Cabot Prime Pro Week Ending October 27, 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 talks about the generally healthy state of the market. All of the major indexes are above their moving averages, but the Dow is really strong, while the Nasdaq is far weaker. There’s been some sector rotation and we’re smack in the middle of earnings season, so it’s a good time to keep a close eye on your stocks’ charts. Paul also gives a few stocks that have gotten post-earnings boosts and then kept rising, which is a good pattern to look for. Paul also touts his Free Professional Stock Evaluation contest, which gives one lucky winner a week a thorough analysis of a selected stock.
Cabot’s 10 Best Marijuana Stocks
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 October 27: Follow ups to stocks featured May 24, 2017 (issue 1368) to October 25, 2017 (issue 1379). 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 October 25: Mike has no new buys or sells in the Model Portfolio, though most of our stocks are acting well; we’ll follow our usual plan as we wade through earnings season, including looking for new leadership. Elsewhere in tonight’s Cabot Growth Investor, we talk about using earnings gaps to spot new leadership, including describing the rules and tools we use to separate the wheat from the chaff.
Cabot Top Ten Trader
Movers & Shakers Weekly Update October 27: Four Buy ideas: AbbVie (ABBV), Match Group (MTCH), Salesforce.com (CRM) and Yelp (YELP), and seven Sells: Brinks (BCO), Franco-Nevada (FNV), RPC Inc. (RES), Stamps.com (STMP), Vertex Pharmaceuticals (VRTX 146), Ultra Clean (UCTT) and Weibo (WB). Mike reminds you to book some partial profits while the market is hot—Align Technology (ALGN), Caterpillar (CAT) and MKS Instruments (MKSI) are three stocks that are a bit out of trend on the upside.
Weekly Issue October 23: This week’s Top Ten has another strong, varied batch of stocks from all industries. Our Top Pick is Skechers (SKX), a beaten-down retailer that’s decisively turned the corner after a blowout quarter last week.
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 October 27: Position Update on Union Pacific (UNP).
Trade Alert October 27: Sell Half of Existing Position: Sell HALF your Union Pacific (UNP) January 120 Calls for $10 or more, or Sell HALF your Union Pacific (UNP) January 120/145 Call Spreads for $7 or more.
Market Update October 26: Tonight really kicks off earnings season for big technology stocks with Amazon, Google, Microsoft and Intel reporting. The stock’s reactions to those earnings should give us a great read on the state of growth stocks. In recent weeks, many growth leaders have been trading sideways or even wobbling a touch.
Earnings Update October 26: Amazon (AMZN), Microsoft (MSFT) and Intel (INTC) report earnings today after the close.
Earning Update October 26: This morning, Union Pacific (UNP) beat earnings and revenue estimates. UNP has not traded in the pre-market. Regardless of how the stock moves today, we are playing a longer-term move higher.
Market Update October 25: The S&P 500 and Nasdaq are currently trading lower by 1% on the day. This has the potential to be the first down 1% day since the middle of August.
Earnings Update October 25: Service Now (NOW) reports earnings today after the close, and Union Pacific (UNP) and Bristol-Myers (BMY) will report tomorrow before the open.
Earnings Update October 25: Freeport McMoRan (FCX) reported earnings and revenues this morning that beat expectations. In early pre-market trade, FCX is trading higher by $0.35 at 15.60.
Trade Alert October 24: Buy-Write: Buy Fiat Chrysler (FCAU) Stock and Sell the December 17 Call (exp. 12/15) for a net of $16.50 or less.
Earnings Update October 24: Advanced Micro Devices (AMD) will report earnings today after the close, and Freeport McMoRan (FCX) and GrubHub (GRUB) will report tomorrow before the open.
Cabot in the News October 23: Jacob shares his years of Wall Street and market experience in this StockTwits Q&A session.
Stocks on Watch October 23: Jacob’s order flow list during earnings season provide interesting trade ideas if you want to take a shot on an earnings stock. He gives Texas Instruments (TXN) and Union Pacific (UNP) as examples.
Earnings Updates October 23, 2017: Caterpillar (CAT) and Fiat Chrysler (FCAU) both report tomorrow before the open.
Weekly Update October 23: It was another strong week for the bulls as the S&P 500 and Dow each advanced all five days. The S&P 500 gained 0.86%, the Dow rose by 2% and the Nasdaq added 0.35%.
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
Special Bulletin October 27: Mattel (MAT), Total (TOT) and Weyerhaeuser (WY) reported quarterly earnings; Mattel suspends dividend.
Special Bulletin October 26: Quarterly earnings beats from Alexion Pharmaceuticals (ALXN), Legg Mason (LM) and Vertex Pharmaceuticals (VRTX), and earnings miss from Commercial Metals (CMC).
