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Weekly Summary September 28, 2018

Cabot Prime Pro Week Ending September 28, 2018

Cabot Weekly Review (Video)

In this week’s stock market video, Mike Cintolo talks about the market’s continued sloppiness, with the intermediate-term trend mostly neutral at this point and many stocks showing some yellow flags. That said, he’s still yet to see many breakdowns among leading stocks, so he’s sticking to a bullish stance but is also remaining flexible, having some stops in place but also going through a bunch of good-looking setups should the uptrend resume.

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Cabot Growth Investor

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.

Bi-weekly Update September 19: Remain bullish, but keep your antennae up. Mike has seen repeated bouts of selling in leading growth stock so far this month, and while most evidence remains bullish, a few yellow flags have appeared. In tonight’s issue, he has no major changes, but he’s holding our 16% cash position and placing Grubhub (GRUB) and Neurocrine Biosciences (NBIX) on Hold, as well as tightening a couple of mental stops.

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 September 28: It’s been a mixed week, with some good and some bad. On the positive side, many leading stocks have generally bounced in recent days, including a few that tested key support. Today’s buy ideas are Alison Transmission (ALSN), Ciena (CIEN ) and iRobot (IRBT). Today’s sell ideas are Darden (DRI), Horizon Pharma (HZNP), SiteOne Landscape (SITE), Splunk (SPLK) and Workday (WDAY).

Weekly Issue September 24: To this point, the action has been acceptable given the big runs in so many stocks during the summer, but some indexes and many stocks are approaching key levels—if the buyers show up here, all could be well, and we wouldn’t be shocked to see another leg up develop. This week’s list is still heavy on growth ideas (though some are turnaround-type plays), but Mike’s Top Pick is Rowan Drilling (RDC), which is showing great strength by lifting out of a big bottoming area.

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 Stock on Watch September 28: Because of the combination of stock strength and bullish option activity the stock that is at the top of Jacob’s watch list is Xilinx (XLNX).

Cabot Options Trader Trade Alert September 27: Buy-Write: Buy Regions Financial (RF) Stock and Sell the November 19 Calls (exp. 11/16) for a net of $18.25 or less.

Cabot Options Trader Stock on Watch September 26: Jacob writes that two stocks that have grossly underperformed this year have caught bullish options positioning the past several days—General Electric (GE) and General Motors (GM).

Cabot Options Trader Market Update September 24: Two stocks hit Jacob’s radar late last week and are on his list for potentially joining the portfolio should the market strengthen. Axalta Coating (AXTA) saw three straight days of bullish activity to close last week and Xilinx (XLNX) is intriguing as it is one of the few semiconductors that is acting well, while the rest of the sector has been a sloppy mess.

Cabot Options Trader Weekly Market Update September 24: The Chicago Board of Options Exchange Volatility Index (VIX) closed the week at 11.68, or virtually unchanged on the week. Of note from this past week was the surge in call buying Jacob highlighted Thursday; and he saw similar action on Friday.

Cabot Options Trader Pro Weekly Market Update September 24: Jacob has 5 long positions: BABA, PAGS, PFE, PSTG, SPY and one short position: QQQ

Cabot Undervalued Stocks Advisor

Special Bulletin September 26: Alexion Pharmaceuticals (ALXN) has been racing upward in recent days and is fast approaching 137, where it last traded in July. The stock will most likely need to rest (or pull back) while it gathers strength to break past 137. Crista is moving her recommendation from Strong Buy to Buy, since the current price action is likely to come to a halt.

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.

Monthly Issue September 4: Crista writes that there are a handful of times each year when Wall Street analysts revamp research, earnings estimates and stock recommendations for a majority of the stocks within their purviews. Certainly they do so after companies report quarterly financial results. But there’s a similar surge in updated research reports after summer vacation season ends, and in early January. In that light, she anticipates reporting on many such changes within the next two weekly updates of Cabot Undervalued Stocks Advisor. Today, Synchrony Financial (SYF) joins the Buy Low Opportunities Portfolio, Marathon Petroleum (MPC) joins the Growth Portfolio and Total S.A. (TOT) joins the Growth & Income Portfolio.

