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This month we’re venturing into the services sector with a stock that fits the Growth at a Reasonable Price (GARP) strategy that’s come back into favor recently. This isn’t a high-flying stock with a new widget or software solution. It’s a pretty basic business really. In all likelihood, it’s insulated from trade wars, and even recessions too.

This little nugget is helping rebuild America’s infrastructure, one road at a time. With funding for road construction and repairs going up, and a long list of acquisition targets to roll into its business, this young company has a bright future.

All the details are inside the November Issue of Cabot Small-Cap Confidential.

Current Market Outlook


Impeachment talk stole the headlines last week, and China trade issues remain one of the chief economic concerns, but overall, the market remains healthy, with all major indexes in uptrends and most just a couple of weeks off their recent highs. Nevertheless, making money remains difficult, as the forces of rotation have been sending old leaders to the locker room and trotting out fresher new leaders to take their place. This is actually good for the health of the bull market, but it does make investing more difficult, so you should continue to tread carefully, in particular by choosing low-risk entry points and being ruthless at cutting loose your worst performers. As for the market monitor, we’ll stand pat this week, as the flurry of selling late last week has created some decent entry points.

This week’s list includes a great variety of stocks, and our Top Pick is a lower-risk insurance stock, Arthur J. Gallagher (AJG), which has been building a base over the past couple of months and looking ripe to resume its uptrend.

Stock Name	Price	Buy Range	Loss Limit
Arthur J. Gallagher (AJG)	89.27	87-91	84-86
Chubb Group (CB)	153.34	156-164	150-152
Entegris (ENTG)	48.08	46-48	41-42
Garmin (GRMN)	97.45	81-87	77-78
Insulet (PODD)	175.69	154-168	145-147
Jabil Inc. (JBL)	41.50	34-36	31-32
MasTec, Inc. (MTZ)	66.65	62-65	59-61
Synnex Corp. (SNX)	129.70	110-113	105-108
Taylor Morrison Home (TMHC)	27.51	24-26	22-23
Weight Watchers International, Inc. (WW)	35.33	35-38	30-32

There are five growth stocks in our Cabot Undervalued Stocks Advisor portfolios that offer dividend yields in excess of 5%. That’s crazy! Stocks with rising profits in combination with very large dividend yields are generally uncommon, and can indicate an extreme undervaluation of those companies’ share prices. Dividends can tell you a lot about a company, or about the broader stock market. I cover the dividend topic in more detail in today’s issue.

Current Market Outlook


The major indexes found some decent support last week, rallying back to the top of their ranges, but overall they’re still thrashing around in the same range they’ve occupied since early August, keeping the intermediate-term trend sideways-to-down. The one thing that did change late last week was a bout of rotation, with money flowing into the beaten-down areas (financials, transports, energy, etc.); it’s something to keep an eye on, but we can’t say it’s a new trend quite yet. All in all, the market is showing us a lot of movement, but little net progress—and thus, our overall advice hasn’t changed. We’re keeping our Market Monitor at a level 5, meaning you should be choosy and keep things small on the buy side, while holding some cash and honoring stops and loss limits with your weaker performers.

The good news, as it has been all year, is that there remain many stocks that looks ready to enjoy meaningful upmoves if the market can get its act together. Our Top Pick is New Oriental Education (EDU), a rare China-related stock that’s making new highs on good volume.

Stock Name	Price	Buy Range	Loss Limit
Burlington Stores (BURL)	193.95	195-198	179-182
Jacobs Engineering Group (JEC)	89.83	86-88	79.5-81
Meritage Homes (MTH)	102.20	63-66	57.5-59
Neurocrine Biosciences (NBIX)	123.40	95.5-98.5	88-90
New Oriental Education (EDU)	113.97	106-108	98-100
Take-Two Interactive (TTWO)	123.32	129-133	120-122
Tandem Diabetes (TNDM)	74.77	67-70	60-62
Trex Company (TREX)	117.56	80-83	74-76
Twitter (TWTR)	40.37	40.5-42.5	37-38
Wheaton Precious Metals (WPM)	34.43	28-29	25.5-26.5

I hope you had an enjoyable and relaxing summer. Wall Street is back to work this week, and Apple (AAPL) is launching a new product or two next week, so get ready for stocks to start moving again.

The market is looking a little healthier, but it’s too early to call the all-clear yet. Still, many of our stocks are looking better, with several hitting new highs in recent days.
This week’s recommendation is an oil-patch giant that pays a good dividend, is undervalued, and is going up—what’s not to like?

Current Market Outlook


Last Friday’s surge higher by the broad market was a powerful sign that the lack of progress by growth stocks in recent months might be over, and for that reason alone, we are raising our market gauge one notch above neutral to the 6 level. But until we see true follow-through, and numerous growth stocks hitting new highs, we can’t be sure. In the meantime, however, there are still plenty of individual stocks acting well, with the potential to make big moves if the broad market cooperates.

Our Top Pick this week is the world leader in electronic signature technology, DocuSign (DOCU), which is making it easier to do business securely as the world turns increasingly digital.

