Latest Summary
CABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo is pretty straightforward: He likes what he sees, with the market’s early leadership remaining strong, more leaders emerging in the past couple of weeks and, more recently, the market as a whole broadening out. He’s not cannonballing into the pool, and in fact some near-term shakeout or further rotation wouldn’t surprise him; flexibility remains key. But he’s listening to the evidence and gradually adding exposure.
Stock Discussed: FIVE LVS BA MTZ KBR DOCN PCOR ONON ADBE CFLT NVDA AMD CELH NXT ANF
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad talk the new bull market, recent enforcement actions against Coinbase and Binance and debate whether the firing of GameStop’s CEO is the final nail in the coffin of the “meme stocks.” Then, they welcome on Tom Hutchinson, Chief Analyst of Cabot Dividend Investor and Cabot Income Advisor, to discuss the value of dividend stocks in a narrow bull market, how they’ll benefit from rotation, and strategies for allocating into fixed income while rates are at 15-year highs.
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 January 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 Pro 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 June 1: The market still has many of the same issues that have been hanging around for weeks, including an extreme narrowness, with the vast majority of the market struggling while mega-cap indexes do pretty well. Even so, we do think the evidence has taken a step in the right direction -- the AI boomlet is a positive sign, and many non-AI leaders acted well in May and have rested normally since. We’re not flooring the accelerator, but given our monstrous cash position, we’re dropping a couple more lines in the water tonight, adding two half-sized stakes in old favorites. Elsewhere in tonight’s issue, we give our thoughts (and some ideas) within the AI advance, write about a long-term growth area that could be re-emerging and, as always, go over our stocks, an expanded watch list and some other new ideas to chew on.
Bi-weekly Update June 8: WHAT TO DO NOW: Remain optimistic. The market has steadily shown improvement during the past two or three weeks, with even yesterday’s rotation helping the broad market—and today’s snapback in leading stocks is good to see. Our Cabot Tides have effectively turned positive, and our Two-Second Indicator is close, too. Having just put a slug of money to work (including three new half-sized buys on Tuesday’s special bulletin), we’ll sit tight tonight, but if the good vibes continue, we’ll probably add more exposure next week. We have no changes tonight. Our cash position stands around 50%.
Cabot Top Ten Trader
Weekly Issue June 5: The market finished solidly in the black thanks to a strong end to last week; interestingly, while the intermediate-term trend is still neutral overall, a couple of broad up days from here could kick it into the green. Even better is the action of leading stocks, with more names emerging and, importantly, more names holding their recent upmoves. To be clear, there’s still a lot of proving to do, but overall, we think the evidence has taken another step in the right direction—we’ll move up our Market Monitor to a level 6 and see what comes from here.
This week’s list has a ton of strong names and other good setups that could lift should the market continue to improve. Our Top Pick looks like the leader of the improving cybersecurity group, having lifted out of a long consolidation. Dips should be buyable.
Growth names make another good showing this week, with a variety of sectors (outside of retail, which has been rough) represented. Our Top Pick is a big-cap chip name that has stormed back after a spring correction.
Movers & Shakers June 9: It’s been an interesting and, frankly, encouraging week on two fronts. The first is that the market has broadened out a bit—coming into Friday, the S&P and Nasdaq are flat-ish, but the broader indexes have pushed nicely higher, with small and mid-caps up 2% to 2.5% and equal-weighted big-cap indexes outperforming their weighted cousins.
Cabot Value Investor
Monthly Issue June 6: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the June 2023 issue.
The U.S. presidential election, “only” seventeen months away, is shaping up to follow a predictable script. Investors should keep their personal views and their investing process separate.
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 May 30: Longer-term subscribers are no doubt familiar with our immense patience with beleaguered discount retailer Big Lots (BIG). Its shares initially sagged due to bloated inventory, similar to other more highly regarded retailers like Target and Walmart, leading to our initial recommendation. We had expected that its earnings would be weakened as it offloaded its excess goods at sizeable discounts, but also that it would ultimately work its way out of its difficult but by no means impossible situation. At the time, Big Lots had a cash-heavy, nearly debt-free balance sheet, was generating positive free cash flow and traded at a depressed 3x EV/EBITDA multiple. What could go wrong?
