Two Favorite Stocks for 2010
In Case You Missed It
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Merry Christmas from everyone at Cabot! I hope you're having a wonderful holiday season full of family, food and fun.
You may have noticed us talking about a special issue of Dick Davis Digest to be published in January that will contain the top stock picks for 2010 from the best investment pickers in the business. Today, I have an interview with the editor of the publication, Chloe Lutts. Her name probably sounds familiar and it should; she's Timothy Lutts' daughter (and Cabot's founder Carlton Lutts' granddaughter). You've never heard from her in Cabot Wealth Advisory before, but you certainly will again when she starts writing issues of her own in the New Year. Enjoy!
1.) When and how did you know you wanted to join your father (and grandfather) in the family business?
In a lot of ways, I grew up as part of the Cabot family. In fact, I've been working at Cabot on and off since high school, spending the occasional summer or winter break learning the ropes. I gradually earned more responsibility and started doing more important work, and it eventually grew until I joined full-time in September.
2.) What are the most valuable things that you've learned from your father and grandfather?
I think a general sense of optimism definitely runs through all three generations of our family. It's the reason the Cabot philosophy dwells not on the so-called "demise of the dollar," but on the next big thing--whether that's e-commerce or Green energy. It's mixed with a contrary streak, which has served Cabot subscribers equally well. As soon as the voices espousing an idea begin to sound cacophonous, my father and grandfather walk away. It's a mentality my dad first explained to me when I was still very young, using the word iconoclast. I think I was being rather difficult at the time. I looked up the word later to find the definition "a person who questions or tears down traditional ideals," and said, yeah, that's me.
3.) Have you always been interested in investing?
When I was younger, my father bought me some shares of Ballard Power (BLDP), a company that makes hydrogen fuel cells. The stock trades under $2 today, but it was a pretty big winner for Cabot in the 1990s. The company sent me an investor prospectus in the mail one day, and I was convinced hydrogen fuel cells could solve pretty much all our problems. I was especially impressed that their only emission was water!
Ballard's fuel cells have lost a lot of their luster today, as they've been surpassed by more feasible technologies, but I still love the thrill of finding an undiscovered company whose products are going to change the world. In fact, when I was working at the Cabot office over my Christmas break in January 2007, before heading to China for a semester, my father asked me to compile a report on Green investments, as preliminary research for the possible launch of a Green-focused newsletter (which eventually came to fruition as the Cabot Green Investor.)
My research focused heavily on solar power stocks, which were experiencing a mini IPO boom at the time. My top pick in the sector was First Solar (FSLR), which had recently come public in late 2006. I was impressed by the company's thin film semiconductor process. In November of 2007, after FSLR had soared from below 30 to over 250 in 11 months, Forbes wrote a story headlined "First Solar Goes Supernova," about the company's 969.8% earnings jump. Like Ballard, First Solar eventually fell back to earth, losing about two-thirds its value, but following it in the meantime gave me a taste of the thrills of growth investing.
4.) Do you have any early memories about Cabot or stock picking?
I remember my sister and I started getting the Cabot Market Letter in the mail when I was still in middle school. I didn't get much mail at that age, and I read the whole letter cover to cover every month. I liked the Model Portfolio the best; the last page, with the market timing stuff, was a little harder to understand.
During one of my earlier stints working at Cabot, in high school I think, my father gave me a book to read during my downtime. It was about chart patterns, and I remember copying the patterns out of the book onto the back of some paper from the recycling bin so I would remember them better. I made little notes next to the formations, like "usually takes three to six months" or "exit direction indicates the direction of the next move." I remember looking for charts online that matched the patterns, and being surprised at how often they appeared. I decided then that that was a pretty good way of picking stocks.
5.) What's your background?
Just prior to joining Cabot, I worked as a reporter at Debtwire, a news service that focuses on the loan and bond markets. Debt markets are notoriously secretive places, so trying to break news in that area was always challenging. It certainly kept me on my toes. Additionally, I did some reporting for Institutional Investor, also in the loan markets. That was my introduction to what can still be a pretty opaque corner of the financial world.
