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In today’s note, we discuss pertinent developments and ratings changes for some of the stocks in the portfolio, including Alcoa (AA), Atlassian (TEAM), GE Aerospace (GE), SLB Ltd. (SLB), Starbucks (SBUX), Super Hi International Holding (HDL) and Teladoc Health (TDOC).

Current Market Outlook


Major indexes, including the S&P 500, Dow Industrials and Nasdaq Composite remain range bound, chopping sideways in very tight ranges during the past five to seven weeks. But the broad market is looking better and better—most small- and mid-cap indexes hit new highs last week, and we’ve seen some improved action among growth stocks. All told, we remain positive on the market and believe the path of least resistance remains up. Individual stocks have been a bit trickier, but many are acting well. We think it’s best to remain heavily invested.


This week’s list includes many smaller, rapidly growing companies, reinforcing the view that money is flowing toward growth ideas. Our Top Pick is Shopify (SHOP), which has enormous potential as e-commerce expands. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Wix.com (WIX)	302.53	39.5-41.5	35-36
Ubiquiti Networks (UBNT)	170.11	50-52	47-48
Shopify (SHOP)	585.00	40.5-42.5	36-37
Ingevity Corp. (NGVT)	99.98	42-44.5	39-40
Microsemi (MSCC)	0.00	38.5-40	36-37
LGI Homes (LGIH)	86.04	37.5-38.5	33-34
Green Plains Energy (GPRE)	0.00	23.5-24.5	21.5-22
Finisar (FNSR)	0.00	21.5-22.5	19.5-20
Exact Sciences (EXAS)	116.91	18-19	15.5-16
Autodesk (ADSK)	229.00	66-68	60-61

Emerging markets are seeing a boost from positive news out of Hong Kong and on the U.S.-China front. Our Emerging Markets Timer has raced higher in recent days, putting it within striking distance of a new buy signal. Our new recommendation comes from an unexpected country, but a well established semi-monopoly industry.

This service could and would surpass the use of a professional financial advisor who usually invests client funds in various mutual funds.
J.P.

Ford (F) reported a down third quarter, but Explorer stocks had a good week with all positions in the black. MP Materials (MP) and Oracle (ORCL) were up 11%, and SQM rose 8%.

The headline of today’s GDP report will likely be more upbeat than the two previous negative growth numbers, instead showing that third-quarter GDP grew at about a 2% annualized pace.

But beneath these numbers, investor sentiment, economic trends, and geopolitical risks are not all that encouraging.

How should investors take all this in and execute a strategy to exploit the situation?

Our portfolio has been largely treading water for a few weeks. That’s not surprising given that we’ve been waiting for earnings season to start (it finally has!) and that there’s this persistent sense that bad news for the economy resulting from the coronavirus equal more stimulus and accommodative fiscal policy equals support for equity markets and, in some ways, good news for certain tech and MedTech companies.

Current Market Outlook


Last week was a microcosm of 2015 as a whole, with plenty of ups and downs, intraday reversals, sector rotation … and not much overall progress for the major indexes. That said, we have seen more and more leading stocks hit the skids during the past two weeks, which is a yellow flag; there are still plenty that remain in good shape, but it’s obvious that picking your spots remains vital. We’ll keep our Market Monitor in neutral territory, waiting for a decisive show of strength or weakness before turning bullish or bearish.

This week’s list has something for everyone—airlines, medical, construction and retail. Our Top Pick is Wayfair (W), a newer stock that blasted out of a base on earnings last week as growth accelerated. Given the market, keep new positions small and try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Wayfair (W)	167.03	46-52	39-42
Vulcan Materials Company (VMC)	137.10	96-99	89-90
Sabre Corp. (SABR)	0.00	28-29	24-25
Molina Healthcare (MOH)	0.00	78-80	72-73
Fortune Brands Home & Security (FBHS)	81.02	49-52	42-43
Expedia Group (EXPE)	0.00	118-123	112-113
Envision Healthcare (EVHC)	0.00	42-44.5	40-41
D. R. Horton (DHI)	66.55	30-31.5	27-27.5
AmSurg (AMSG)	0.00	82-84.5	75-77
Allegiant Travel (ALGT)	170.65	228-236	212-214

Today’s featured stocks include a bank and its CCAR results, a retailer and its prognosis in the wake of the Amazon-Whole Foods merger, and a new addition to the Growth & Income Portfolio.

Both Chinese antiques and Chinese stocks are hot right now.

Struggling companies sometimes need a push in the right direction, these two value-priced companies could use a push from activist investors.

Last week’s market action provided an awesome opportunity to discover leading stocks; they were the ones that quickly bounced back from the broad market selling and broke out to new highs! It’s not often you get such a clear opportunity to separate the wheat from the chaff, but when you do, it’s worth taking advantage of. Today, all those stocks that broke out are on our favored list, while those that bounced weakly are suspect. And those that did worse? They should be sold—note that our Hold list on page 12 has shrunk a bit. Also arguing for selling is the fact that our Market Monitor remains in neutral territory, mainly because the market’s intermediate-term trend is down. In short, holding some cash and keeping new buys small is advised. Our favorite stock in today’s crop is WebMD (WBMD), which has solid growth prospects and a great technical set-up.

