Latest Summary
CABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo is still bullish because the primary evidence is bullish -- and most of all, leading stocks act great, including more than a couple of recent earnings winners that have rallied on huge volume. That said, there are more and more storm clouds to keep an eye on, such as the action of regional banks, the wild moves in interest rates and the lagginess of the broad market. Even so, while he’s keeping his feet on the ground, the fact is big investors are buying, so Mike’s holding his winners while keeping his watch list fresh.
Stocks Discussed: ASML, TSM, AXP, DECK, SHOP, APO, URI, LLY, NVO, TEX, EXPE, MDB, PSTG, Z
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad discuss whether we’re in an artificial intelligence bubble, the latest Fed meeting, earnings reactions from market-leading stocks and whether China is still a viable contrarian play. Then, they welcome on Jacob Mintz to talk all things options. They dive into what the options market is signaling for the current market rally, whether regional banks are a red or yellow flag, and the importance of picking your spots even in a bull market. To close out the episode, Jacob shares a tale from the trading pits of the CBOE. You can sign up for Jacob’s upcoming webinar, “3 Winning Trading Strategies for 2024" at this link.
Cabot Webinar
2024 Stock Market Outlook: Secrets to Success in a New Bull 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 January 25: Big picture, it’s hard to find much wrong with the market, as the primary evidence (trends of the indexes, action of leading stocks) remains clearly positive. Thus, we’re generally holding our winners and think there’s a good chance last November marked a major turning point after nearly three years of growth stock sluggishness.
That said, near-term, we’re keeping our feet on the ground and going slow on the buy side, as there’s no question stocks have had a good run and many leaders are extended. Recently, we’ve trimmed a couple of positions but, tonight, we’re averaging up on one name to fill out our stake.
Bi-weekly Update February 1: WHAT TO DO NOW: Remain bullish, though we are seeing more crosscurrents pop up. The big-picture evidence remains positive, so we’re holding most of our winners, but we’re also comfortable holding some cash as earnings season progresses. We’re watching a few of our names closely (as well as many names on our watch list), but tonight we’ll hold our 23% cash position and have no changes.
Cabot Top Ten Trader
Weekly Issue January 29: We could pretty much cut and paste last week’s write-up here, as nothing much has changed with the evidence, and thus, with our positioning—the primary evidence remains bullish, with the trends of the indexes pointed up, and the action of leading stocks remains very solid. With that said, the broad market is mostly marking time, while interest rates are testing key intermediate-term levels. Long story short, we’re still bullish and are keeping our Market Monitor at a level 8, but are being more discerning on the buy side.
This week’s list has everything from popular tech names to cyclical tech to development-stage biotech, though as mentioned above, we like that we’re seeing some big-volume moves. Our Top Pick has a history of trending in good times and looks set for a big turnaround.
Movers & Shakers February 2: It was Fed and jobs week in the market, which implied a lot of volatility—and that’s just what we’ve seen, with a big drop after the Fed said no cuts were likely in March, a nice rebound yesterday, and this morning is looking more mixed, as some big tech earnings are helping the Nasdaq but the rest of the market is suffering as a strong jobs report has rates spiking.
Cabot Value Investor
Monthly Issue January 2: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the January 2024 issue.
We review the stock market’s remarkable performance in 2023 and highlight our recommendations that produced notable gains along with our clunkers. Our view on the 2024 market is that stocks will have an average year, with the Magnificent Seven producing flat/modest returns at best. Readers should keep in mind quotes from Yogi Berra and Warren Buffett when considering market forecasts. Onward to 2024.
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.
Weekly Update January 30: Last week, we wrote about how rising debt and rising interest rates are increasingly weighing on the Federal budget. Our rough math points to interest costs consuming as much as 21% of Federal revenues by 2025. We also added that “This math seems awful. Realistically, how likely is this to play out and what can investors do to mitigate, or even benefit?”
Our risk management process involves considering a wide range of possible macro scenarios. We are terrible at predictions, so we don’t make them. But, by accepting that the world is not risk-free and by recognizing risks early, we are better prepared to deal with them if they do materialize later.
Cabot Dividend Investor
Monthly Issue January 10: Things look good for 2024. Inflation is down, interest rates have likely peaked, and there is no sign of recession. But you never know. It’s a tough game to predict the future of the market. However, certain trends are likely to persist.
It’s a good bet that interest rates have peaked. Sure, they could edge higher from here. But they are unlikely to soar to new highs past 5% for the 10-year Treasury. The situation would have to completely reverse for that to happen. Meanwhile, stocks that have been dragged lower by rising interest rates have come alive again.
These stocks, which have strong track records of market outperformance, are at historically cheap valuations, have established upward momentum, and are positioned ahead of a likely slowing economy.
