Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo goes in-depth on the market’s growth stock selloff this week -- in a nutshell, he’s playing things cautiously for now and does think more weakness (in growth and the market) is more likely than not, though he’s also not selling wholesale and says the odds continue to favor another move higher once this selling finishes up. Mike goes through tons of market and individual stock charts to show you exactly what he’s seeing, as well as highlighting many names from a variety of groups to consider.
Stocks Discussed: CFLT, IOT, FRPT, OLLI, PLTR, BOOT, FSLY, NET, BLD, APO, BX, BA, NE, RIG, CIVI, NOG, WFRD, SCCO
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad talk travel stocks, earnings, the Fed and electric vehicles before welcoming on Cabot Explorer’s Chief Analyst Carl Delfeld. Then, they continue the EV deep dive and discuss ethical investing in the EV supply chain, identifying key inputs to megatrends, and investing globally. You can find Carl’s latest book, Power Rivals: America and China’s Superpower Struggle, here.
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 July 27: The big-picture outlook with the market hasn’t changed, with all of our key market timing indicators bullish, many studies pointing to higher prices down the road and leaders--even those that have taken hits--showing little abnormal action. That said, near-term, the odds are growing we may see more choppy trading, if not a pullback of some sort, so we’re not pushing the envelope here and are ditching names that crack. Earlier this week, that meant selling one position, and today, we’re selling another, leaving us with 28% in cash.
To be clear, the odds still favor the next big move being up, so we’re aiming to put some money to work in new leadership that emerges on earnings, or current leadership that pulls in to support. For now, though, we’ll hold the cash and see how earnings season progresses.
Elsewhere in tonight’s issue, we go over a few new ideas, with the biggest write-up being what could be the #1 AI platform play (not picks and shovels, but actual platform) out there. It’s on our watch list.
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 July 31: The major indexes all closed last week near their highs, which is one big factor keeping the top-down evidence very bullish; nothing has changed with our big picture positive thoughts. That said, right now, we don’t think the situation is as strong as the indexes suggest—just looking at a variety of names, it’s clear many are consolidating even as the S&P and Nasdaq tested new high ground late last week. Again, we’re not saying that’s a big bugaboo, but right now, we continue to think being more discerning when looking for entry points makes sense, as does pruning some laggards if you have them. We’ll keep our Market Monitor at a level 7.
This week’s list has something for everyone, with a decent amount of cyclical exposure but also some true blue growth names as well. Our Top Pick is helping to lead a new group move in metal stocks in general (and copper in particular).
Movers & Shakers August 4: For the first time in about three months, this week saw the sellers really demonstrate some power—yes, the major indexes took some lumps (down 1% to 2.5% coming into today), but more important, we saw many stocks crack near- to intermediate-term support, especially on the growth side of things.
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 July 12: Artificial intelligence (AI) is a game-changer that will usher in the next wave of technological advancement that will have a dramatic positive impact on certain stock prices for years to come.
The phenomenon got a huge shot of adrenaline when Nvidia (NVDA) blew away earnings estimates, citing greater demand for AI technology far sooner than expected. It’s like the opening gun has sounded for the new craze.
The efficiency and cost-saving potential for businesses are massive. Companies can’t afford to fall behind. For many businesses, rapid AI adaptation is a matter of survival. There is a stampede to apply cutting-edge AI technology to businesses before the competition. Companies that provide AI-enabling products and services will benefit mightily for years to come.
In this issue, I highlight the great income stock of a company that will surely benefit from the race to adopt AI. The price is still very reasonable, and it pays a high dividend yield. There is a window of opportunity after the first wave of price surges levels off before the longer-term price appreciation sets in.
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 1: The good times are here again. The S&P 500 is up over 19% YTD and is now within just 4% of the all-time high. Stocks are in a strong uptrend that began in the beginning of May and appear likely to move still higher.
Inflation is crashing. The Fed is about out of bullets. And there is no recession in sight. Things could always discombobulate down the road. But there doesn’t appear at this point to be anything ahead in the next month or so that will change the current positive narrative.
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 Mike: Do you use the slow stochastic, relative strength indicator and the MACD (move average convergence/divergence) indicator in your decisions of when to buy or sell? And have you ever heard of the zig-zag high/low?
Mike: I do glance at the slow stochastic, yes, and we definitely use the relative strength line (not the RSI index)—we don’t trade off them but for entries we’ll take a gander usually, yes. Price/volume comes first, at least for the chart part of the analysis.
Never done any work with the zig-zag stuff – nothing against it, if it works for you then I’m all for it, but I’ve mostly used price/volume/moving averages/relative strength for 20+ years.