Time is drawing short for you to grab a reservation to Cabot’s Wealth Summit on September 13–15. All of Cabot’s analysts will be there to share their wisdom and answer your questions. It’s a lot of fun and a very useful way to get a truckload of investing advice in just a few days. I hope to see many of you there.
The market has finally declared itself, with the major indexes moving out to new highs during the week. It looks like a real breakout from the choppy, range-bound action of the past weeks, and it’s a good reason to put more money to work.
Yes, volume has been light. That and the looming shadow of earnings season are the major reasons for caution. But we take the trend of the market seriously, so we won’t quibble all that much. It’s time to identify leading stocks and do some buying.
BUY IDEAS
Many stocks we’ve covered have moved out to new highs, but we’re going to soft-pedal that group. You all know a rally when you see one, and can make your own decisions. 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 48) stairstepped higher in May and June, and began a slow, steady advance in late June. A pullback to previous resistance on July 19 was followed by a rebound on Thursday. With earnings likely not out until the middle of August, you could take a small position here with a stop near 43.
Global Payments (GPN 94) corrected through June and early July, but caught an updraft on July 12 and has just now punched out to new highs. The company will report Q2 results on August 3, so it’s probably not the time for a big position. But it’s a big story with a seven-week pause to build on. A nibble here with a tight stop at 87 could do well.
Lending Tree (TREE 179) started the year in a mild rally, then caught fire in late April, hitting 184 in June. An orderly pullback to 167 in July led to a couple of weeks of following its 25-day moving average higher. TREE is back within a few points of those old highs and has a couple of constructive volume clues. No word yet on when quarterly results will come out, but you can take a small position here and use a stop at the 50-day, now at 167.
Take-Two Interactive (TTWO 78) will reveal Q2 results on August 2 after the close. The stock pulled back to its 50-day moving average in late June, and has been pulling higher since the start of July. This is a chance to get in on a long-term winner at a slight discount. But watch the earnings reaction.
Teladoc (TDOC 34) has been trading pancake flat all month despite news that the company has completed its globalizing acquisition of Best Doctors. Earnings are scheduled for August 2 after the close, and if investors like the news, this flat base will provide a nice blastoff platform. You can either take a small position or watch the chart for the reaction. Analysts are looking for revenue of $44 million and a loss of 26 cents per share.
Wayfair (W 76) is big, ambitious and willing to trade earnings for growth. When the company drops its Q2 numbers on August 8 before the open, analysts are expecting revenue of a shade over $1 billion and EPS of –47 cents. The stock has been trading sideways since late June and the rising 25-day moving average has just caught up. So everything is in place for a rally if results are good. Watch the reaction and use a stop around 70.
SELL IDEAS
We have four sells this week, all stocks that tripped their stops: Clovis Oncology (CLVS 87), HealthEquity (HQY 48), RingCentral (RNG 35) and Sherwin-Williams (SHW 350)
SUGGESTED STOPS
Activision Blizzard (ATVI 61) near 57
Adobe Systems (ADBE 149) near 138
Arista Networks (ANET 151) near 145
Autodesk (ADSK 109) near 102
Berry Plastics (BERY 57) near 56
Bob Evans (BOBE 67) near 65
Boyd Gaming (BYD 26) near 24.5
CoStar Group (CSGP 278) near 255
Domino’s Pizza (DPZ 213) near 205
Exact Sciences (EXAS 39) near 34
Global Payments (GPN 94) near 88
Graco (GGG 108) near 107
Impinj (PI 52) near 48
InteractiveCorp (IAC 105) near 99
IPG Photonics (IPGP 151) near 142
JD.com (JD 43) near 39
LendingTree (TREE 179) near 163
Lumentum (LITE 61) near 57
Medidata Solutions (MDSO 77) near 74
MiMedx Group (MDXG 15) near 14.2
Nintendo (NTDOY 42) near 37.5
Nvidia (NVDA 167) near 143
Paycom Software (PAYC 70) near 65
Penn National Gaming (PENN 21) near 20
Planet Fitness (PLNT 23) near 22
Regeneron Pharmaceuticals (REGN 518) near 475
ServiceNow (NOW 109) near 102
SiteOne Landscape (SITE 52) near 49.5
Square (SQ 26) near 23
Summit Materials (SUM 28) near 27.9
Take-Two Interactive (TTWO 78) near 72.5
Terex (TEX 38) near 35.5
Trade Desk (TTD 53) near 48
Universal Display (OLED 122) near 107.5
Veeva Systems (VEEV 63) near 58
Vertex Pharmaceuticals (VRTX 158) near 121
Workday (WDAY 102) near 96
XPO Logistics (XPO 60) near 57.5
Zillow (Z 45) near 44