Cabot Stock of the Week

Weekly Issue September 25: The market remains strong and Tim continues to recommend that you be heavily invested in a well-diversified portfolio that meets your investment needs. This week’s recommendation, Synchrony Financial (SYF), is a low-risk financial stock with decent prospects that is temporarily low because it lost what investors mistakenly believed was a key client. It was originally recommended by Crista Huff of Cabot Undervalued Stocks Advisor for her Buy Low Opportunities Portfolio. Today’s changes: GrubHub (GRUB) moves from Buy to Hold and Teladoc Health (TDOC) moves from Hold to Buy.

Cabot Emerging Markets Investor

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.

Bi-weekly Issue September 20: Paul says that while it’s always nice to find a brand-new stock that’s climbing the charts, sometimes the best choice is a familiar name that’s been in the doghouse for a while. And that description fits today’s recommendation, Baidu (BIDU) to a T. It’s rated Watch. There is one change in the Model Portfolio, Ecopetrol (EC) moves from Watch to Buy a Half.

Cabot Small-Cap Confidential

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.

Monthly Issue September 7: Tyler’s new recommendation is Goosehead Insurance (GSHD), a unique, rapid-growth player in the insurance industry that is building something entirely new – an independent personal lines insurance sales and support platform. There are no changes to the portfolio.

Cabot Dividend Investor

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.

Weekly Update September 19: Calm has been restored to Wall Street since Chloe’s last update. The Nasdaq is virtually unchanged in the last week, though leading growth stocks remain a bit choppy and wobbly. There are no rating changes today.

Cabot Marijuana Investor

Update September 20: Tim is writing today to give you a few more pointers on how to handle these volatile stocks so that you can first, avoid major losses, and second, become a long-term winner. As always, he starts with a look at the environment. The Marijuana Index is trending upwards, as it has been since mid-August, but is still short of exceeding its January high, and thus the advance is likely to continue.

Fall Issue August 30: Tim reminds us that marijuana remains a young and unpredictable industry, with frequent developments on both the legal side and the corporate side, as the players angle for advantage in what is the fastest-growing industry in America (27% per year). What is certain is that the legal market for adult-use marijuana in Canada opens October 17—and all the big players are ready. How big demand will be, both on the first day and in the weeks and months thereafter, we will see. Also to be seen is how marijuana prices change as production of what is essentially a commodity adjusts to meet market demand. Tim has updates on the 10 stocks currently in the portfolio, and gives you three new names to consider.

Wall Street’s Best Investments

Daily Alert September 28: Vanguard Global Equity Inv (VHGEX) from The No-Load Fund Investor
Daily Alert September 27: Capcom Co., Ltd. (CCOEY) from The Buyback Letter
Daily Alert September 26: Nike, Inc. (NKE) from Canaccord Genuity Research
Daily Alert September 25: Sell: TriMas Corp (TRS) from The Turnaround Letter
Daily Alert September 25: Sell: KLX Inc. (KLXI) from Cabot Undervalued Stocks Advisor
Daily Alert September 25: Retire: Bank of America (BAC) from Cabot Undervalued Stocks Advisor
Daily Alert September 25: Alexion Pharmaceuticals, Inc. (ALXN) from Cabot Undervalued Stocks Advisor
Daily Alert September 24: Universal Insurance Holdings, Inc. (UVE) from Validea Hot List Newsletter

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 September 28: Blue Capital Reinsurance Holdings Ltd. (BCRH) from High Yield Wealth
Daily Alert September 27: Ecopetrol S.A. (EC) from Cabot Emerging Markets Investor
Daily Alert September 26: L Brands, Inc. (LB) from Sure Dividend
Daily Alert September 25: J.G. Boswell Company (BWEL) from Positive Patterns
Daily Alert September 24: Urstadt Biddle Properties Inc. (UBA) from The Intelligent REIT Investor

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 Marijuana Investor

Question: I’m interested in subscribing to your Cabot Marijuana Letter. However, I would like to find out if it is legal in USA to invest in Marijuana stocks. I thought there were some restrictions by US Customs for Canadian investors. So, I don’t know if there is any restrictions for US investors. Could you please advise?

Tim: All the stocks I recommend in Cabot Marijuana Investor are legal for U.S. investors to buy and sell. Some brokers (Raymond James, for example) do not allow trading in the stocks, but all the big ones, Fidelity, Charles Schwab, Ameritrade and Etrade, will.

Cabot Options Trader

Question: Last year after the Houston flooding, I bought calls on USG and ran with it until January, 2018. This was a nice profit in less than six months. Do you have any thought on USG with all the flooding in multiple states from Florence? As the leading sheet rock producer, would USG be a good bet over the next several months? Thank you in advance for your wisdom and thoughts, Great trade by you. I remember us emailing about it. Well done!

