Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo is in the same boat as last week--the preponderance of intermediate-term evidence is bullish but there has been some short-term churning in the indexes. He goes into detail of what that means for his stance and reviews a ton of leading stocks (which continue to handle themselves well) he’s eyeing. Stocks Discussed: DDOG, NET, SHOP, LLY, NVDA, AZEK, GTLB, TMDX, ZS, S, VRT, DASH, MBLY
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad briefly talk AI in their daily lives before Chris and breaks down the bull case for Bitcoin after a triple-digit (percentage) run from 2023 lows. Then, they welcome on small-cap investing expert Tyler Laundon to discuss a crypto bet he lost to Jacob Mintz, recent trends in an undervalued sector of the market and seeing Rivian SUVs outside the ski slopes. To close out the episode, they debate the Fed’s path forward, expectations for the market, and the importance of identifying strong companies and not painting asset classes with a broad brush.
Save the Date: Thursday, December 14 at 2:00 PM ET
#1 Investment Strategy for 2024: Your Key to Outperformance in Today’s Market
Quarterly Cabot Analyst Meeting
The recording of the Cabot Prime Members Meeting with the Analysts from October 18, 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 November 30: From an intermediate-term perspective, the pieces continue to fall into place for the bulls--recently, our Two-Second Indicator has joined our trend-following indicator on the bullish side of the fence, while things like our Aggression Index and the trend in interest rates remain encouraging. Short-term, we are finally seeing some signs of churning in extended leaders, so we’re continuing to move gradually, picking our stocks and spots carefully. Last week, we did a little more buying in DUOL and started a position in ANET, and today we’re starting one more half-sized stake that will diversify the portfolio a bit.
Bi-weekly Update December 7: WHAT TO DO NOW: Continue to lean bullish, though keep an eye on things in the short term. Overall, our indicators look very good, so we’re aiming to put more money to work—but near-term, we are seeing a few warning signs, so we’re picking our spots and stocks carefully. On yesterday’s special bulletin we sold Noble (NE) and added another half position in PulteGroup (PHM), but tonight, we’ll stand pat and see how things go in the coming days. Our cash position is now 36%.
Cabot Top Ten Trader
Weekly Issue December 4: Most of the rubber-meets-the-road evidence is positive when it comes to the intermediate-term, that said, short-term, some wobbles and rotation are beginning to creep in—some growth areas (like chips) are weakening while the broad market (small-caps, etc.) are perking up, and after five weeks of strong gains, investor sentiment has gotten a bit comfortable. That doesn’t have us growing more cautious, and in fact, we’re bumping up our Market Monitor to a level 7—though we are still favoring moving gradually and picking your stocks and entry points carefully.
This week’s list has another nice collection of stocks, including everything from precious metals to chemicals to some powerful earnings gaps in the tech space. Our Top Pick is a tech infrastructure name that isn’t early in its run, but after a choppy three months, it appears ready for its next move.
Movers & Shakers December 8: It’s been a relatively quiet and mildly positive week for the major indexes, with most up less than 1% (though small caps have been a little stronger) following this morning’s jobs report. It’s a similar story with interest rates, which, despite a pop higher today, are unchanged to slightly higher on the week.
Cabot Value Investor
Monthly Issue December 5: Artificial intelligence-inspired investors are partying like it’s 1999. We’re finding attractive value elsewhere, in discarded industrials like our new Buy recommendation, CNH Industrial (CNHI).
Weekly Update November 28: The best poker players usually are stone-faced. That means that they show no emotions, make no unusual or unplanned moves, and most important, have no “tells.” A “tell” is any change in a player’s behavior, attitude or other actions that indicate the strength of the cards they hold in their hand. Common tells are changes in their chatter, eye contact, twitches and frequency of checking their hole cards.
Cabot Dividend Investor
Monthly Issue November 8: The market has been highly unpredictable over the last several years. Things are too uncertain to make bets on the current outlook. Timing the market and betting on sector rotation is a riverboat gamble. I’d rather bank on prevailing trends that will transcend short-term market gyrations.
There is a strong prevailing positive trend in the energy industry, particularly American energy.
Clean energy is the future, but not the near future. The world will continue to rely overwhelmingly on fossil fuels for at least the rest of this decade and probably much longer. But the world has underinvested in oil and gas exploration and production over the last decade and a half. Global supplies are straining to meet growing demand. The dynamic will last for some time.
Investors are realizing the value of companies and stocks in a sector that had been neglected for many years until recently. While commodity prices will go up and down based on several circumstances, energy companies should benefit over time going forward.
