Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo talks about the two pieces of market evidence - the first is the overall market, which is pulling back, yes, but doing so normally to this point -- but then there are growth stocks, where a ton of names have cracked their intermediate-term trends. Overall, Mike advises going at things stock-by-stock, holding stuff that’s resilient (including many cyclical names) but ditching things that are cracking, while being much more discerning on the buy side until the environment improves.
Stocks Discussed: CFLT, DUOL, NOW, IOT, NFLX, CELH, FRPT, BROS, BOOT, OLLI, NXT, ARRY, DASH, RCL, LULU, PSTG, ONON, SLB, CAT, BA
Cabot Street Check (Podcast)
This week on Street Check, “Defend the Take” takes its revenge as Chris and Brad pay the price for their boldest predictions. They’ll revisit each take defended since the podcast began and eat their words with a side of the hottest hot sauces out there. Click here to register for Chris’ webinar, 2 Cabot Stocks Most Likely to Become the Next Tesla, on August 17th at 2pm EST.
FREE WEBINAR: Thursday, August 17 at 2:00 PM ET
Quarterly Cabot Analyst Meeting
The recording of the Cabot Prime Members Meeting with the Analysts from April 26, 2023 is now available for you to listen to at your convenience—click here for access. This private call with our analysts is one of your exclusive Cabot Prime Core member benefits.
RECENT BUY AND SELL ACTIVITY
This table lists stocks bought or sold in the most recent Issues or Updates.
PORTFOLIO UPDATES THIS WEEK
Cabot Growth Investor
Bi-weekly Issue Augustly 10: The overall market has started to pull back, and the encouraging news is that, from a top-down perspective, things are under control--our trend-following indicators are positive and the retreat to this point has shown little, if any, abnormal qualities. The problem, though, is growth stocks, as many of them haven’t just fallen, but decisively cracked their intermediate-term uptrends, often after quarterly results--that’s not something we can ignore, and so we’ve been selling and have quickly built up a big (50%-ish) cash position. Near-term, we expect this correction to go further, but the odds continue to favor a resumption of the bull trend once the selling finishes up.
In tonight’s issue, we write a lot about this earnings season and some slightly different tactics we may use going ahead, aiming to still give us long-term upside but better protect ourselves against trends that don’t persist. We also review a bunch of new names and offer plenty of commentary about the good, bad and ugly of the stocks we own and are watching.
Bi-weekly Update August 3: WHAT TO DO NOW: Continue to pare back and hold some cash—though you should also continue to hold your resilient stocks and keep your eyes open for an eventual turn back up in the market (and growth stocks in particular). In the Model Portfolio, we sold pieces of DoubleVerify (DV) and Celsius (CELH) earlier this week, leaving us with 36% in cash. We’ll stand pat tonight but will be on the horn if we have any further changes going ahead.
Cabot Top Ten Trader
Weekly Issue August 7: After two-plus months where sellers really couldn’t make a dent in the market, last week was a change, with the major indexes down and, more important to us, many growth stocks decisively cracked near- to intermediate-term support. On the flip side, the vast majority of the top-down evidence remains positive, some growth names are holding their own and a bunch of industry, energy, transport and other cyclical names are still acting fine. Put it together and we think it makes sense to pull in your horns a bit for now, but we’re also not selling wholesale, as the odds continue to strongly favor the market (and many leaders) working its way higher once this selling squall passes. We’re moving our Market Monitor down to a level 6.
Interestingly, despite the market’s hiccup, it wasn’t hard to find a bunch of solid charts (and some solid setups) in a variety of sectors, as you’ll see in this week’s list. Our Top Pick is a cookie-cutter retailer that looks to have finally emerged from a long bottoming effort.
Movers & Shakers August 11: It’s been another mostly red week, with growth stocks again faring worst (though not nearly as bad as last week) but with most everything tilting into the red. Coming into today, most indexes are down marginally to just over 1%.
Cabot Value Investor
Monthly Issue August 1: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the August 2023 issue.
The surge in the stock market this year reminds us of 1987. Also similar to 1987 is the sharp increase in interest rates from unusually low levels.
Several of our companies reported strong earnings this past week and are approaching their price targets.
Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Weekly Update July 25: As interest rates were roiling the stock market last year, it seemed like the long bull market was over. By mid-October, the S&P 500 had slid 27% from year-end 2021. Since then, however, stocks have surged. Today, the S&P 500 is 30% higher than that Halloween-month nadir. And, the index is only 5% away from reaching its prior all-time high. Clearly, the bear market has ended.
For nearly 40% of stocks in the index, their stock prices are now above their year-end 2021 level. It’s not just mega-cap tech stocks like Nvidia (NVDA), which is now 51% higher, or Apple (AAPL), up 8%, or Microsoft (MSFT), up 2%. More prosaic stocks like Occidental Petroleum (OXY), up 110%, Cardinal Health (CAH), up 81% and Lamb Weston (LW) up 78%, have rebounded sharply, as well.
Cabot Dividend Investor
Monthly Issue August 9: The market looks great right now. Inflation is falling fast, the Fed is just about done hiking rates, and there is no recession in sight. It looks like we will get through the steepest rate-hike cycle in decades without much economic pain.
But nothing is certain. Inflation could rise again. The Fed may keep rates high for longer than the market expects. The economy may turn south in the quarters ahead. There could be more trouble with bank failures or the war in Ukraine. S&P earnings have been contracting for three straight quarters.
