Cabot Prime Pro Week Ending October 5, 2018
Cabot Weekly Review (Video)
In this week’s stock market video, Paul Goodwin talks about the Thursday Massacre that hit the market this week. He also points out that the intermediate term trend of the market has turned down. Emerging market stocks are also a good way along a significant correction. So it’s time to back off on buying and keep your current holdings on a short leash. But the most important thing Paul says is that it’s essential to look at the charts of your stocks and pay attention to what the chart is saying. He shows a few stocks whose charts are in good shape and a few that have taken nose dives and need to be sold or avoided.
Advisory Services
Cabot Growth Investor
Special Bulletin October 4: The market weakened further today, with growth stocks in particular hit hard, and now our Cabot Tides has turned negative, telling us the intermediate-term trend of the market is down. Thus, risk minimization comes to the forefront, and in the Model Portfolio, that now means selling one more stock, DexCom (DXCM), which has seen some heavy volume selling this week and is now well below its 50-day moving average. Additionally, Mike is going to downgrade Autodesk (ADSK) to Hold, mainly because of high-volume selling today.
Bi-weekly Update October 3: Mike says to pare back. The iffy action he saw among growth stocks in September has turned into a severe selloff so far in October. While our Cabot Tides are still neutral, the action among leading stocks is enough for us to raise some cash. He has no further changes tonight.
Special Bulletin October 2: Tonight, Mike is doing a little more selling—he’s going to take partial profits in both Teladoc (TDOC) and Ligand Pharmaceuticals (LGND), selling one-third of our stake in each.
Special Bulletin October 2: Mike writes that the longer-term trend of the market and most leading stocks are still up, and he continues to think the odds strongly favor higher prices in the months down the road for this bull market. But, intermediate-term, our Cabot Tides are effectively on the fence and we’ve now seen a month’s worth of sloppy, rotational action among growth stocks. In the Model Portfolio today, he’s going to sell PayPal (PYPL), which is a fine company but hasn’t really been a leader for most of this year and has suffered many waves of big-volume selling in recent weeks. He’ll take the solid profit and hold the cash. He’s also going to place Dexcom (DXCM) on Hold as the stock stalled out a bit last month and suffered a big-volume selloff yesterday on some news from the competition.
Bi-weekly Issue September 26: In tonight’s issue, Mike introduces our new Real Money Index, which is replacing the Two-Second Indicator; he thinks it will help us lean against the wind in many circumstances. His advice today is to remain bullish and also flexible. He’s stood pat in the Model Portfolio with nine stocks and a cash position of 16%, and is willing to move in either direction (raise a little more cash or add a fresh leader or two) depending on what he sees going forward.
Other Stocks of Interest September 28: Follow ups to stocks featured April 25, 2018 (issue 1392) to September 26, 2018 (issue 1403). 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 October 5: Overall, except for the action of individual stocks that got caught in the undertow on Thursday, the situation hasn’t changed a lot. But what has changed is that the Cabot Tides indicator has turned negative, telling Mike that the intermediate term trend of the market is now down. And that means you should tighten the stops on the stocks you own and cut back on further buying. Today’s buy ideas are Greenbrier (GBX),HCA Healthcare (HCA), Jacobs Engineering (JEC), Rowan Companies (RDC) and iRobot (IRBT). Today’s sell ideas are BJ’s Wholesale Club (BJ), Carvana (CVNA), Chart Industries (GTLS), Guidewire (GWRE), Ingevity (NGVT), Inogen (INGN), PayPal (PYPL), Stitch Fix (SFIX) and Yext (YEXT).
Weekly Issue October 1: The start of a new quarter often sees many crosscurrents, and most leading stocks, while choppy, remain in uptrends. But Mike has now seen funky action and lots of rotation for over a month, which has his antennae up. He’s moving the Market Monitor to a level 6 and feels the next few days will be telling—if leaders are OK, he expects to see support show up, but if not, the odds of a longer pullback will increase. His Top Pick today is Allegheny Technologies (ATI), a specialty metals firm that is showing signs of getting going after months of base-building.
