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Current Market Outlook


After a hot and heavy few weeks, the growth stock sellers came out of the woodwork during the past two days, driving many down sharply to support. What happens from here will tell the tale in our view—if most growth stocks hold up in this vicinity or push nicely higher, then the odds will favor this being another shakeout. But should we see a weak bounce (or, worse, no bounce), then it’s likely growth stocks will be entering a longer consolidation following their heady runs. We’ll see how it goes, but right now, you should honor your stops and maybe even take a couple of partial profits if you haven’t recently. As for buying, we’re OK with it, but look for stocks near support and keep new positions small.

This week’s list has far more non-growth ideas, which have found some buying in recent days. Our Top Pick is Penn National Gaming (PENN), which is part of a strong group and looks relatively early in its overall advance.

Stock Name	Price	Buy Range	Loss Limit
Abiomed (ABMD)	0.00	136-139	128-131
Berry Global (BERY)	64.22	56.5-58	52-53
CBOE Holdings (CBOE)	0.00	87-90	81-83
Grand Canyon Education (LOPE)	121.03	77-80	70-72
Hancock Holding (HBHC)	0.00	49-51	45-46
ILG Inc. (ILG)	0.00	24.5-26	22-23
Penn National Gaming (PENN)	45.38	20.3-21.3	18.7-19.4
Sherwin-Williams (SHW)	526.09	340-350	320-325
Terex (TEX)	0.00	35.5-37	32.5-33.5
Workday (WDAY)	194.88	94-98	87-90

Current Market Outlook


The issue following the huge selloff on June 9 was titled, “What Happens From Here is What Counts,” and so far, we’ve been encouraged by what we’ve seen—the Nasdaq found intraday support three times in the 6,100 to 6,150 area last week, and few growth stocks decisively broke key support levels. And today, we saw the Nasdaq and many leading stocks pop nicely. In the short-term, we can’t say the market is completely out of the woods, so picking your spots makes sense. But our main focus is on the intermediate-term, and the trends there remain up for most major indexes and the vast majority of leading stocks. All in all, we remain mostly bullish, though don’t be surprised to see some more “tests” for the market in the near-term.

This week’s list is also encouraging, as our screens aren’t finding it difficult to find great charts and enticing stories. Our Top Pick is LendingTree (TREE), which just broke out in late-April and has held up well during the recent market wobbles.

Stock Name	Price	Buy Range	Loss Limit
Bluebird Bio (BLUE)	0.00	106-112	96-100
Cooper Companies (COO)	0.00	234-242	220-223
HealthEquity, Inc. (HQY)	70.70	50-52	45-46
IAC/InterActiveCorp (IAC)	0.00	99-103	91-94
Impinj (PI)	0.00	52-56	46-48
Lending Tree (TREE)	411.51	166-174	152-156
PayPal (PYPL)	147.00	51-53	47-48
Summit Materials (SUM)	0.00	27-28.5	25-26
Supernus Pharmaceuticals (SUPN)	52.50	37-39	33-34.5
Zillow (Z)	76.64	44.5-47	40.5-42.5

Today’s recommendation is a steel stock! It’s a sector that nobody is excited about, but the value proposition is great, and the stock has just blasted off following an excellent earnings report.

In today’s issue, we’re giving some tips about how to handle your portfolio when markets are kicking up a fuss. We also have a new stock pick that takes us outside China and the tech sector, plus the portfolio moves we’re taking to lower our exposure a little.

The market’s main trend remains up, though there is certainly some rotation going on, with technology stocks pulling back and financials and medical stocks surging. My advice is to react slowly to these shifts, taking things on a stock by stock basis according to what the stocks are actually doing—and not assuming anything.

In today’s issue, I add a mid-cap tech stock to the Dividend Growth tier, provide updates on all our holdings, and share some of my favorite investment resources.

Today’s recommendation is a very strong Chinese stock that had quieted down nicely during the past two weeks and is now on a four-day run. One thing we really like in a growth stock is a huge mass market, and this company is right in the middle of one of the biggest markets there is.

While it’s pretty clear that the world isn’t going to calm down or stop giving investors heart attacks every week or so, it’s also clear that investors are ready and willing to put money into growth stocks. That’s what’s driving the buy signal from the Cabot Emerging Markets Timer and the performance of our portfolio.

