This online educator’s price target was just raised by Morgan Stanley, to $83. Analysts are forecasting 5-year annual growth of 25% for the company.
Chegg, Inc. (CHGG)
From Cabot Growth Investor
While the Nasdaq returned close to its highs from last Monday, many stocks we own or are watching didn’t. And then today happened, with growth stocks (and most others) getting dented across the board. (We know there were reasons behind today’s selloff, like some antitrust action against Apple, but we’re more interested in the what than the why.)
None of this evidence is super bearish when looking out a few months; indeed, our key market timing indicators (Cabot Trend Lines, Cabot Tides, etc.) are still bullish, and next to no leading growth stocks have cracked their intermediate-term uptrends as of yet. Moreover, some sort of hesitation was going to come eventually, and as we wrote in last week’s issue, the current time frame (we had 16 weeks up with very strong performance) fits with prior instances where the sellers finally put up a fight.
But shorter-term, we’re not in the mood to chase stuff, as many stocks are wobbling, and a ton have earnings reports coming during the next two or three weeks. Long story short, having trimmed last week, we’re content to stand pat tonight with a cash position right around 20% while holding onto our strong, profitable positions.
From here, we’re willing to move in either direction (buy or sell) depending on what comes, but right now we feel giving our names a chance to build new launching pads is the best course.
The debate over school reopening’s is raging across the country, but more and more seem to at least be starting out with a part-virtual option (with some going fully virtual for at least the first few weeks). That’s likely helping perception of Chegg, which rebounded excellently from last week’s selloff, tagging new highs today before reversing (on light volume).
Anything is possible, of course, but the trend is up here for the business and the stock. We’ll stay on Buy, though dips toward the 25-day line (near 70 and rising) would mark better entry points. Earnings are likely out in early August. BUY.
Michael Cintolo, Cabot Growth Investor, cabotwealth.com, 978-745-5532, July 23, 2020