Earnings recently drove this Top Pick’s price down, so we are selling the stock and taking our profits.
Top Picks Update
NMI Holdings (NMIH)
From Cabot Stock of the Week
The perils of investing in low-priced stocks are clear, especially when they’re thinly-traded. NMI Holdings, Inc. (NMIH), the mortgage insurer, trades an average of 342,000 shares a day now, and that’s light enough so that when the company’s earnings report of May 4 underwhelmed investors, the absence of buyers caused the stock to sink in a matter of days from 12.5 to 10.5 (16%).
The stock has erased some of its damage from then, and we still have a nice profit from the start of the year, but the momentum is gone, so I now recommend taking the profit and moving on.
Timothy Lutts, Cabot Stock of the Week, www.cabotwealth.com, 978-745-5532, June 27, 2017