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 Trade Alert October 4: Sell Existing Position: Sell your S&P 500 ETF (SPY) March 300 Calls for $4.50 or more.
Cabot Options Trader Market Update October 4: Jacob writes that one of the reasons given for the decline today, and the general weakness recently, is the big move in the bond market. While rising rates may be a problem for the market, it is his opinion that it is the speed in which the treasury yields have risen that is the real issue. When looking at the portfolio he is just about as defensive as can be.
Cabot Options Trader Pro Trade Alert October 3: Close Existing Position: Buy Back your Alibaba (BABA) October 150/145 Bull Put Spread and 205/210 Bear Call Spread for $0.34 or less.
Cabot Options Trader Position Updates October 3: Jacob is raising stops on two of his positions: The Pfizer (PFE) position continues to work, and the calls are now worth $4.30, or a potential profit of approximately 200% so Jacob is raising the stop to $3, and the S&P 500 ETF (SPY) calls are now worth $6.35, or a potential profit of approximately 56% so Jacob is raising this stop to $5.
Cabot Options Trader Stocks on Watch October 2: The Emerging Markets (EEM) have been a source of concern for traders for much of 2018, with much of the pain coming from Latin America. However, today Jacob is picking up on a wave of call buying in stocks from that region: PagSeguro (PAGS), Vale (VALE) and Petrobras (PBR).
Cabot Options Trader Stocks on Watch October 2: Intel (INTC) and United States Steel (X) hit Jacob’s radar this morning with very big bullish options activity.
Cabot Options Trader Earnings October 1: One of the glamour growth stocks that has lost a touch of steam recently is Stitch Fix (SFIX) which is up 75% year-to-date and will report earnings today after the close. The reaction to earnings tonight could give us a read into risk on/risk off to start the fourth quarter.
Cabot Options Trader Weekly Market Update October 1: The Chicago Board of Options Exchange Volatility Index (VIX) closed last week at 12.12, or marginally higher on the week. And with the VIX continuing to trade near the lower end of its range, Jacob believes holding puts against a bullish portfolio is the right trade.
Cabot Options Trader Pro Weekly Market Update October 1: Jacob has 6 long positions: BABA, PAGS, PFE, PSTG, RF and SPY and one short position: QQQ
Cabot Undervalued Stocks Advisor
Monthly Issue October 2: Today’s featured stocks include Alexion Pharmaceuticals (ALXN), CIT Group (CIT), and a new addition to the Growth & Income Portfolio: Delta Air Lines (DAL). Today’s portfolio changes are: Blackstone Group LP (BX) moves from Buy to Hold, Delek U.S. Holdings (DK) moves from Strong Buy to Hold and Martin Marietta Materials (MLM) moves from Strong Buy to Hold. Crista also writes about General Electric (GE).
Weekly Update September 25: A few days ago, Crista reviewed the price charts on the 59 stocks in her “Waiting in the Wings” list – a list of undervalued growth stocks that she might add to these portfolios at some point. What really struck her was that less than 15% of them have attractive price charts right now. There is one addition to the portfolio today: Regions Financial (RF) joins the Growth & Income Portfolio as a Strong Buy.
Cabot Stock of the Week
Weekly Issue October 2: This week’s recommendation is WNS Holdings (WNS), a company headquartered in India, which is relatively free of the political turmoil that’s gripped the U.S. recently. Furthermore, given that foreign stocks have underperformed dramatically this year, Tim is optimistic about getting on board somewhere near the beginning of a renewed uptrend. Here are today’s changes: Carvana (CVNA) moves from Hold to Sell, Guess? (GES) from Buy to Hold, Instructure (INST) from Buy to Sell, PayPal (PYPL) from Hold to Sell and Stitch Fix (SFIX) from Hold to Sell.
