Checking in on Three Top Stocks

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Today I'd like to discuss a few stocks that I've written about this year and that still look good today as the market continues the bull market that re-started in early September.

The first is Lululemon Athletica ( LULU ), which was a big winner at the end of 2009 and early 2010. When I wrote about the stock in April, it was still flying high from that big run in 2009. And the market itself was doing well. Then the stock got chopped around in the market's summer volatility and really got hammered in August and early September. Recently, however, the stock began recovering and even hit new highs last Friday. It also recently appeared in Cabot Top Ten Weekly. This is what Editor Michael Cintolo had to say about LULU:

"Lululemon is a unique retailer in that it is exploiting a successful niche in its industry. The firm's fashionable athletic wear appeals to consumers (mainly women) who are fitness oriented, but also fashion conscious. As it turns out, this so-called niche is a lot larger than most expected-sales and earnings have been soaring in recent quarters, and with just 130 stores open at the end of the second quarter, there is enormous potential for growth. Management is targeting 14 store openings by the end of this year, and another 20 to 25 during 2011; those alone would increase the store count by 28%, and with sales at existing locations soaring (up 31%!) and e-commerce sales actually constrained by a lack of inventory, you can see just how big profits could become in the quarters ahead. Granted, we're talking about high-priced retail, which can go in and out of style, but Lululemon's unique product line and top management should keep growth humming."

The next stock I want to revisit is Netflix ( NFLX ). This stock has been discussed many times in Cabot Wealth Advisory both by me and the other editors. I most recently wrote about the stock in mid-August when it had just announced yet another online streaming deal to get customers more movies faster. The stock chopped around a bit after that, but really got going again with the overall market in September. NFLX is a Cabot Top Ten Weekly stock and this is what Mike said about it in early September:

"With 25 previous appearances in Cabot Top Ten Weekly, Netflix has proven again and again that it is a top stock, rising to the top of the rankings in strong and weak markets. From its first appearance back in February 2003, the Netflix story has been both consistent and changeable. In 2003, the story was about using the much-maligned U.S. postal mail to take on Blockbuster for the movie rental business. Then the company reinvented itself again, using alliances with video game makers Sony (PlayStation 3), Microsoft (Xbox) and Nintendo (Wii) to stream movies, TV shows and other content directly to TV screens. And now, Netflix has partnered with Apple to deliver content through the Apple TV appliance. This constant innovation in content delivery has shown up on the bottom line, too, with Q2 results showing a 52% jump in earnings on a 27% gain in revenue. We think that repeated Cabot Top Ten Weekly appearances say a lot about a company's management and its ability to push the company to the head of the class for investors. Netflix has done that more often than any other stock."

Next on my list is Priceline.com ( PCLN ), which I wrote about in mid-March when it was trading just under 240. The stock suffered from the market's summer volatility (and uncertainty surrounding the volcano in Iceland), but rebounded strongly at the beginning of August when it had a huge gap up on earnings (a bullish sign). The stock has been on a tear ever since. Here is what Mike recently said about it in Cabot Top Ten Weekly:

"When times are tough, travelers still need airline flights, hotel reservations, car rentals and vacation and cruise packages. But they'd like to get them as cheaply as possible. Priceline.com's discounted travel arrangements, including its famous Name Your Own Price discounts and last minute deals, can save plenty of dough. While U.S. consumers contributed 63% of 2009 revenues, it was increased online booking in Europe that allowed the company to record blowout Q2 earnings of $3.09 per share, while analysts had forecast just $2.65. Revenue growth has averaged just under 30% for the last four quarters, up from an average 18% in the previous three. Online booking is expected to continue to grow as the Internet penetrates more deeply into Europe. And China, which has more consumers online than there are people in the U.S., is waiting in the wings. Priceline.com weathered the minor crisis caused by cancelled flights from the Icelandic volcano in the first quarter of the year, and it hasn't slowed down since."

With the market chugging along, these three stocks look great. You could buy them now and hope for the best or you could subscribe to Cabot Top Ten Weekly where you'll get updated information on these and other leading stocks. Click here to learn more.

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In this week's stock market analysis video, Cabot Market Letter Editor Michael Cintolo says that the market had a great September, but that it has hit a little bit of distribution in the last week or two. The best way to tell that is, as usual, by looking at the leading market indexes and the leading institutional-quality growth stocks. Stocks discussed include Apple ( AAPL ), Baidu ( BIDU ), Netflix ( NFLX ), Amazon ( AMZN ), NetApp ( NTAP ), Riverbed Technology ( RVBD ) and Under Armour ( UA ). Click here to watch the video.

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Until next time,

Elyse Andrews
Editor of Cabot Wealth Advisory



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks


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