In this issue, I highlight the largest American oil refiner. The stock has been a stellar performer. And the company will continue to benefit from cheaper American oil and a reduced number of refineries.
Weekly Update December 6: The superb rally that began after October is fading.
November was the best month for the S&P 500 in over a year. But now some reality is starting to set in. Wall Street took the good news about peak interest rates to another level and started pricing in Fed rate cuts early next year. The market is pulling back after the Fed dismissed that notion.
Cabot Early Opportunities
Monthly Issue November 15: In the November Issue of Cabot Early Opportunities we lean into the strengthening market with a group of companies doing everything from providing security for new AI applications to paving roads in the Sun Belt to making packaged foods for health-conscious consumers, and more.
Cabot Income Advisor
Monthly Issue November 21: There has been a dramatic turnaround in the market this month. After falling for three straight months, the S&P 500 has rallied 7.6% in the first three weeks of November. The main reason for the turnaround is interest rates. If the current Wall Street expectation that the benchmark 10-year Treasury rate peaked at 5% is true, it should be positive for stocks, or at least eliminate a big negative.
Weekly Update November 28: December 5: The market had a great November. But the rally petered out.
Wall Street always overdoes it. It took the good news about peak interest rates to another level and started pricing in Fed rate cuts early next year. The market pulled back on Monday because the Fed dismissed that notion.
Cabot Turnaround Letter
Monthly Issue November 29: Every investor has loser stocks. We discuss two ways to convert this year’s losers into assets and winners, including tax loss selling and buying shares that others have discarded for artificial reasons. Last year’s crop of bounce stocks performed exceptionally well. We discuss five for this year that look promising.
One of our more productive methods for sourcing new ideas is to see what other like-minded investors are buying. We discuss how to refine the vast data in 13F filings and review four from the most recent batch of filings that look attractive.
This month’s Buy recommendation, Fidelity National Information Services (FIS), was used in a February 2023 article about how we evaluate candidates. It was too expensive then, but its recent 26% share price slide and encouraging fundamentals make it attractive to buy now.
Weekly Update December 8: There were no earnings reports or ratings changes this week.
Cabot Money Club
Monthly Magazine December: The end of the year is a time for friends, family, holidays, and celebrations of all stripes. It’s also (unfortunately) a time to do some year-end clean up of your portfolio, harvest some tax losses, and get started on planning for 2024. So, to give you a head start before you have to meet your accountant, this month we’re exploring tax credits, including some you may have never heard of, and the most important numbers you need to know when planning for the year ahead. Plus, we’ll highlight some tax-efficient investments to save you money next year.
Stock of the Month November 9: The markets had a very good week, and so far, we are also seeing momentum in the first couple of trading days this week. These upward moves have taken the Dow Jones Industrial Average to just about where we started at the beginning of 2023.
Last month, inflation edged up to 3.7%, from 3.67%, and the unemployment rate also slightly increased, to 3.9%. The Federal Reserve—for two continuous decisions—kept the Fed Funds rate steady.
ASK THE EXPERTS
Prime Question for Mike: Mike, I’m weary of (often tech) companies that rely on hyper-growth rates to compensate for stock-based compensation. Bill.Com just reported a decent quarter but not as much of a surprise as usual and lowered revenue guidance from approximately 30% to 20% for the next year. Stock dropped. Lower, non-hyper growth of Bill.com and stock based compensation don’t mix well. Although I love MongoDB’s (MDB) product (I’m a retired programmer) I just sold the stock because of their heavy reliance on stock-based compensation.
What I’ve started to look for is companies that will benefit from falling rates because they have debt or own bonds. The latter category is mostly insurance companies. I bought Everest Group (EG).
WillScot Mobile (WSC) has substantial growth, but the debt/total capital is about 60%. The method of operation is each year acquire a small company and usually add to debt, then use any excess cash to buy back stock. ... Interest expense is at an all-time high for them. Both they and the construction industry will benefit (from) lower rates.
Anyway, I’d like to see even more picks like PulteGroup (PHM), of companies that would benefit from lower rates and be warned of picks that rely on the hyper-growth/stock-based compensation combo. Thanks! I enjoy your growth service very much.
Mike: Thanks for writing and the kind words. I can’t argue with your logic – and maybe that’s one reason why we’re seeing more small caps and economically sensitive names perk up. We’re not huge on diving into the super-popular names right now, though we will go wherever the growth is. We’ll see, but I am trying to not have all chip/software/tech type names, per se.