Cabot Emerging Markets Investor
Bi-weekly Issue October 4: Paul writes that it may be that the Fed’s recent actions have increased the attractiveness of bonds versus stocks. But whatever the cause, emerging market stocks have taken it on the chin over the last two days, pulling both the iShares EM Fund and the China Golden Dragon Fund decisively into the bearish camp. Our cash position is plenty high enough to weather the storm, but you should be paying close attention to your personal loss limits. Tonight’s recommendation is Companhia Vale do Rio Doce (VALE) (literally the Doce River Valley Company, but just Vale to its friends), a big Brazilian iron miner. It’s rated Buy. Paul has no changes to the portfolio tonight.
Bi-weekly Update September 27: The Cabot Emerging Markets Timer is flashing a technical Buy, but there are few good setups out there. Paul will keep the portfolio heavily in cash until he sees the right combination of a recovery in the broad emerging markets sector and good buying opportunities in strong stocks. There are no changes in today’s update.
Cabot Small-Cap Confidential
Monthly Issue October 5: Things have deteriorated over the past week and investors are clearly becoming more concerned about a larger correction. So there are two moves to Hold in today’s update: Apptio (APTI) and Q2 Holdings (QTWO). Tyler’s new recommendation is Altair Engineering (ALTR), a $2.8 billion company that develops and sells computer aided engineering (CAE) software to help manufacturing companies innovate across their entire product lifecycle, from concept design, to manufacturing, to in-service operation.
Weekly Update September 28: Tyler writes that big picture, things still look reasonably good out there. That said, he’s seen persistent, but not severe, weakness in small-cap stocks since the beginning of September. That alone isn’t cause for concern. After all, small caps have been out in front of the market in 2018. But it does bear monitoring. Instructure (INST) moves from Buy to Hold today.
Cabot Dividend Investor
Weekly Update October 3: The stock market managed to tread water for most of September. The S&P 500 and Nasdaq both ended the month up about half a percent, while the Dow managed to gain nearly 2%, helped by rallies in energy and industrial stocks. However, Chloe is seeing some renewed rotation as we start October. BB&T Corp. (BBT), moves back to Hold today following a selloff. The regional bank is on the chopping block if this correction continues.
Monthly Issue September 26: Today Chloe is adding a little more diversity, increasing her consumer exposure by adding a well-known chain, Dunkin’ Brands Group (DNKN), to the Dividend Growth tier. Also, Community Health Trust (CHCT) moves to Hold.
Cabot Marijuana Investor
Monthly Issue October 4: Marijuana stocks have been relatively calm since Tim’s last update exactly two weeks ago, and this is good, particularly if you can find a good setup. His choice for the portfolio today is MedMen Enterprises (MMNFF), which he profiled in his August 22 report. In the portfolio, he will now take half the cash and invest it in MMNFF. Additionally, he will now take partial profits in Aurora (ACBFF), selling a third of his position, because it’s grown to an oversize share of the portfolio and the stock is extended.
Wall Street’s Best Investments
Daily Alert October 5: Cushman & Wakefield plc (CWK) from Barclays Capital Equity Research
Daily Alert October 4: Fortive Corporation (FTV) from DRIP Investor
Daily Alert October 3: Jack Henry & Associates (JKHY) from Pivotal Point
Daily Alert October 2: Cerner Corporation (CERN) from PAD System Report
Daily Alert October 2: Edwards Lifesciences Corporation (EW) from PAD System Report
Daily Alert October 1: Napco Security Technologies, Inc. (NSSC) from BI Research
Monthly Issue September 19: Nancy’s Spotlight Stock is AK Steel (AKS), a leading producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing, including electrical power, and distributors and converters markets. In her Feature article, she further discusses the health of the industry, as well as Wall Street’s view of the recommended stock.