Current Market Outlook


There are a still a couple of flies in the market’s ointment, but the past week or two has seen the market broaden out—the Nasdaq and growth stocks are still leading the way, but the S&P 500 and NYSE Composite have joined them in new high ground, and even the lagging small- and mid-cap indexes have perked up. Market-wise, then, the evidence has improved, so we’re nudging up our Market Monitor to a level 9. Just as important, though, is handling your stocks correctly—right now, many are extended to the upside, though some are just emerging while others look like great buys on any dips. Long story short, you should remain bullish, but honor your stops and continue to pick your spots on the buy side.

This week’s list has another batch of strong growth stocks. Our Top Pick is JD.com (JD), which catapulted to all-time highs a month ago on earnings and has calmly consolidated since.

Stock Name	Price	Buy Range	Loss Limit
Autodesk (ADSK)	229.00	107-112	99-102
Bob Evans Farms (BOBE)	0.00	67-70	62-63.5
Broadcom Limited (AVGO)	266.26	245-255	227-232
Graco Inc (GGG)	0.00	109-113	101-103
JD.com (JD)	39.58	38-40	35-36.5
Lumentum (LITE)	87.00	56-58	51-52.5
Marriott Vacations (VAC)	0.00	116-120	105-108
Marvell Technology Group (MRVL)	36.88	16.8-17.5	15.8-16.2
ServiceNow (NOW)	341.86	102-105.5	95.5-97.5
Weibo (WB)	98.16	73-76	66-68

This month, we’re going back to what’s served us well, small business software. The company has a cloud-based software solution tailor-made for property managers. It’s growing revenue by more than 30%, has no debt, and is on track to become profitable this year. The chart is solid. And I believe the company will ultimately be sold, hopefully at a nice premium to where shares trade today.

Investors’ jitters about the dog fight in Washington, D.C. caused a sharp market correction this week that included emerging market stocks. Our portfolio also sustained a little damage, but, so far at least, it’s under control. The major uptrend in emerging markets has been dulled, but not blunted. In this issue, I look at the performance of emerging vs. developed market stocks. I also bring back a stock from last year that will give us a different take on Chinese retail.

Today’s recommended stock is a niche medical provider whose risk is substantially outweighed by reward, both fundamentally and technically. As to our current portfolio, most stocks are acting well and there are no ratings changes.

Current Market Outlook


The market’s rebound since its sharp one-day selloff on Wednesday, May 17, has been impressive and encouraging—the Nasdaq and leading growth stocks spiked to higher highs, and even the S&P 500 nosed out above its March 1 peak. It’s certainly a good sign and pretty much brings us back to where we stood two weeks ago. On the positive side, most growth-oriented stocks are in good shape and most indexes are either at, or just a couple of percent off, all-time highs. But much of the broad market (and many indexes) is just marking time and the number of stocks hitting new lows is at unhealthy levels. Even so, the long-term trend and leading stocks are the most important pieces of evidence, and they’re both bullish. Thus, you should be, too.

This week’s list has another crop of very strong names from many strong sectors. For our Top Pick, we’re going with a big-cap turnaround play—Best Buy (BBY) has surprisingly strong earnings figures, a big share buyback program and the stock just gapped up after its quarterly report.

Stock Name	Price	Buy Range	Loss Limit
Alibaba (BABA)	254.81	120-124	111-112
Best Buy (BBY)	0.00	57-60	52-54
Domino’s Pizza (DPZ)	339.47	200-205	187-190
FMC Corp. (FMC)	0.00	73.5-76	69-71
MercadoLibre, Inc. (MELI)	980.83	272-282	248-254
MuleSoft (MULE)	0.00	25.5-28	22.5-24.5
Regeneron Pharmaceuticals (REGN)	512.96	435-455	400-410
Wayfair (W)	167.03	60-64	57-58
West Pharmaceutical (WST)	210.25	94-97	88-90
Wynn Resorts (WYNN)	121.08	123-127	114-117

In tonight’s Cabot Growth Investor, we dive into all our stocks and highlight our current batch of ideas (including an intriguing recent IPO with a great cookie-cutter story) and discuss the good and bad of mental versus in-the-market stops.