Is Cabot Top Ten Report Right for You?
By
Timothy Lutts, Chief Financial Strategist and Editor of
Cabot Stock of the Month ReportFrom Cabot Wealth Advisory 5/13/08
Sign up for free Cabot Wealth Advisory e-newsletterOur goal at Cabot is to help you find the investment advisory services that are best for you. If you want foreign stocks, you need
Cabot China & Emerging Markets Report. If you want earth-friendly stocks that are benefiting from the big movement away from polluting fossil fuels and toward all things Green, you need
Cabot Green Investor. And if you want our most full-featured growth-oriented advisory service, you need
Cabot Market Letter.
But sometimes the distinctions aren't so clear. Cabot Top Ten Report, for instance, is generally regarded are our most aggressive service and thus best suited to short-term investors. With as many as 10 new names added to the list every week, turnover is usually quick, so our list doesn't sink under the weight of more than a hundred names. Today the list has 43 names, most of which were added this year.
But there are exceptions, and today I want to write about five of them, because they're the real champions of the system, and they're the stocks in which patient investors are likely to derive the greatest profit.
MasterCard (NYSE: MA) appeared in Cabot Top Ten Report on November 5, 2007. At the time, it was trading at 186 and we named it Editor's Choice, writing this:
"Since coming public in May 2006, MasterCard has wowed the market with impressive sales growth, stunning earnings growth, and growing margins...the real action is overseas; transactions grew 22% in the Asia-Pacific region, 26% in Europe, 24% in Latin America and a whopping 41% in South Asia, the Middle East and Africa. Going forward, those trends should remain buoyant, as more consumers use credit or debit cards, instead of cash; emerging markets, in particular, should be a big growth engine."
Since then, MasterCard has appeared in Top Ten four more times, and investors who bought back then are up 54%. You could buy now, or on pullbacks to 260.
MasterCard, or course, is a very famous name. But as a stock it has great growth potential because it's still young.
Gafisa (NYSE: GFA), on the other hand, is unknown to most Americans. It appeared in Cabot Top Ten Report on November 12, 2007, when we wrote:
"Gafisa is Brazil's leading national homebuilder, a diversified construction company with over 900 completed projects, including houses, housing developments and commercial buildings...The big question on Gafisa has been about whether the current slump in housing in the U.S. will prove contagious; being in Brazil might provide immunity and it might not. Revenues increased 11% in 2004, 25% in 2005 and 62% in 2006, and in the long run, the company's outlook is excellent. "
Back then, Gafisa was selling at 36, and we gave it a buy range of 33-37. Since then, it's appeared in Cabot Top Ten Report three more times, TWICE as Editor's Choice (most recently last week). Readers who bought at the first recommendation would be up 14%, which is a modest gain...but the future is still bright, and you could buy on the current pullback.
Southwestern Energy (NYSE: SWN) also appeared in Cabot Top Ten Report on November 12, 2007, when it was selling at 26 (split-adjusted). We wrote:
"While oil service stocks are beginning to have a rough go of it, the stocks of energy producers are finding buyers, thanks to new all-time peaks in the price of oil and a rebound in natural gas prices. Southwestern Energy is a big beneficiary, due not just to higher prices, but to much higher production as well. The company's Fayetteville Shale site saw production more than triple from a year ago, leading to a company-wide 56% jump in oil and natural gas output. Even better, the Fayetteville site is accelerating—production near the end of October was up 30% from the end of July. When you combine higher realized prices (its oil and natural gas sales prices were up 15% and 7%, respectively) with higher production and sound cost controls, you get newly accelerating earnings growth—up 47% and 50% the past two quarters, with an 85% gain expected in the fourth quarter and 43% more expected in '08. Bottom line: The tide appears to have turned for oil producers, and that will help Southwestern Energy."
Southwestern has appeared in Cabot Top Ten Report four more times since that November recommendation, and early buyers have a profit of about 70%. It's still an attractive buy on pullbacks.
Then there's
Companhia Siderurgic (NYSE: SID), the biggest steel company in Brazil, which, appeared in Cabot Top Ten Report on the last day of 2007. (Note that Cabot Top Ten Report recognizes no country boundaries. If you can buy it on a U.S. exchange, and it's liquid and it's strong, Cabot Top Ten will find it.) We wrote:
"Founded in 1941 as a strategic national industry, [Companhia Siderurgic] was privatized in 1993. Since then, the company has been expanding and modernizing, while retaining the advantages that it enjoyed as a national asset, including control of its own iron ore sources, electric power from a wholly owned hydroelectric dam, and superb rail and seaport facilities. Recent expansion efforts have included the construction of a new re-bar plant and the development of a complementary concrete business."
Back then, SID was trading at 90. The stock has appeared twice more in Cabot Top Ten Report, and also split 3-for-1, and readers who bought then are up 60%. SID is still strong, and OK for buying on pullbacks.
Finally, there's
First Solar (Nasdaq: FSLR), first recommended in Cabot Top Ten Report on February 19, 2007, when we wrote the following:
"The first solar (photovoltaic) cell was built way back in 1883, and after 114 years of development, the electricity from the devices is still more expensive than electricity produced by burning fossil fuels. But tax incentives, particularly in Germany, have spurred rapid growth in the industry in recent years, and as volumes have grown, technological improvements have continued to lower the cost of a watt of electricity. Today a number of solar stocks are strong, but First Solar is the first to earn a spot in Cabot Top Ten. What makes the company different is its reliance on second-generation thin film technology. Using a proprietary CdTe (cadmium and tellurium) technology, its solar modules produce the same amount of electricity as first-generation technologies used by other manufacturers, while using only 1% of the silicon, which is in tight supply! As a result, cost per watt is lower. First Solar's modules are designed for use in large-scale grid-connected products, and its goal is to become, by 2010, the first solar module manufacturer to offer a solar solution that competes with the price of retail electricity on a non-subsidized basis. What made the stock pop last week, however, were the superb fourth quarter results"
Back then, First Solar was trading at 45. It's appeared in Cabot Top Ten Report eight more times, and subscribers who bought on the original recommendation are up 525%.
But if you missed First Solar, what then? I say buy a little now. The company is still the leader, both fundamentally and chart-wise. And the company is targeting pricing parity in selected electric power locations by 2010.
Finally, you should pay attention to any stock that has repeat appearances in Cabot Top Ten Report. History proves that these are the big long-term winners.
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