Latest Summary
CABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, Tyler Laundon talks about the recent positive inflation readings and how that’s helped the broad market move higher and increase the odds that we’re near peak rates for this cycle (even if the Fed hikes in late-July). Tyler walks through some growthy ETFs that can give investors broad exposure to both AI stocks and small cap stocks. Then he runs through a number of names with specific AI exposure before wrapping up with some fresh small cap industrial and machinery stocks that look terrific.
Stocks Discussed: UNH, VBK, PSCF, AIQ, BOTZ, DDOG, GTLB, SHOP, SSTK, FIX, HLLY
Cabot Street Check (Podcast)
This week, Chris and Brad discuss inflation, second-quarter earnings and when to expect the national investment in green infrastructure to hit companies’ bottom lines. Then, they run through head-to-head matchups covering everything from big vs. small caps, biotech vs. semiconductors and the battle of the AI heavyweights to Shohei Ohtani and the Barbie movie. The Inflation Reduction Act information referenced in the episode is available here.
Cabot Webinar
3 Little-Known Stocks to Take Advantage of the AI Boom
FREE WEBINAR: July 13, 2023 Sign up now.
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 13: There’s not much to say: The market and leading stocks continue to act in a textbook fashion, with not just more up than down but tame pullbacks that respect logical support and big volume on the advances--all signs that big investors are accumulating stock. We still want to be selective on new buys, and we’re sure earnings season will throw everyone a few curveballs, but we continue to put money to work--today we’re adding a few more shares to one of our positions and adding a full-sized stake in a new name.
Elsewhere tonight, we write about another bullish long-term market indicator, what the recent action in interest rates mean, and go over many leading and potential leading stocks that are enjoying the market’s newfound uptrend.
Bi-weekly Update July 7: WHAT TO DO NOW: Remain optimistic but keep an open mind. At this point, our market timing indicators remain bullish and we’re seeing little abnormal action among leading stocks—that said, the Fed/interest rate situation refuses to go away, and near term, some more shaking of the tree is certainly possible to raise the fear level. Tonight, we have no new buys or sells, but we’ll place Inspire Medical (INSP) and Monday.com (MNDY) on Hold and see how things progress. Our cash position will remain in the 30% range.
Cabot Top Ten Trader
Weekly Issue July 10: After a heady run, further short-term wobbles are possible, even likely, as the market and many stocks digest their May/June gains and as fear levels rise with interest rates. That said, to this point the consolidation in the major indexes and leading stocks has been completely acceptable, with very little abnormal action. If we start to see some names crack meaningful support, we’ll knock our Market Monitor down a notch or two, but today we’ll keep it at a level 8, as the odds continue to favor this being a normal rest period that will give way to higher prices.
This week’s list has a handful of names that have recently got going despite the market’s shenanigans. Our Top Pick this week is from a beaten-down group that’s come to life, possibly signaling the start of a group move.
Movers & Shakers July 14: This week is a good reason why, despite having a few near-term worries during the past month (we thought another wobble was possible), we’ve remained focused on the bigger picture—that the market seemed to be emerging from a bear phase, so near-term wobbles were likely … but were also likely to give way to higher prices.
Cabot Value Investor
Monthly Issue July 5: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the July 2023 issue.
Almost like an annual rite of passage, major banks reported their Federal Reserve stress test results last week. All major banks passed, in that their capital levels were in excess of the minimum requirements under the Doomsday Scenario conditions outlined in the test assumptions. We’re not the biggest fans of these tests, for reasons outlined in our monthly letter.
Citigroup remains a riskier bank relative to other majors, but also has a higher return-potential share valuation, plus a 4.5% dividend yield to reward patient investors.
Weekly Update July 11: The first half of the year produced stock market returns that few, if any, anticipated. The S&P 500 has uncorked a 15.6% year-to-date return (through last Friday), a remarkably strong showing relative to the index’s history. Brokerage firm forecasts for the rest of the year have an exceptionally wide breadth given the equally wide range of economic forecasts. We will readily admit that we are not in the forecasting business. This saves us from the considerable embarrassment that comes with forecasting as well as an immense amount of time. Our approach requires us to be “macro-aware” but not “macro-driven.” As such, we are well aware of the milieu of others’ forecasts, and the rationales behind them, but find them unactionable for our style of investing.