Stock Name	Price	Buy Range	Loss Limit
Aaron’s (AAN)	74.35	66-69	59-61
ASML Holding (ASML)	350.01	253-260	228-232
Chipotle Mexican Grill (CMG)	773.32	795-825	730-745
Crocs (CROX)	0.00	29.5-32.3	25-26
DocuSign (DOCU)	107.98	64-66.5	56-57.5
Lululemon Athletica (LULU)	304.69	200-202	190-192
Quanta Services (PWR)	91.45	37-39	34-35
Saia Inc. (SAIA)	129.19	93-97	85-87
SolarEdge Technologies Inc. (SEDG)	124.37	87-89.5	78-80
Trex Company (TREX)	117.56	87-90	79-81

Current Market Outlook


All eyes are on Janet Yellen this week, who is set to speak Friday morning, and whether she’ll offer hints to the Fed’s next move. As always, we’ll let others slice and dice the comments; we’ll stick with the market’s action itself. And on that front, things look solid—the market’s consolidation of the past few days has been normal thus far, and while a short-term shakeout of some sort wouldn’t surprise us, the odds continue to point toward higher prices down the road. We continue to advise you to remain heavily invested, though be sure to honor your stops for any stocks that break support.

This week’s list includes a nice array of stocks and sectors, including a few recent earnings winners. Our Top Pick is Gigamon (GIMO), a hot stock that’s recently taken a few weeks to catch its breath. Further dips are possible but buying here with a tight stop makes for a good risk-reward opportunity.

Stock Name	Price	Buy Range	Loss Limit
Yelp (YELP)	41.30	35-37	32-33
US Silica Holdings, Inc. (SLCA)	0.00	38.5-40.5	35.5-36.5
Royal Gold, Inc. (RGLD)	129.66	80-83	74-75
Pioneer Natural Resources (PXD)	0.00	177-183	164-166
Insulet (PODD)	175.69	40.5-42.5	37-38
MercadoLibre, Inc. (MELI)	980.83	160-165	149-150
Line Corporation (LN)	0.00	44-46	39.5-40.5
Gigamon (GIMO)	0.00	43.5-46	40-41
Dicks’s Sporting Goods (DKS)	0.00	56-58	50-51
Acuity Brands (AYI)	0.00	273-280	253-256

Heading into the last month of the year, the prospects for the market remain very good, with a plethora of technical indicators telling us the market will be higher in the years ahead, and thus I continue to recommend that you be heavily invested.

Forget tariffs, forget trade negotiations, forget politics, and forget all the “problems” of the outside world. Just hold a portfolio of carefully selected high-potential stocks, and all will be well.

Today’s recommendation is a fast-growing company that’s a major participant in the 5G communications revolution.

Details in the issue.

The world is about to change in a major way. So much so that you may look back ten years or even five years from now and realize how profoundly different things are since 2019.

The rapidly advancing rollout of 5G will be a technological tipping point that crosses a threshold into the digital age where everything is connected to the internet. Today, only a few things are connected. In a few years, the whole world will be computerized.



5G is such a game changer that many companies and governments can’t afford to be left behind. The current Administration has labeled 5G a national security priority. It seems 5G is the news arms race.



Those are the stakes. And it’s coming fast. In this issue, I identify a company that is at the epicenter of the 5G rollout. It holds vital technology that is light years above the competition and is necessary to connect any device to 5G. Earnings and revenues should skyrocket as the rollout proceeds in haste.

The market has been all over the place so far in August, with some huge daily declines and advances depending on the news of the day. While the continued rebounds are a good sign buyers are lurking out there, the fact is the intermediate-term trend isn’t up, so we think it’s best to stick with a cautious stance—jettisoning your portfolio of losers and laggards (as we’ve done in recent weeks) while looking for either undervalued or resilient stocks to take their place. Our choice this week is a blue chip that’s cheap, near support, pays a nice dividend and is in position to benefit from any bounce in interest rates.

Current Market Outlook


Last week’s action was encouraging, with the major indexes snapping back decently from Monday’s selloff and with many individual growth stocks either acting resiliently and/or reacting well to earnings. That said, three up days (Tuesday-Thursday last week) are not enough to reverse the prior meltdown—right now, all major indexes are below their 50-day moving averages and, generally speaking, the overall intermediate-term trend is neutral-to-negative. We’re not advising you to hole up in your bunker, but the onus is on the bulls to prove that the tariff-induced decline was a shakeout; until then, it’s best to remain cautious by holding some cash, keeping new buys small and making sure your losers and laggards don’t slip much further.

Going along with the action in growth stocks, this week’s list is chock-full of recent earnings winners. Our Top Pick is TransDigm (TDG), a solid 20%-ish grower in the aerospace field that gapped on earnings and is set to pay a huge one-time dividend.

Stock Name	Price	Buy Range	Loss Limit
Carvana (CVNA)	82.90	75-78.5	64-66
Insulet (PODD)	175.69	144-147	128-131
Lattice Semi (LSCC)	23.92	17.5-18.5	15.5-16.2
Martin Marietta Materials (MLM)	261.52	243-250	218-222
Medpace (MEDP)	76.28	75.5-78.5	67.5-69.5
Roku, Inc. (ROKU)	150.46	124-130	107-110
Shake Shack (SHAK)	92.08	85-88	75-77
SolarEdge Technologies Inc. (SEDG)	124.37	80-84	70-72
TransDigm (TDG)	599.41	525-545	475-485
Wingstop (WING)	121.52	95-98	88-90