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CABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo discusses the late-week rotation seen out of the mega-cap growth titles, and short-term he wouldn’t be surprised to see more of it, with the market possibly starting its first “real” pullback of the advance. Thus, he’s not pushing the envelope at this point--but he also remains very bullish intermediate- and longer-term, so he’s holding his strong, profitable names and expecting higher prices after any coming wobbles the market throws at us.
Stocks Discussed: FTI, NE, RIG, MTZ, GTLS, MGM, THOMLM, VMC, PCOR, ONON, ITCI, DT, IOT, DOCN, PANW, NXT
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad welcome on Jacob Mintz (Cabot Options Trader, Cabot Profit Booster) and Mike Cintolo (Cabot Growth Investor, Top Ten Trader) to discuss growth stocks, artificial intelligence, and the state of the new bull market. They also break down signs of exuberance in individual sectors, navigating this quarter’s earnings and whether signs are pointing to higher prices ahead. To register for Mike’s upcoming webinar “3 Emerging Leaders of the New Bull Market, click here.
Cabot Webinar
3 Emerging Leaders of the New Bull Market
FREE WEBINAR: July 25, 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 17: There’s no doubt the market continues to keep investors on their toes, and some further discomfort in the short term is certainly possible after the recent run. It’s also a decent bet that earnings season, which is now ramping up, will present a few potholes. But those are the trees—if you look at the forest, all of the bullish factors are still in place, whether it’s the uptrend in the major indexes, the solid action among most leading stocks, the sluggishness of defensive stocks and, more recently, the strength of the broad market (including five straight days of 2-to-1 NYSE breadth). We remain bullish and expect higher prices—we’ll leave our Market Monitor at a level 8.
This week’s list has a very broad mix of names, including everything from giant blue chips to more speculative small caps. Our Top Pick is in the right area (big-cap growth) and is trying to emerge from a tight consolidation. Earnings are out in a couple of weeks, so start small and build if the breakout works.
Movers & Shakers July 21: This week has brought a wave of rotation—after strong initial gains, the Nasdaq has reversed to minor losses on the week (coming into Friday), with the S&P 500 up less than 1%. Meanwhile, broader indexes are up in the 1.5% range on the week and, for individual stocks, we saw some of the hot mega-cap growth names get smacked around some, while the rest of the market held firm or pushed higher.
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 18: As value/contrarian investors, we have little interest in accepting the market’s wisdom. Some might say that we have little ability to accept the market’s wisdom, which is probably what distinguishes us from other investors (and academics) that accept such guidance.
We’ll quote Warren Buffett, founder and head of Berkshire Hathaway, who wrote in his 1987 letter to shareholders, “Mr. Market is there to serve you, not to guide you.” By this, he means that the stock market’s inability to make accurate predictions should help investors make money. And that these predictions shouldn’t provide guidance on how to invest, given that they are so often wrong.
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 19: The good year is continuing. The market rally is broadening. And pundits increasingly have positive things to say about the second half of the year.
Artificial intelligence isn’t the only mania capturing the imagination of investors. The soft-landing belief is also widespread. Investors see inflation falling fast, the Fed nearly done hiking rates, and no recession. It looks like we can get through this rate hiking cycle, the steepest in decades, without much economic pain.
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.
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 18: These are confusing times in the market. It looks like a soft landing for the economy is more likely. But that’s no guarantee. We could still have a recession next year. The bull market could rage on or pull back. Instead of betting on the economic cycle, it’s a time to focus on individual stocks.
Artificial Intelligence (AI) exploded onto the market scene in a huge way in May when semiconductor company Nvidia (NVDA) blew away earnings expectations citing much higher demand for AI chips than anyone expected. It added another leg to the bull market as AI-related stocks soared.
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 21: We comment on earnings from Capital One (COF), First Horizon (FHN) and Nokia (NOK). Next week, the deluge starts, with ten companies reporting.
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 Jacob: I’m have been option subscriber for a few years now; firstly, thank you for your many profitable trades. I have a question regarding a number of in-the-money calls I own that are expiring this week with 3 or 4 different stocks, I was wondering what your strategy is during the week of expiration of in-the-money calls. Do you sell early in the week or do you wait to the last day or somewhere in between? I would like to get your opinion on how you normally handle this matter; looking forward to your input.
Jacob: To be honest, there is not a surefire day of the week that is more beneficial to sell versus another. Instead, what I would recommend is to set stop levels on those trades. If an option is worth $7, for example, you say to yourself, if it drops to $6.50 I’m selling. That way you are using price levels, and not random days, as your trigger to sell.
Glad to hear your trading is going well!