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 July 6: The S&P 500 delivered an impressive 16% return in the first half. Can the good times continue in the second half?
A big part of the latest surge higher has been the artificial intelligence (AI) excitement. After Nvidia (NVDA) blew away expectations citing far greater demand for AI technology, the market-leading tech sector caught fire. But returns were impressive even before then as the market is sensing a soft landing.
Cabot Early Opportunities
Monthly Issue June 21: In the June Issue of Cabot Early Opportunities we talk Artificial Intelligence (AI) and break down the technology into a few buckets of opportunity that make it a little easier to understand. I also profile five ways investors can put their money to work in companies with AI exposure. Enjoy!
Cabot Income Advisor
Monthly Issue June 27: Few stocks have participated in the YTD rally. In fact, just ten large-cap technology stocks accounted for just about all the market gains this year. The market has so far shunned defense and favored growth. But that situation is unlikely to persist.
There is still lots of risk. Inflation could be stickier, and the Fed could be more hawkish than currently anticipated. Even if a recession never happens, it’s reasonable to expect that the economy will slow in the second half of the year. And overall market earnings have already contracted for the last two quarters.
The relative performance of defensive stocks historically thrives in a slowing economy. If the rally broadens in such an environment, it will need participation from the defensive sectors. If the market pulls back, defense should be the best place to be.
I highlight a new buy-recommended stock in the issue. It is a legendary income stock that pays dividends on a monthly basis. It’s also near the lowest price level of the past two years.
Weekly Update July 11: It’s anybody’s guess what the second half will have in store for the market. The first half surprised almost everyone with a stellar 16% gain in the S&P.
Investors are sensing a soft-landing, whereby we get past this Fed rate hiking cycle without a recession and minimal economic pain. Recent economic numbers reflect a greater likelihood of that scenario.
Anything is possible. The market could be off to the races, or it could sober up and pull back. Inflation is falling while the Fed is still making hawkish noises. It’s reasonable to assume that even if the economy isn’t slowing down yet, the Fed will continue to raise rates until it does.
Cabot Turnaround Letter
Monthly Issue May 31: It’s no secret that a fresh fascination with artificial intelligence has ignited shares of companies like Alphabet (GOOG), Microsoft (MSFT) and Nvidia (NVDA), while “safety stocks” like Apple (AAPL) have rebounded on recession fears. Shares of more prosaic technology companies have lagged, but a few offer highly relevant albeit slow-growth products and services, making their businesses highly resilient. They are often well-supported by durable balance sheets and capable management. We highlight four such companies.
As a follow-up to our April edition that featured banks, we have found additional interesting financial stocks by looking at the 13F filings of like-minded value investors. We discuss three that saw sizeable new purchases or meaningful additions to already-sizeable holdings by well-respected value managers.
Our feature recommendation this month is Tyson Foods (TSN), a major producer of chicken, beef and pork products. Its earnings and shares have tumbled due to an unusual simultaneous downturn in all three protein groups. The hardest time to buy a commodity cyclical is at the bottom of the cycle, as there appears to be no end in sight to the malaise. We think this is the time to buy Tyson.
Weekly Update July 14: Comments on earnings from Wells Fargo (WFC). A profit warning from Nokia (NOK). Shares of ESAB Corp (ESAB) have reached our price target so we are reviewing our rating. Additional comments on Volkswagen (VWAGY), Newell Brands (NWL), Elanco Animal Health (ELAN) and Bayer AG (BAYRY). And, what the heck is EBITDA?
Cabot Money Club
Monthly Magazine July: With airline and cruise bookings eclipsing pre-pandemic levels, it appears that vacationers’ pent-up travel demands are finally being unleashed in this “revenge travel” summer. Here’s how you can save money as you tick a few items off your own travel bucket list and profit from the most in-demand travel companies.
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: Hi Mike! You’ve mentioned Boeing (BA) in some of the videos as well the newsletter. They have a good backlog on orders. I THINK the chart is favorable. Any thoughts?
Mike: So I do keep an eye on it, and I’m really looking for a breakout – earnings are in two weeks so maybe that’s it, but it keeps banging its head on this area (218-224) for months, so at this point, I’d almost rather buy it higher than earlier, if that makes sense.If you wanted to nibble here, I wouldn’t argue with it – it’s a bull market, or so it seems. But I may start small in case this is another fakeout. Just my take.