Cabot Dividend Investor
Monthly Issue May 10: Energy stocks have been by far the best-performing market sector over the last couple of years. They went from worst to first in dramatic fashion. And the good times may be just beginning. The industry has had very low capital spending and expansion in recent years. Crude oil inventories have fallen below the five-year average and are likely headed far lower. OPEC has pledged dramatic production cuts to push prices higher. There is also a high degree of geopolitical risk. In fact, Goldman Sachs analysts are forecasting oil prices to get back to $95 per barrel before the end of this year.
Weekly Update June 7: This is, dare I say, a good market.
The S&P 500 is up 11.31% YTD, and the year isn’t even half over. Stocks have rallied more than 20% from the October low. The index is within bad breath distance of last summer’s high. The S&P is only 10% below the all-time high.
Why is the market so strong? There are several reasons. Inflation is coming down. The Fed is almost done hiking rates. And there is no recession. Throw in a booming artificial intelligence business and you have a rising market.
Cabot Early Opportunities
Monthly Issue May 17: In the May Issue of Cabot Early Opportunities, I profile a potential turnaround story in a well-known stock that is returning to its roots. We also take a closer look at one of the highest-end luxury brands in the world, an unknown green tech company, an emerging MedTech star and a construction materials specialist that’s spreading across the U.S. Enjoy!
Cabot Income Advisor
Monthly Issue May 23: This is a tough one. The overwhelming majority of the time the market goes up in the year following a down year. The S&P 500 is up over 9% YTD. That’s a better than 20% annual pace.
Of course, much of that YTD return has to do with the strong performance of the large technology stocks that comprise more than 25% of the index. Nevertheless, stocks have climbed a wall of worry and shown impressive resilience so far.
Weekly Update June 6: The economy is showing some mixed signals. But it certainly does not appear to be near a recession now. That could change. But it keeps not coming.
At the same time, the Fed is near the end of the rate hiking cycle. Sure, there’s speculation about another rate hike in the June meeting or the next one. But it is still close to the end of the hiking cycle. Inflation appears to be moderating (for now). Unless there is a big surprise with that number, the market can soon stop worrying about the Fed.
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 June 2: This week, we comment on earnings from Duluth Holdings (DLTH) and Macy’s (M).
We also include the Catalyst Report and a summary of the June edition of the Cabot Turnaround Letter, which was published on Wednesday. We encourage you to look through the Catalyst Report. This report is a listing of all of the companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.
Cabot Money Club
Monthly Magazine June: Teaching your children basic financial literacy pays serious dividends throughout their lives. It helps them avoid debt, practice responsible budgeting and can even help them pay for college and retirement. In this month’s issue, we’ll explore the best ages to teach your children important financial skills, the best apps and tools for learning about money, and even the best games to make financial learning less of a chore.
Stock of the Month June 8: The markets have been fairly volatile this past month. The Dow Jones Industrial Average sits at just about the same place we were in last month’s issue. But the S&P 500 has been on a tear, up about 140 points, and the Nasdaq has risen some 50 points due to the momentum in the tech sector, where the average stock is up more than 33% year to date.
Communication Services and Consumer Discretionary stocks have moved along nicely in the past month, on average up 32% and 22%, respectively.
Growth stocks are still outperforming value in all capitalization categories.
ASK THE EXPERTS
Prime Question for Mike: Hi Mike. Over the last several years it seems like the overall market (and especially growth stocks) have become much more volatile than in the past. It seems like some stocks can swing 15-20% in a day and certainly over a week. My question is, has this changed the “old” general stop of 15 - 20%?
Mike: Thanks for writing. So, I do agree we’ve had a period of elevated volatility -- really since the pandemic. That said, I think these things go in waves. The next few years will likely be less volatile.
As for the loss limit, no, I wouldn’t change that, but you’ve seen us use half-sized positions or what-not to get started – I wouldn’t start giving stocks 30%, as that is just too much room, but I do think using smaller positions makes sense so that you can withstand the normal-but-severe dips that occasionally occur.
Of course, I’m always open to being wrong and changing my mind, but those are my thoughts here and I do think that volatility is likely to fade back some in the years ahead.