Also, artificial intelligence is here to stay. Businesses must spend on it not only for competitive advantage, but as a matter of survival. The new technology will continue to be a strong growth catalyst for technology stocks. And the trend will continue regardless of what the Fed does, or the state of the economy, or who is elected president.
In this issue, I highlight a fantastic dividend stock whose long record of strong performance has been interrupted these last two years. It’s also a company that focuses on technology and will surely benefit from the proliferation of AI in the years ahead. The timing for this stock should be outstanding.
Weekly Update January 31: It’s been a good start to the year, with the S&P 500 up more than 3% so far this month. Of course, that’s a big slowdown from the breakneck pace of advancement in November and December. But that’s to be expected.
Cabot Early Opportunities
Monthly Issue January 17: In the January issue of Cabot Early Opportunities, we take a look at updates within our portfolio then dive into five stocks from markets ranging from defense to cybersecurity to the blooming IT infrastructure market.
As always, there’s something for everybody!
Cabot Income Advisor
Monthly Issue January 23: I believe the good news will prevail in 2024. But you never know. Forget about trying to predict the direction of the overall market. However, certain aspects of the current environment and established trends are much more bankable.
For example, it is highly likely that interest rates have peaked. Sure, rates could bounce higher than they are now. But that 5% peak level on the 10-year Treasury is unlikely to be eclipsed, at least in this cycle. Artificial intelligence is here to stay. Businesses must spend on it not only for competitive advantage but as a matter of survival. The new technology will continue to be a strong growth catalyst for technology stocks.
In this issue, I highlight a fantastic dividend stock whose long record of strong performance has been interrupted these last two years because of rising interest rates. It’s also a company that focuses on technology and will surely benefit from the proliferation of AI in the years ahead. The timing for this stock should be outstanding.
Weekly Update January 30: We are smack dab in the heart of earnings season for this portfolio. With the market sputtering along without much conviction, individual stocks are taking center stage, and earnings are a major part of that.
Quarterly and annual earnings will be reported this week from AbbVie Inc. (ABBV), Alexandria Real Estate Equities (ARE), American Tower Corporation (AMT), Marathon Petroleum Corporation (MPC), and Qualcomm Inc. (QCOM). The reports could be a hugely important factor in determining the near-term direction of these stocks.
Cabot Turnaround Letter
Monthly Issue January 31: This issue focuses exclusively on spin-offs and discusses seven attractive and relatively recently spun-off companies.
This month’s Buy recommendation, Baxter International (BAX), a major producer of medical equipment and hospital supplies, is involved in a spin-off. In this case, it is the parent company of an upcoming spin-off. The transaction, along with fundamental improvements and a long-time low share valuation, makes Baxter shares attractive.
Weekly Update February 2: In today’s note, we discuss the recent earnings reports from Janus Henderson Group (JHG) and Polaris (PII). Our note also includes the monthly Catalyst Report and a summary of the February edition of the Cabot Turnaround Letter, which was published on Wednesday.
Cabot Money Club
Monthly Magazine February: From stamps and coins to art, cards, cars and even wine, collectibles have been rapidly growing their share of the global financial markets. And while some portfolio managers may position them as “alternative assets,” are collectibles even really investments? More importantly, are they worth your hard-earned money? This month, let’s look at the trends of the booming (and busting) collectibles market.
Stock of the Month January 11: Welcome to our TOP PICKS issue! For this issue, I asked the Cabot analysts to give me a couple of their top picks for 2024. And I hope you will be pleased with the diversity—market-cap and sector-wise—that the analysts have offered.
But first, let’s talk about the market.
ASK THE EXPERTS
Prime Question for Mike: Hi Mike. Thanks for all you do. I have a basic question: I see that you like 2x leveraged SSO or UWM. From what I read, since these leveraged stocks get repriced each day, there is some drag/losses compound and are not good for long-term investing. Given that the S&P 500 is up approximately two-thirds or three-quarters of the time, even with the drag, over (the) long term (over the last decade), it seems to have done very well. What is the issue in keeping a permanent allocation of 5% in SSO? Not so sure about UWM. Especially if you buy (it) on a down market (say 5% correction) - can it be held for a long term as a strategy instead of being in and out of it? Just wanted to get your thoughts. Appreciate it.
Mike: So, it depends on how much churning happens. For instance, over the past 10 years, UWM Is actually up less than just IWM, even though both are up. In the past two years (24 months), SPY has actually outperformed SSO, even though both are up a smidge.
Basically, yes, if you’re in an overall uptrend, sure, that could make sense, but if we hit a period where the market doesn’t do anything for years (like 2000-2013), then definitely not. With that said, I don’t think we’re starting that sort of secular bear phase for a while, so I’m not opposed to it, but the choppy action can take a bit out of the leveraged funds if it happens for many months, etc.