Stock Name	Price	Buy Range	Loss Limit
WebMD Health Corp. (WBMD)	0.00	44-46	39-40
Twitter (TWTR)	40.37	60-65	54-55
Sangamo BioSciences (SGMO)	0.00	16.5-18.5	14-15
Royal Caribbean Cruises (RCL)	0.00	47-50	45-46
Qihoo 360 (QIHU)	0.00	95-98	84-85
Pandora Media Inc. (P)	0.00	33-36	30-31
NPS Pharmaceuticals (NPSP)	0.00	32-35	29-30
Keryx Biopharmaceuticals (KERX)	0.00	14-15.5	12.5-13.5
Facebook, Inc. (FB)	0.00	60-62.5	55-56
Concur Technologies (CNQR)	0.00	113-115	100-102

I’m changing my recommendations on Dollar Tree (DLTR) to Hold; and on Big Lots (BIG), Kraft Heinz (KHC) and WellCare (WCG) to Buy.

Current Market Outlook


The market finally hesitated a bit last week, and going through our weekend research, we did spot more leading names that had pulled back during the past five to 10 trading days. But as has been the case since the early-October lows, that weakness was tame (most dips were calm and controlled), with today’s burst of buying pushing many back up. (Encouragingly, even the lagging small-cap indexes are now trying to break out of multi-month ranges.) There’s still some shorter-term yellow flags, so we wouldn’t throw caution to the wind here (don’t forget to take some partial profits!), especially if you’ve put a bunch of money to work in recent weeks. But the fact that most stocks and indexes haven’t been able to retreat much despite those yellow flags is yet another stone in the bullish wall. We remain bullish.

This week’s list includes a broad mix of names, from old winners coming back to life to new names perking up to recently strong performers that have eased to good entry points. Our Top Pick is Axon Enterprise (AAXN), which has come back to life after a year-long rest. Start small and go from there.

Stock Name	Price	Buy Range	Loss Limit
Alnylam Pharmaceuticals (ALNY)	143.58	107-113	97-99.5
AAXN (AAXN)	87.11	72-75	66-64
Kansas City Southern (KSU)	176.54	149-153	138-141
Leggett & Platt, Incorporated (LEG)	49.79	51.5-53	47-48
Lithia Motors Inc. (LAD)	146.30	160-165	145-148
Luckin Coffee (LK)	0.00	28-30	24.5-25.5
Novocure (NVCR)	0.00	88-91	80-82
Palo Alto Networks (PANW)	236.92	241-246	225-228
Synnex Corp. (SNX)	129.70	119-123	110-112
Target (TGT)	124.77	122-125	112-114

While the market is up today, the correction that began a month ago remains in force, making it tough for stocks (growth stocks in particular) to make real headway. Thus we have four Sell recommendations today, as well as one upgrade to Buy.

As for the new recommendation, it’s a solid growth company that dominates a totally unexciting industry in the U.S., and long-term prospects are great.



Details inside.

There are roughly 200 million commercial vehicles in the world. They’re all trying to get to the right place, at the right time, at the lowest possible cost, without crashing. Managing these fleets probably isn’t as stressful as being an air traffic controller, but it’s right up there!
To help get the job done, fleet managers are increasingly turning to fleet telematics solutions. This specialized hardware and software can improve driver safety records, reduce accidents and theft, and reduce operating costs. Dramatic increases in fleet efficiency boost an organization’s bottom line. The bigger the group is, the bigger the potential opportunity.
All the details are inside this month’s issue of Cabot Small-Cap Confidential. Enjoy!

Novonix (NVNXF) shares broke above 5 this week and have more than doubled since early August even as the market is under pressure due to the slowing of federal stimulus, China’s property debt issues, and some increase in interest rates and inflation.

The growth stock selloff of February and March knocked good software companies down a peg. But many of these stocks are bouncing back now as investors realize growth isn’t going to evaporate as the pandemic eases.

Today’s addition is a newly public company with a software platform for hosting virtual events. The pandemic supercharged growth and revenue doubled. Deeper evaluation of the trends suggests things will calm down a little, but growth should be sustained well above 20% for years and could even top 30%.



Despite the potential, the stock is dirt-cheap as compared to its peers. We’ll jump in now before investors realize the disconnect.



Enjoy!

The evidence remains mostly bullish, with the major indexes and a growing number of leading stocks acting well. To be fair, it’s not 1999 out there, as many stocks are suffering a lot of choppy action and sentiment is buoyant--that’s no reason to be negative, but we’re continuing with our step-by-step buying spree.

Last week, we started a new half position in CrowdStrike (CRWD), and tonight, we’re filling out our position in Novocure (NVCR), leaving us with around 20% in cash.

Tech stocks are having a tough week as interest rates and inflation fears creep up. This is uncomfortable for many because five companies, Microsoft, Apple, Amazon, Alphabet and Facebook, make up almost 25% of the market value of the S&P 500. My view is that this pullback is providing new entry points for some tech stocks that have been on a good run. For perspective, most non-tech stocks are weathering the increase in bond yields quite well.

Today, we’re selling two profitable ideas that have lost some momentum, and our new Explorer recommendation centers on turbulence on the high seas.