Special Bulletin October 25: Alexion Pharmaceuticals (ALXN) receives drug approval, Ameriprise (AMP) and XL Group (XL) report third-quarter results, Chipotle Mexican Grill (CMG) moves from Buy to Hold and PulteGroup (PHM) moves from Strong Buy to Buy.
Weekly Update October 24: Today’s Portfolio Changes: Bank of America (BAC) moves to Buy, Invesco (IVZ) moves to Sell, KLX Inc. (KLXI) moves to Buy and Nucor (NUE) moves to Hold.
Monthly Issue October 3: Today’s featured stocks are Bank of America (BAC), Schlumberger NV (SLB) and Nucor (NUE). BP plc (BP) and Legg Mason (LM) move to Hold and Schnitzer Steel (SCHN) moves to Sell.
Cabot Stock of the Week
Weekly issue October 24: This week’s stock is Grupo Supervielle (SUPV), a little-known young Argentinean bank that is enjoying strong growth trends—and that may be helped by the sweeping victory of the country’s center-right in the recent elections.
Cabot Emerging Markets Investor
Bi-weekly Update October 26: The iShares EM Fund (EEM) is holding above its moving averages, which keeps the Cabot Emerging Markets Timer a bright green. But the weakness in Chinese stocks is hitting the portfolio hard. In response, we have six moves today. We are selling Autohome (ATHM) and HDFC Bank (HDB), and moving Alibaba (BABA), Jupai (JP), Sina.com (SINA) and TAL Education (TAL) to Hold.
Bi-weekly Issue October 19: Despite the sting of today’s pullback that included just about the entire market, the Cabot Emerging Markets Timer is holding on to its buy signal. With good profits in many of our stocks, we’re willing to be patient as we head into earnings season, and new stock recommendation Jupai Holdings (JP) is as hot as anything Paul’s ever recommended.
Cabot Benjamin Graham Value Investor
Weekly Update October 26: Azmath summarizes the latest news for three companies: Toll Brothers (TOL), Gentex (GNTX) and Blackstone (BX).
Monthly Issue October 12: Azmath begins the transition of stocks from Roy Ward’s Value and Enterprise Models to his new, more consolidated Prudent Model. Azmath’s top recommendation is Gentex (GNTX).
Cabot Small-Cap Confidential
Weekly Update October 27: As expected given the recent surge in small caps, it feels a little dicey out there, but the big picture looks good. Our earnings season got started last night with LogMeIn (LOGM), which beat expectations once again. Tyler has one rating change: AppFolio (APPF) moves to Hold.
Monthly Issue October 6: A year ago, a group of college kids laid out the case for a Trump’s victory. And they did it with a mess of disparate data in just 20 hours using a data prep platform by the little-known company that Tyler is recommending today: Datawatch (DWCH). One rating change: US Concrete (USCR) moves to Buy.
Cabot Dividend Investor
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 October 27: Adobe Systems (ADBE) from Canaccord Genuity Research
Daily Alert October 26: Splunk (SPLK) from Technology & Opportunity
Daily Alert October 25: Stantec (STN) from Internet Wealth Builder
Daily Alert October 24: HubSpot (HUBS) from Cabot Stock of the Week
Daily Alert October 23: TopBuild (BLD) from BI Research
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 October 27: Magna International (MGA) from Validea Hot List Newsletter
Daily Alert October 26: DoubleLine Income Solutions (DSL) from Bob Carlson’s Retirement Watch
Daily Alert October 25: Swiss Re (SSREY) from Sure Dividend
Daily Alert October 24: PPL Corp (PPL) from Argus Weekly Staff Report
Daily Alert October 23: Prologis (PLD) from Barclays Capital Equity Research
Monthly Issue October 11: Our Spotlight Stock this month is representative of thriving stock markets. CME Group (CME) owns and operates exchanges for stocks, options, futures and derivatives. It has grown leaps and bounds, both internally and by acquisition, and numerous opportunities for expansion remain. Nancy’s feature further explores those opportunities.
This Week’s Q&As
Cabot’s 10 Best Marijuana Stocks
Question: I just subscribed to your Marijuana Report, but I’m a little confused about how it works. I can see that it’s not the typical weekly advisory with a monthly in-depth write up, so how will this letter be normally distributed?
Also, I saw AXIM has had some serious price movements lately. Have you sent out any updates since the October update when AXIM was up about 30%? If not too much has actually changed with the exception of the price, would this be a good spot to jump in?
Tim: Officially, the Marijuana Report comes out four times a year, with irregular updates between issues. The next issue is scheduled for mid-November (perhaps the 17th), and will feature the 10 best marijuana stocks I can find, which will include both some of the previous stocks and some new stocks. As to AXIM, the stock is back down to its base, so it’s not one of the better charts, but it’s not bad either. If you like the story, this could be a good entry point.