Wall Streets Best Dividend Stocks
Daily Alert October 5: Canadian Western Bank (CWB.TO) from Internet Wealth Builder
Daily Alert October 4: CenterPoint Energy, Inc. (CNP) from Dow Theory Forecasts
Daily Alert October 3: International Flavors & Fragrances Inc. (IFF) from Wall Street Forecaster
Daily Alert October 2: Wells Fargo & Company (WFC) from Insider Alert
Daily Alert October 1: Blackrock Health Sciences Trust (BME) from The Personal Capitalist
Monthly Issue September 12: This month’s Spotlight Stock is Cypress Energy Partners which is an oilfield services firm seeing a global increase in demand of their services. Nancy delves more into how demographics are driving the opportunities in the energy sector in her Feature article.
Ask the Experts
Cabot Emerging Markets Investor
Question: I am a subscriber to several of Cabot’s advisories, however, emerging markets is not one of them. I was hoping you would answer a question for me.
I have several Chinese stocks (they are in advisories such as Stock of the Week or 10 Stocks To Hold forever) and all of them have had a rough year. I have one that is not currently listed in any of them: TAL. I bought this stock in March 2016 and have sold off ¾ of my initial investment (sold in 3/17 and 6/18) so I have done well with the stock and have a profit in my remaining shares – I had planned to hold them “forever”. Do you think that is wise? Do you think it will bounce with the rest of the Chinese Stocks, or is it toast? Thank you for your time.
Paul: Managing long-term stocks isn’t exactly a science. If you have already taken profits in the stock, you have reduced exposure and more cash to work with. But if you still have a profit and are wondering what the long-term prospects for TAL Education are, you’re in a paradoxical place. The idea behind buy-and-hold is that you have a long time horizon and are prepared to wait out bear attacks to get the long-term benefits. But with TAL down since the middle of June, you’re now wondering whether it might be a better idea to exit the position. I understand the conflict between the two impulses, but I don’t have a definitive answer for you. You could sell TAL at any time, hold the cash and buy the stock again when it gets back on track. Or you could just forget about it and let it ride, trusting that the company’s strength (and the size of the Chinese market) will eventually deliver the price appreciation you seek. Neither idea is wrong, but I tend to favor selling when a stock has been in decline for more than three months and the general trend in emerging market stocks is also down. Except for income stocks that deliver a dividend, I don’t see the utility of holding stocks through long corrections. Your ability to jump into and out of positions is one of your chief advantages over institutional investors. I think you should use it.
Question: Good Afternoon Paul, It was good to see you at the recent Wealth Summit ! Could you give me your thoughts on PAGS please? Can I start to nibble ? Thanks for all you do to help us make money !
Paul: Glad you enjoyed the Summit. It’s a good time for us too. I agree that PAGS has formed a very nice right side of a cup-shaped formation. It still has quite a ways to go before it completes that side, but the basing structure and the beginnings of a rally are there. There’s nothing wrong with putting a little money into PAGS right now. But be sure you keep it small and keep your mental stops updated. We don’t have the general trend in emerging market behind us yet and there’s no certainty that we will get it. So adjust your bets accordingly.
Cabot Options Trader
Question: I would like to know how do you choose an option strike price and expiration date based on Bullish/Bearish order flow. Example day before yesterday i see information about INTC bullish order flow. Technically INTC chart breakout from downtrend line with heavy volume. In this situation how do you trade INTC. After getting into the trade how do you set up target price and stop limit price on the trade. Do you see any factor other than market and stock chart when closing option position.
Jacob: Great questions. So I will say this, every trader has different ways to choose strikes and expiration. My general line of thinking is that I can’t time the market in the short term. However, over the long term, my odds get much better. With that being said, I tend to buy options with 3-6 months until their expiration. That gives the option time to work if we run into a couple weeks of bumpy market action (like right now). Next is which strike. Again, everyone goes about this differently. My general rule is this ... if you have high conviction, you buy an in-the-money call as they will cost more, but also move higher with the stock. If normal conviction, buy a call at-the-money, or slightly out-of-the-money. And I really never buy calls really far out of-the-money as they need a really big move. So in the case of INTC, I might target the January 49 calls. That gives the trade a couple months, and the calls are just a touch out-of-the-money. That said, while I think INTC could work, this morning the semiconductors look bad. So I won’t be buying for now.
