Search

I’m really trying to avoid buying high—so today’s selection is an undervalued stock that recently had a great correction and is now working its way back up.

We’re clearing one underperforming stock from the portfolio today, and putting one dividend stalwart back on Buy. In today’s issue, you’ll also find a very high-yielding new addition, a recap of our sell strategy and updates on all our stocks.

The charts and the fundamentals of leading growth are likely pointing toward a new sustained advance. With 22% cash, we’re building our Watch List and looking to put more money to work, ideally on dips or shakeouts.

The market rebound over the past few weeks has been very impressive; it’s now turned our intermediate-term timing indicator back to positive. But buying after such a spike is risky, so today’s recommendation is a beaten-down stock that has nowhere to go but up.

Current Market Outlook


The market’s two-plus-week rally hit a wall last week, with the major indexes suffering three days in a row of distribution (higher volume selling), that caused most to fall back below their 50-day lines. That’s reason enough to remain relatively cautious—we’re keeping our Market Monitor in neutral territory. On the flip side, though, is the action of leading stocks, a ton of which are actually pushing higher despite the market’s wobbles! Of course, good-looking stocks can go bad in a hurry in a bad market, but there’s no question this broad resilience (including a slew of solid earnings reactions) is very encouraging. Our thought is to pick up a few shares of some potential winners of the next leg up, but because of the market, do so in small amounts, while continuing to hold a chunk of cash on the sideline.

This week’s list is chock-full of strong growth stocks (and a couple of old world stocks, too). It’s hard to narrow down our choice to just one, but we’re going with Proofpoint (PFPT), which looks like a mid-cap leader in the newly strong cybersecurity group.

Stock Name	Price	Buy Range	Loss Limit
Coupa Software (COUP)	262.20	44-46	39-40.5
Etsy (ETSY)	112.97	22.5-25.5	21-22.5
Lumentum (LITE)	87.00	61-64	55-57
MercadoLibre, Inc. (MELI)	980.83	375-395	345-355
The New York Times Company (NYT)	0.00	23-24.5	21-22
Proofpoint (PFPT)	113.79	110-114	100-103
Salesforce.com (CRM)	0.00	117-121	108-111
Splunk (SPLK)	207.67	98-102	90-92
United States Steel Corporation (X)	0.00	42.5-45.5	37-39
Veeva Systems (VEEV)	180.23	72-76	65-67.5

The market is strong, and the strongest sector of all is growth stocks; we have bunch hitting new highs. As to today’s recommendation, it’s a repeat, a stock we owned successfully last year and that looks good to enter again.

We’re adding a pure-play security solutions provider to Cabot Small-Cap Confidential to increase our security software exposure. This company is growing revenue well over 20% and is expanding its portfolio of solutions to address large and rapidly growing markets.

Today’s stock is from one of the hottest sectors of the market, China, and it’s got a big growth story—as well as the beginnings of a move to expand outside of China. As for our current stocks, in general all is well, not least because of the market’s recent rebound. In fact, we’ve got several stocks hitting new highs!

Current Market Outlook


It’s been a tricky few weeks, but by our measures, the intermediate-term trend of the major indexes has turned up, which is a sign to increase your exposure to the market’s leading stocks (preferably on pullbacks). And there are a lot of leaders to choose from! In particular, the growth stocks that bounced nicely off the market’s early-February low continue to perform excellently, displaying powerful and persistent action, which usually indicates more upside is in store (albeit with normal pullbacks and shakeouts along the way). We’re not viewing this as a blastoff, but more of a resumption of the market’s longer-term uptrend. Our Market Monitor moves up a couple of notches into bullish territory.

This week’s list is another one that’s filled with enticing growth stories and strong charts. There are a ton of good stocks to choose from, but we’re going with TD Ameritrade (AMTD) as our Top Pick, as it’s one of the strongest Bull Market stocks out there today.

Stock Name	Price	Buy Range	Loss Limit
Ligand Pharmaceuticals (LGND)	267.14	173-178	158-162
Micron Technology, Inc. (MU)	43.31	56-60	51-53
Palo Alto Networks (PANW)	236.92	181-187	166-170
Qualys (QLYS)	0.00	74-77	68-70
Sarepta Therapeutics (SRPT)	120.93	73-77	64.5-67.5
TD Ameritrade (AMTD)	0.00	60-63	55-57
Teladoc, Inc. (TDOC)	127.95	37-38.5	36.5-38
Twitter (TWTR)	40.37	32.5-34.5	29-30
Western Digital Corporation (WDC)	0.00	96-100	89-91
Zillow (Z)	76.64	53-55.5	48.5-50

In today’s issue, we talk about some of the clues to identifying abnormal action, which earlier this year led us to sell a couple of stocks that have since been hit hard, while holding onto some leaders that are beginning to re-emerge. It’s an art as much as a science, but we think the discussion will help you hold your highest-potential holdings through tough corrections.

With a bumpy market to work with and a few stocks still to report earnings, we take a look at the political risks to the portfolio. We also shift our focus to Brazil, where we find an unusual commodity company and a fresh airline stock to consider.

Today’s featured stocks include GameStop (GME), Southwest Airlines (LUV) and PBF Energy (PBF), which is joining the Buy Low Opportunities Portfolio. I’m also selling Nucor (NUE) today.

Current Market Outlook


Most major indexes have recouped a bit more than half of what they lost in the recent two-week plunge and are now standing above or just below their 50-day moving averages—so what happens from here will be vital. A continued rally would turn the intermediate-term trend positive and tell us to become more aggressive, but renewed weakness would be a sign that the sellers are still lurking. Meanwhile, it’s hard not to be encouraged by the action of leading stocks, many of which have rebounded nicely, with some (including a few in this issue) pushing to all-time highs. We’re nudging our Market Monitor back to neutral, and will take our cues from the market and leading stocks in the days ahead.

This week’s list is the second straight that’s featured a bunch of resilient growth stocks, which tells you where big investors are putting money to work. Our Top Pick is Weibo (WB), the Chinese social media giant that broke out to new highs last week.

Stock Name	Price	Buy Range	Loss Limit
HubSpot (HUBS)	582.89	102-106	93-96
Okta, Inc. (OKTA)	148.41	32-34.5	30-31
Paycom Software (PAYC)	0.00	90-95	83-86
Sangamo BioSciences (SGMO)	0.00	21.5-23.5	18.5-20
Shopify (SHOP)	585.00	130-138	117-123
SolarEdge Technologies Inc. (SEDG)	124.37	42-45	39-40.5
Steel Dynamics (STLD)	0.00	47-49	43-44
Weibo (WB)	98.16	130-135	112-117
Workday (WDAY)	194.88	119-124	110-113
Yandex (YNDX)	0.00	40-41.5	36.5-38