Cabot Growth Investor and Cabot Top Ten Trader
Question: I have been subscribing to Top Ten Trader and it is chock full of really good ideas. However, I’m not really sure how to use all this info. How can I get the most out of it?
Mike: First, Top Ten is a source of new ideas so don’t feel like you have to grab every stock—it’s about having the ones you own do well, not kissing all the babies.
Second, consider having a Top Ten “portfolio” (could be a separate account or just mentally part of one of your accounts) that has a set maximum number of stocks—let’s just say 5 to 10, but it could be anything.
Third, focus mostly on the Top Picks each week, and then look for themes (which I try to highlight)—new sectors or industries that are emerging. Also, look for stocks that have shown up recently; if it’s the second time in Top Ten in a couple of months, it’s likely the stock is getting going.
At day’s end, Top Ten is meant to be something where we do the first four or five steps of the process for you: find the strongest stocks, tell you what’s driving the stock, highlight a good buy range and loss limit, etc., and then let the subscribers take it from there. It gives less “hand holding” than our other advisories, but obviously more ideas, and following some simple guidelines like those above can help you focus in.
Cabot Options Trader and Cabot Options Trader Pro
Question: I made a nice profit on Micron Technologies (MU). Why don’t we try it again?
Jacob: MU is on the TOP of my watch-list. That said, the Nasdaq is showing some signs of getting tired. Stocks like BABA, FB and others are really not accelerating as the Dow stocks are performing. Could be a short-term rotation. But for now, I’m going to sit and watch MU, the semiconductors and the 2017 leaders to see how they perform this week (huge earnings week).
Question: Barron’s had a nice writeup about DowDupont. Moat strong. Good EBITDA/Revenue estimates. Any view on an options play here?
Jacob: DWDP has mostly gone quiet options-wise in recent weeks. However, there is significant open interest on the December 70 Calls from buyers on 10/2 10/11 and 10/13. These buyers brought open interest on this strike to nearly 20,000.
Earnings are on 11/2, and if I was looking to play the stock long, the December 72.5 Calls are extremely cheap. And longer term, the January 72.5 for around $2 are also very reasonable.
Cabot Undervalued Stocks Advisor
Question: What would you suggest that I do with my Facebook (FB) shares?
Answer: Facebook (FB) shares are a bit overvalued, according to the Cabot Undervalued Stocks Advisor investment strategy. Earnings are growing aggressively, and consensus earnings estimates have been increasing in recent months. The stock broke out of a trading range on October 27, which is quite bullish. Since the valuation is higher than I would prefer, I would use a stop-loss order at about 168, and move it higher as the share price rises.
Cabot Emerging Markets Investor
Question: My first purchase based on your emerging market advisory was Sina.com (SINA). l purchased SINA at 116.23 per share. I know you indicated in your last issue that you thought we would be OK with SINA if it stayed above 110 (resistance point). SINA is now at 107.51 breaking through the 110 level. I would appreciate your guidance. Should I sell here or hold on to SINA? I appreciate your help.
Paul: Today’s swamping of our entire portfolio was just a slightly more volatile reflection of all three major U.S. indexes. With no obvious reasons for the pullback (no news from the Fed or about the tax plan before Congress) it looks like a reaction to general unease. There’s also the news about Xi Jinping’s apparent solidification of his complete control over the Chinese government, which may dismay some investors. And there’s the usual nervousness about earnings season.
I’m inclined to wait a day and see if there is any follow-through to the downside. I will be writing the regularly scheduled portfolio review tomorrow and will have a more definitive answer then. But for now, I would hold onto SINA.
Question: Could you tell me what your rules are for setting stop losses on stocks in the EM portfolio? I certainly want to manage risk to conserve capital, but I’m unclear as to how much room to give a stock.
Paul: The entire population of Chinese stocks is being swamped today, with JP among the hardest hit. I don’t expect this to be the start of a major correction, so I’m inclined to be patient. If tomorrow doesn’t bring some improvement (support or at least a much smaller correction), I will probably do some selling. But I think the market is reacting negatively to news out of the Communist Party Congress and the consolidation of power by Xi Jinping, and that shouldn’t be a long-term weight on our stocks.
My rule-of-thumb guideline is usually 10% to 15% below my buy price, with qualifications and exceptions depending on whether there’s an identifiable reason for a correction.
I’ll have more to say about all of our stocks in tomorrow’s regularly scheduled portfolio review.
Cabot Small-Cap Confidential
Question: Which of our stocks is the health company that does nerve repair?
Tyler: It’s Axogen (AXGN).