Premium Reports
Cabot’s 10 Best Canadian Small-Cap Stocks
Special ReportAugust 31: One of the generally accepted wisdoms over the past couple of years has been that the U.S. stock market is where the action is. But there are market-beating returns available to investors willing to step abroad too. And one of the easiest places to find them is just over the border with our neighbor to the north, Canada.
10 Monthly Dividend Stocks to Buy for Year-Round Income
Special ReportAugust 9: Dividend-paying stocks are favorites of retirees and other investors who live off income from their investing portfolios. Like bonds, dividend-paying stocks provide a steady income stream that you can spend without eroding your principal. Unlike bonds, many stocks increase their dividends over time, so your income stream can actually rise each year. This report includes profiles of Chloe’s 10 favorite monthly dividend payers, each of which offers a unique mix of yield, capital appreciation and safety. If you’re looking for monthly income, you’re sure to find at least one that’s right for you.
Cabot’s 10 Best REITs to Buy Now
Special ReportJuly 18: Nancy has always loved real estate; in fact, she owns a small real estate franchise. But she loves the idea of a diversified real estate portfolio and REITs fit the bill. They have been excellent investments for her subscribers over the years as they offer the perfect opportunity to buy real estate with very little capital. And she believes the boom cycle in real estate is far from over. With that in mind, she set out to find the 10 Best REITs for today’s economy and market. She looked at growth, valuation, dividend yield, and fundamental and technical strength.
Cabot’s 10 Best Buy and Hold Stocks for 2018
Update July 13, 2018: Today, Crista updates investors on portfolio news and performance of the stocks in Cabot’s 10 Best Buy and Hold Stocks for 2018. In terms of individual stock performance, Supernus Pharmaceuticals (SUPN) is up 34.6% YTD through July 12, while Universal Electronics (UEIC) is down 28.0% YTD. The performance of the remaining stocks ranges between +19.5% and -18.2%.
Update June 12, 2018: On June 11, 2018, USG Corporation (USG) announced that its Board of Directors agreed for the company to be acquired by Gebr. Knauf KG for $44 per share in cash. Crista suggestion is that investors sell USG now, rather than wait for the remaining $0.96 per share to accrue from the special dividend and the remaining potential capital appreciation.
Cabot’s 10 Best Takeover Stocks
Special ReportUpdated August 10: There are a variety of reasons that a corporation might want to purchase another company. They might want to acquire a company’s patents or products to enhance their product lines; access the company’s distribution network and sales relationships; or simply aim to increase their earnings growth rate by purchasing a very profitable company within a related industry. After all, stronger earnings growth leads to better share price appreciation—a topic that boards of directors care very much about. Crista’s investment strategy, which combines both growth and value criteria, inadvertently identifies potential takeover targets. That’s because big companies and she often seek the same thing: stock investments in undervalued, financially thriving companies that can deliver profits to investors. The ten companies are all undervalued growth stocks. What’s more, they’re small enough that big competitors and peers within their sectors could easily finance their acquisitions, often through current cash flow.
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’s 10 Best Small-Cap Cloud Computing Stocks to Buy Now
Special ReportUpdated August 10: If you’re a growth investor, you need to own cloud software stocks. It’s just that simple. Cloud computing is changing the world. It’s powering massive growth in companies across sectors, empowering digital transformations, enabling new generations of connected technologies and changing how people live their lives. Tyler Laundon lays out the landscape and names his 10 best small-cap cloud computing stocks.
A Richer Retirement
Special Report This handbook is designed to help you secure a better, longer, richer retirement for yourself by making the most of your savings both before and during retirement.
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.