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Topic: Daily Advice

CGI : Special Bulletin – February 26, 2016

The market followed up Wednesday’s big-volume turnaround with further gains yesterday—at day’s end, the Dow rose 216 points and the Nasdaq gained 40 points. The push higher by the major indexes took them above resistance levels, and gives us a clear Cabot Tides buy signal.

As we mentioned on Wednesday, the market still faces many headwinds, the most important of which is that the longer-term trend remains down for the indexes and many stocks. But there’s no question the evidence has improved during the past three weeks, and with our Tides now positive, we’ll begin to put money to work in a couple of well-situated stocks with big growth expectations.

The first is Sabre (SABR), which operates the most popular distribution network for air and hotel bookings in the world. Growth has been steady and should accelerate in 2016, and after a sharp correction, the stock has found huge-volume support after its recent earnings report and should do well going forward.

The second addition is Vulcan Materials (VMC), the nation’s largest producer of construction aggregates that reported a great quarter two weeks ago. Management believes its cash flow can more than double in the next couple of years as the industry surges.

We’ll also return Facebook (FB) to buy, as the stock has been relatively resilient, hitting higher highs and lows during the sharp market retreat this year.

Even with these two new additions, the Model Portfolio will still be holding around 55% in cash, so we’re not exactly banging the bullish drums quite yet. If the market and our stocks act well going forward, we’ll put more cash to work, but if not, we’ll keep all our five stocks on tight leashes.

In total, the Model Portfolio now has five stocks, four of which are rated BUY. The BUY-rated stocks are Facebook, PayPal, Sabre and Vulcan Materials. We’ll leave our remaining shares of Ulta Beauty rated HOLD for now.

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