Jacob: However, in this case it likely won’t work. Why? Because USG is in the midst of being taken over for $44 a share. So with the stock trading at 43.25, the most you can possibly make, unless there is a higher bid, is another $0.75. This is a likely stay away.

Cabot Stock of the Week

Question: Hi Tim, I love the Stock of the Week newsletter. I have done very well using your advice. I have a question concerning partial profits while a stock is doing well. I also get the Top Ten Trader and Mike Cintolo takes out profits as the stock is rising. It seems to be a quandary. Right now I have over a 100% gain on the Teladoc stock. The other day I thought of taking some out but it had a great day and made about $400. If I had taken out some, it wouldn’t have got the total gain. But on the other side of the coin if it tanked, I would have lost some of the profits I could have made. Do you have a general rule of thumb? I know you tell us when to buy and hold but not to take any profits of the table. Is there a general rule you can use? I would appreciate any advice you can give. I realize that you can’t call everything perfectly, but any tips would be great.

Tim: In general, when it comes to taking partial profits, I believe it’s important to measure (somehow) your risk exposure in each of your holdings (for example $ in the position times % decline that is possible), and take profits off the table in holdings where the result of that calculation is too big for comfort. But there are other factors, like how mature the stock’s advance is—a factor Mike frequently notes—as well as your portfolio’s diversification, and each stock’s individual short-term chart. (I recently sold EVBG from Cabot Stock of the Week very close to its high, even though I remain long-term bullish on the stock, because it was out of trend to the upside and, as I’ve said, I need to sell an average of one stock a week in that portfolio.) And then, sometimes, there’s the possibility, as with TDOC, that a stock might turn out to be a very big winner, a factor that argues for more leniency, especially if you’ve already doubled your money or more. One of my subscribers is extremely bullish on TDOC for fundamental reasons and overweighted in it, and it might work out fine for him. But the market is full of surprises, so his overweight position, regardless of his confidence, does bring added risk. In the past, I have sometimes noted in Stock of the Week when taking partial profits might be a good move, and I will try to do it more in the future. Finally, I will note that when you write, “If I had taken out some, it wouldn’t have got the total gain,” you may be confusing lost opportunity with lost money. And that may be a sign of excess optimism.

Cabot Small-Cap Confidential

Question: Tyler, Hope all is well. Goosehead (GSHD). I’m taking a hit. Down 10% now. If breaks through the 50 day are you still going to hold?

Tyler: The short answer is yes, I plan to hold on even if GSHD dips below that 50-day line. It’s still a “young” stock so I don’t think a 10% move up or down is too worrisome at this point (even though it doesn’t look great in a brokerage account). In Small Cap, I start to get more concerned when we’re down in the 15% to 20% range, then things move to the sell block around 25% to 30% down (but no more than that). As far as the 50-day line, it’s only been around since early-June, so again, it’s not a huge factor in my thinking. I’m looking more at the consolidation phase in the 26 to 28 area that lasted for a while in July and August as a more important level to hold firm. Another factor is there could be a recent headwind in the stock due to hurricane Florence, which drove insurance stocks down. GSHD doesn’t underwrite policies, so no risk there. But it still could have gotten swept up in a sector/sub-sector move.

Question:Tyler, what’s up with Instructure (INST)?

Tyler: I still like Instructure (INST). The market was a little concerned with the deceleration in bookings last quarter (hence the drop after earnings) but my understanding is that management sees 2019 shaping up to be a very good year for the academic products. Probably more exciting is the potential of the corporate LMS solution, Bridge. This is a competitive market, but Instructure has been investing heavily and brought in some talent (Dan Goldsmith from Veeva) this June to help ramp that product up. We’re hoping that the company has more or less figured out how to sell this product now, and is moving into “execution” phase, which should drive Bridge sales to 15% to 20% of the company’s total revenue. In short, I believe the stock price reflects a little quarterly volatility in bookings, but masks the growth potential over the next 12 months, which isn’t guaranteed to happen, but seems more likely than not based on management’s comments. I expect to keep it in the portfolio, barring a total meltdown.

Premium Reports

Cabot’s 10 Best Canadian Small-Cap Stocks

Special Report

August 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 Report

August 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 Report

July 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 Report

Updated 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 Report

Updated 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.