin November 8: BioTelemetry (BEAT), Tactile Medical (TCMD) and Primo Water (PRMW) reported earnings. BEAT moves to Hold and TCMD moves to Sell.
Special Bulletin November 7: Earnings updates on Everbridge (EVBG) and AppFolio (APPF), which both reported beat-and-raise quarters.
Monthly Issue November 3: Today’s addition to our portfolio, Materialise (MTLS), is different from our other stocks. It’s not a pure-play cloud software stock, though its software division generates 26% of revenue. It’s not a pure-play medical device stock, though its medical division generates 33% of revenue. It’s not even based in the U.S.
Cabot Dividend Investor
Weekly Update November 8: Chloe gives updates on all the companies that reported this week: General Motors (GM), ONEOK (OKE), Pembina Pipeline (PBA), Welltower (HCN) and Broadridge Financial Solutions (BR).
Monthly Issue October 25: Chloe adds ONEOK (OKE), a new 5.3% yielding stock to the High Yield Tier. Most of her other positions are rated Buy as well, and the market is strong, so if you’re underinvested, it’s time to put some money to work. She also review some of her best and worst trades of the past two years, to see what we can learn from them.
Wall Street’s Best Investments
Daily Alert November 10: BYD Co. (BYDDF) from Crisis and Opportunity
Daily Alert November 9: Adamas Pharmaceuticals (ADMS) from Schaeffer’s Investment Research
Daily Alert November 8: Autodesk (ADSK) from Cabot Growth Investor
Daily Alert November 7: Tencent Holdings (TCEHY) from Cabot Emerging Markets Investor
Daily Alert November 7: Sell HDFC Bank (HDB) from Cabot Emerging Markets Investor
Daily Alert November 6: US Foods Holding (USFD) from Weiss Stock Ratings Heat Maps
Monthly Issue October 18: This month’s Spotlight Stock is Advance Auto Parts (AAP), a household name that ran into some challenges that put a dent in its stock price. But now with a new management team and favorable industry trends, the turnaround looks promising, and the stock price is certainly discounted—and attractive.
Wall Streets Best Dividend Stocks
Daily Alert November 10: Jupai Holdings (JP) from Validea Hot List Newsletter
Daily Alert November 9: Owens & Minor (OMI) from Directinvesting.com
Daily Alert November 8: Crestwood Equity Partners LP (CEQP) from Energy & Income Advisor
Daily Alert November 7: Federal Agricultural Mortgage (AGM) from Upside
Daily Alert November 6: SUEZ SA (SZEVY) from Conrad’s Utility Investor
Monthly Issue November 8: Nancy’s contributors remain bullish, but cautious. The Spotlight Stock is Blackstone Group (BX), a Master Limited Partnership that’s primarily an asset manager, with holdings that are increasingly energy investments. The company is growing at double-digit rates and currently yields 5.35%.
This Week’s Q&As
Cabot Undervalued Stocks Advisor
Question: I’m heavily invested with Occidental Petroleum (OXY) in my IRA after a decades-long career with them. I would like to know your feeling on the stock?
Crista: Occidental is an attractive stock. The numbers look like those of a biotech company that’s coming away from net losses and now experiencing rapidly increasing profits. As such the 2018 P/E is quite high and the 2018 EPS growth rate is even higher. Then curiously we throw in a 4.5% dividend yield, and we have an unusual situation.
There’s going to be some pretty good price resistance at 74, so expect OXY to reach 74 and then pull back, possibly several times.
If this were my stock, I might pare back my holdings a bit at 74. Also, as soon as full-year 2017 numbers are reported, all the analysts will publish their 2019 numbers. I would stare at that new consensus estimate and make sure that it continues to reflect strong earnings growth. Otherwise, I would be less likely to expect the share price to perform well down the road. But we have plenty of months ahead before needing to concern ourselves with the 2019 projections.
Question: I would like your thoughts on AK Steel (AKS).
Crista: The profit situation at AK Steel is finally becoming attractive in 2018. Two red flags: there’s a huge debt ratio and terrible price chart. Any stock that’s fallen this far during the year will generally stay down/fall further in November and December due to tax loss selling. If there were a stock that I liked with that price chart, I’d buy it in January, but not prior.
Cabot Emerging Markets Investor
Question: As a new subscriber, do you suggest buying the current buy ratings at the current price? Do you suggest starting with a full position on the holdings that have already appreciated greatly. What about those on hold, would you suggest any buys there. Thanks for any guidance.
Paul: It’s a ticklish situation right now, with SUPV reporting earnings tonight after the market closes and five other holding reporting over the next two weeks. It hasn’t been a great earnings season for our stocks, with several beating analysts’ estimates on revenue and earnings but disappointing on margins or guidance to future results.
This isn’t exactly unexpected, given the strength of EM stocks over the last year or so.
But right now, I think I would start with half positions in HTHT, JP and YY, even though YY will be reporting next Tuesday (after the close). I’ll have my latest thinking for you when the update comes out tomorrow after the close.
Cabot Small-Cap Confidential
Question: In your write up of Asure Software (ASUR) on March 3, 2017, you mention… “there is only one SaaS company that provides solutions covering human capital management and workplace management.” My question is what does SaaS mean??
Tyler: SaaS is just an acronym for “software as a service”. Which is a fancy way of saying on-demand software. It refers to the business/delivery model for providing the software, which is typically cloud based. In the simplest sense, you pay, log in to the website, and start using the software. Obviously it’s more complex than that in real life, especially for enterprise software, but that’s the basic idea.
The opposite would be on-premise software, which you purchase once (usually a download now, used to be a disk) and use until you feel like upgrading to a current version.
I should also clarify, ASUR is the only one with both HCM and workplace management together. Other companies do one or the other under the SaaS model.
Question: Thanks for the update ... analysis sounds reasonable—hope the market acts reasonably. iRhythm Technologies, Inc. (IRTC) is one of BioTelemetry’s (BEAT) prominent competitors, yes? They have also broken down big-time on my pt&fig chart. Do you think there is a correlation and that some group re-evaluation, but non-BEAT specific, might be going on?
Tyler: Yes, IRTC is, from what I understand, viewed as a rising threat because of its patch product. I know Morgan Stanley is a big fan of IRTC (still, after its latest quarterly report). The growth rate with IRTC is faster than BioTelemetry (BEAT), but doesn’t have the same scale. I think I’ve written before in updates, etc. that I think there’s room for both in the market (along with MDT).
I think there’s definitely some correlation in medical device stocks breaking down. It’s a trend, for sure. I haven’t yet pulled out an index that I can put in a nice clean chart, but it’s on my list of things to do. There are exceptions, for instance INGN popped after reporting. But generally speaking, this softening in the medical device space has been a headwind for us.
I’m going to keep a close eye on BEAT. And will keep sending updates as things unfold.