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Rich Howe

Contributor, Cabot Wealth Daily

Rich is a trained economist and Chartered Financial Analyst (CFA). He has researched and invested in stocks for more than 20 years and has become a recognized expert in micro-cap stock investing. He started his career at investment advisory firm Eaton Vance where he covered a wide range of sectors including software and internet, financials, and health care.

Following his time at Eaton Vance, Rich joined the Citi Private Bank Private Equity Research team and led the creation of a private equity and real estate fund-of-fund that raised over $300 million in capital commitments from sophisticated high net worth individuals and institutions.

Rich left Citi to launch Stock Spin-off Investing, a research service focused on tracking and identifying the most promising stock spin-offs and special situations.

His recommendations have consistently outperformed the market.

From this author
The new bull market is certainly a rising tide, but it isn’t lifting all boats equally yet. Here are three undervalued micro-cap stocks being ignored by the market.
Negative enterprise value stocks are hard to find. But having outperformed the market by more than 5-to-1, they’re worth hunting for.
Today August 23 will be my last day as the author of Cabot Micro-Cap Insider.
In terms of micro-cap news, we had four updates that I want to highlight (more details below):

1) 2seventy bio (TSVT) reported earnings and hosted an earnings call. I still believe in the stock’s long-term outlook.
2) Unit Corp (UNTC) announced a $2.50 dividend and strong earnings.
3) P10 (PX) announced a strong quarter.
4) Medexus (MEDXF) announced a strong quarter.
Today, I’m recommending a company that has been on my watch list for several months. It looks too compelling to ignore.

Key points:
  • No debt and 37% of its market cap in cash.
  • Cheap valuation. Good dividend yield and share buyback program.
  • High insider ownership.
All the details are inside this month’s Issue. Enjoy!
This was another quiet week in the micro-cap world as large-cap stocks continue to roar higher.

Many large-cap companies have reported, but we will have to wait a few weeks for our micro-cap companies to report Q2 earnings.

Here are some takeaways from earnings season.
With U.S. stocks trading at historically high valuations, now’s a good time to look to our neighbors to the north for undervalued opportunities.
This was another quiet week in the small-cap world, but large-cap companies are in the full swing of earnings.

Earnings season represents a great time to “check up” on our micro-cap recommendations to make sure each investment case is on track.

Here’s what’s on tap for earnings this week in the large-cap world.
You may think it’s impossible to find growth stocks trading at value prices, but you can. If you know where to look.
Oil stocks are being ignored by investors, but not by energy company executives who’ve been doing some major insider buying.
This week was a relatively quiet one in terms of our micro-caps, but the market had a good week.

The reason?

The June CPI and PPI readings came in significantly below expectations.
Want to construct the “perfect stock”? Here are the 13 attributes to look for, according to legendary investor Peter Lynch.
Today, I’m recommending an aerospace company that is poised to double revenue over the next 3 years.

Key points:

· Earnings to triple over the next three years.

· Cheap valuation. Good dividend yield and share buyback program.

· High insider ownership.

All the details are inside this month’s Issue. Enjoy!
Hope you had a wonderful 4th of July!

The weather was less than ideal (raining all day in Wellesley, MA, where I live) but we made the most of it and had friends over for some hot dogs and hamburgers.

This has been the rainiest start to the summer in a long time. Fingers crossed better weather awaits us in the second half of July and August.
Investing in stock spin-offs is worth the risk. But you need to know what to do with shares you receive when your larger holding is spun off.
Micro-cap stocks are my bread and butter, and these are the 3 micro-cap stocks I like best today.
Last week, I wrote about how the U.S. markets look expensive both on an absolute basis and relative to international stocks.

Since then, the market has pulled back by about 3% following a couple of hawkish comments by Jay Powell.

Nonetheless, the S&P 500 chart looks relatively healthy and I’m not in a rush to “fight the tape.” Upward trending markets tend to continue to trend upwards.
Some of the world’s best investors built their reputations investing in spin-offs, and these 3 look particularly interesting.
U.S. stocks are starting to look overvalued, so let’s look to our neighbor to the north for 3 attractive Canadian micro-cap stocks.
“Don’t fight the tape” is a famous expression that I’ve learned to appreciate.

I don’t know who coined the expression, but it refers to the practice of not going against the prevailing trend or momentum of the market.

The phrase emphasizes the idea that it is generally unwise to take positions that oppose the direction of the overall market trend.
This morning, I published my latest recommendation: Buy 2seventy bio (TSVT).
Today, I’m recommending a biotech that is well capitalized and has an approved drug that is growing 100%.

Key points about the company:
  • Over $300MM of cash on its balance sheet
  • Key drug to hit $500MM in annual sales in 2023
  • Obscure tax law points to an acquisition offer in November or December.
All the details are inside this month’s Issue. Enjoy!
This week, I wanted to share a few charts before getting into my weekly update.

The first chart shows the amazing valuation discrepancy between small stocks and large-cap stocks.

Mega-cap stocks are trading at a PE ratio of 29.4x while small-cap stocks are trading at a 12.8x.
I’m closing out my NexPoint Diversified (NXDT) recommendation and selling my shares. I had an update call last week; I would characterize the update call as positive (more details below).
These days, AI, or artificial intelligence, is the buzzword du jour.

And it’s easy to understand why.

Play around with ChatGPT, and you will find it to be an incredibly helpful tool.
Peter Lynch is a stock-picking legend, and three of the biggest winners in the Magellan Fund shared this one trait.
A company declaring a new dividend can be a major catalyst for the share price as it makes the shares attractive to an entirely new segment of investors, and this micro-cap stock just announced theirs.
This week, I wanted to share a couple good charts to show why I continue to be bullish on energy stocks.

First, energy still represents a very small weight in the S&P 500.

Energy as a percentage of the S&P 500 reached as high as 16% in 2009. Today it’s under 5%.
Micro-caps have recently pulled back sharply relative to the broader market and are becoming undervalued. These 3 micro-caps look particularly promising.
Sam Zell, the legendary American businessman, recently passed away. Here are 3 of the best business lessons he left behind.