We’ll see if the market can add to the 30% rally from the low, or if it turns south again. A reasonable argument can be made for either scenario. Instead of trying to guess the possible short-term gyrations, let’s look to investments that should be longer-term winners no matter what.
In this issue, I highlight a stock that diversifies the portfolio into the consumer space. The company operates in an incredible niche market that has provided earnings growth for 31 consecutive years and enabled the stock to outperform the market in every measurable period over the last 15 years. The company is positioned for strong growth in the years ahead and the stock has a long track record of delivering stellar returns in all kinds of markets.
Weekly Update August 2: The market continues to ride the soft-landing high. The S&P 500 returned more than 3% in July and is now up 19% YTD and within just 4% of the all-time high.
The bullish mood is brought on by the fact that the miserable inflation/Fed conundrum that drove stocks into a bear market last year is ending. And it appears that we will not have to endure a recession. Even though S&P earnings are falling for the third straight quarter, investors are bullish about the future.Cabot Early Opportunities
Monthly Issue July 19: In the July Issue of Cabot Early Opportunities, we take a quick look at earnings expectations for each of our positions. And we dig into five opportunities spanning AI, HVAC services, retail, real estate and quantum computing.
This may just be our most diverse group of stocks ever.
Cabot Income Advisor
Monthly Issue July 25: The population is aging. And it’s aging at warp speed. People 50 years of age and older now comprise a third of the U.S. population. The fastest growing segment of the population is 65 and older as an average of 10,000 baby boomers are turning 65 every single day. And it’s not just this country – aging is a global phenomenon.
We don’t know how sticky inflation will be or what the Fed will do. We don’t know if there will be a recession this year or next year or what the recovery will look like, or who will be the next president. But we do know that the population is shifting and companies on the receiving end of the torrent of dollars that will flow as a result should benefit mightily.
In this issue, I highlight another new stock to buy. This stock is cheap with strong momentum and properties that should help it perform well in any kind of market. It’s a healthcare stock ahead of a huge megatrend, the aging population.
Investing with the tailwind of a megatrend makes it so much easier to make a successful investment. It makes mediocre stocks great and good stocks one of your best investments ever.
Weekly Update August 8: Stocks are starting the week back in business after last week’s dip over the credit downgrade. The credit downgrade doesn’t appear to be having much effect on the market at this point. Unless that changes, the market appears poised to continue to forge higher, at least for the time being.
Meanwhile, it’s still earnings season and the past couple of weeks have been busy for the portfolio. Earnings had been very kind to the portfolio two weeks ago with Digital Realty (DLR), AbbVie (ABBV), and Intel (INTC) all getting sizable boosts with better-than-expected results. But the season soured on the portfolio last week as both Qualcomm (QCOM) and Star Bulk Carriers (SBLK) laid eggs.
Cabot Turnaround Letter
Monthly Issue July 26: Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the August 2023 issue.
In this letter, we include our Mid-Year 2023 updates for our stock market and high yield bond market outlooks. After being totally wrong with our stock market outlook for 2023, what do we see for the rest of the year, and why? We were nearly spot-on with our high yield bond market outlook. How does this market look to us now?
Our feature recommendation this month is Kopin Corporation (KOPN), an obscure optical display company that previously was run like a hobby by a brilliant scientist. Its primary output was a chronic stream of operating losses and share offerings that heavily diluted its investors. Now, under completely new leadership, the company is being run like a for-profit commercial enterprise with a vast market opportunity ahead.
Weekly Update August 4: We comment on earnings from Adient (ADNT), Dril-Quip (DRQ), ESAB Corp (ESAB), Frontier Group Holdings (ULCC), Gannett (GCI), Goodyear Tire (GT), Janus Henderson Group (JHG), Kaman Corporation (KAMN), Warner Bros Discovery (WBD) and Western Digital (WDC).
Cabot Money Club
Monthly Magazine August: Remote work has disrupted the employment landscape and appears to be here to stay; it’s also reshaped real estate as more and more workers are now untethered from the office. This month, let’s dive into how to take advantage of better affordability by relocating, moving for your lifestyle and not your employer, and what states will actually pay you to relocate.
Stock of the Month July 13: Manufacturing is steady; construction spending is up; and employment numbers surged to 497,000, according to ADP. That’s more than double the number that economists had predicted. In fact, the leisure and hospitality segment produced 232,000 jobs alone—more than the entire 220,000 job increases forecast. The unemployment rate for June declined slightly, to 3.6%.
All in all, the economy seems to be sailing along pretty well, and recession forecasts have dropped to about a 25% chance. We’ll just have to wait and see.
In the meantime, the markets continued their volatility over the last month, which I find exciting, as the down days provide some great opportunities for buying attractive stocks at lower entry prices.
Growth stocks continue to outpace value names. And sector-wise, Technology, Communication Services, and Consumer Discretionary stocks are the market leaders, rising 37.6%, 35.6%, and 31.1%, respectively, year to date.
ASK THE EXPERTS
Prime Question for Tyler: I’m wondering if it’s time to sell TransMedics Group (TMDX). Do you still feel it’s a hold?
Tyler: It has been struggling and there is some uncertainty with the transition into the air charter business. But I’m still interested in seeing where this goes, provided TMDX doesn’t go too much lower. I feel like the last couple of weeks has been something of a reset for the broad market and a lot of these smaller, higher growth companies have sold off more than they should have. So short answer, for now, I’m sticking with it. That said, I can appreciate that I may have a higher risk tolerance than some. And I wouldn’t argue with those that want to take down their exposure by selling part of their position.