I studied international relations at Brown University, and spent a year and a half abroad in Paris, France, and later in Beijing, China. Those were some of the richest, most valuable aspects of my education, because they gave me an understanding of these two very different cultures.
6.) What can readers expect in the Dick Davis Digest Top Stock Picks issue?
I'm very excited about this issue; it's going to be packed cover to cover with great investment ideas for 2010. We've asked the best investors on Wall Street to tell us their single best pick to buy next year, and I can't wait to see what they say.
7.) What are your future plans for the Digests?
Part of my mission is to make the Dick Davis Digest and Income Digest more useful to our subscribers. We've been organizing stocks by sector and investment type on a regular basis, so investors can quickly find the investments most suitable to their portfolios. I'm trying to feature more of the types of investments our subscribers have expressed interest in, from high-potential small-cap stocks to income-generating blue chips. Longer-term, we plan on improving our Web site, to make it more useful to Digest subscribers.
8.) What's one of your favorite stocks right now from Dick Davis Digest?
We recently featured Strayer Education (STRA), a for-profit educational company that offers undergraduate and graduate degrees to adults online and at 71 campuses in 15 states. The recommendation, from Ingrid Hendershot's Hendershot Investments, extolled the company's history of achieving double-digit growth. I expect the adult education sector to stay strong long-term as American workers continue to seek more competitive, knowledge-based jobs, in good times and bad.
9.) What's one of your favorite stocks right now from Dick Davis Income Digest?
I like Paychex (PAYX) for income investors. Recommended in our most recent issue by Nathan Slaughter's StreetAuthority Half-Priced Stocks, Paychex offers a yield of almost 4%, and has a history of consistent dividend growth. Plus, Slaughter thinks the stock is undervalued by at least 50%, and is due to take off as soon as payrolls and interest rates normalize (the firm makes most of its money by investing client money before distributing it).
10.) What is one of your favorite sectors for the future?
I think Green energy will definitely keep growing; probably faster and longer than expected. I hope the next decade will be a truly watershed time, when massive investment in Green technologies--solar, wind and efficiency in particular--will fundamentally change the way the world uses energy.
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Jump-Start Your Portfolio in 2010
Get the best investment ideas from the best minds on Wall Street with Dick Davis Digest. if you subscribe before December 31, you'll not only receive a full year of these winning ideas, but you'll be guaranteed to get our 2010 Top Stock Picks Special Issue when it's released in January.
Just check out some of last year's winning picks:
* Goldcorp: UP 50%
* E-House Holdings: UP 145%
* Freeport-McMoRan: UP 175%
* Teck Resources: UP 384%
And there's a lot more where those came from. Don't delay, this offer won't be around for long. Click below to get started today!
In case you didn't get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, I have links below to each issue.
Cabot Wealth Advisory 12/21/09 - Lessons Learned from the Sirius XM Story
On Monday, Timothy Lutts reviewed the high points of the XM Radio/Sirius Radio saga, which has important lessons for all of us. He also discussed femtocells and a small company with a big idea. Featured stock: Airvana (AIRV).
Cabot Wealth Advisory 12/24/09 - Has the Time Come for DIY Solar?
On Thursday, Brendan Coffey wrote about the availability of DIY solar panels at Lowe's and whether they are yet cost-effective. Brendan also discussed several opportunities in the solar sector that he thinks will perform well in 2010. Brendan finished by writing about a growth stock in a booming segment. Featured stock: Cree Inc. (CREE).
Until next time,
Editor of Cabot Wealth Advisory
Editor's Note: Get the best investment ideas from the best minds on Wall Street with Dick Davis Digest. If you subscribe before December 31, you'll not only receive a full year of these winning ideas, but you'll be guaranteed to get our 2010 Top Stock Picks Special Issue when it's released in January. Don't delay, this offer won't be around for long. Click below to get started today!