Latest Summary
CABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, Tyler Laundon discusses how the big macro drivers of the market return - lower rates, solid revenue and EPS growth, and money on the sidelines - provide a decent setup for market returns over the next couple of years. Tyler also discusses the improving breadth of the market, and suggests investors begin to look for opportunities in pockets they may have previously missed. He flags small caps, energy, financials and even the IPO market as areas recently showing strength.
Stocks Discussed: IJR, PSCF, PSCI, PSCM, DIS, ALL, PGR, ROOT, XOM, TRGP, ERF, AR, TDW, XLF, ARKF, JPM, C, SWAV, TMDX, SIBN, CART, CAVA, RDDT, ALAB
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad talk Tesla’s (TSLA) self-driving offer, cannabis stocks, the IPO of Reddit (RDDT), the arrival of Trump Media & Technology (DJT) and the S&P 500’s five-month winning streak before they welcome on Cabot’s Chief Investment Strategist, Mike Cintolo. Mike breaks down his perspective on the still-young bull market, whether there are signs of froth in early winners and where he’s currently seeing market strength.
Cabot Webinar
March 26, 2024 12:00 PM ET
Capitalizing on the Bull Market: 4 Experts & Their Top Picks for April 2024
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 March 21: Most growth leaders and even the Nasdaq itself has been churning since early February, with a lot of ups and downs but not much price progress—but this week has been more encouraging, as the selling pressures have been unable to persist and the major uptrend may be reasserting itself (basically the opposite situation that was seen repeatedly in 2022-2023). That doesn’t mean it’ll be smooth sailing from here, so we’re still being discerning on the buy side, but we’re holding our winners and remaining in an overall optimistic stance.
In the Model Portfolio, we cut bait on one half position earlier this week that was heading in the wrong direction, but we’re holding our strong perf
Bi-weekly Update March 27: WHAT TO DO NOW: Remain bullish, but continue taking things on a stock-by-stock basis. We’re seeing another round of sharp selling in many leading growth stocks today, though few (if any) have cracked meaningful support. To us, it’s another shot across the bow, not prompting any major moves but putting us on alert with certain names. In the Model Portfolio, we’re making one small move—selling 20% of our stake in CrowdStrike (CRWD)— while doing a quick flip on Celsius (CELH), placing it on Hold after last week’s half-position buy after today’s drop on news. Our cash position will now be 25%, and we’re keeping our eyes on a few names should the selling continue.
Cabot Top Ten Trader
Weekly Issue March 25: There was definitely some churning in the leading areas of the market from early February into last week’s Fed meeting, but there wasn’t much abnormal action, and the past few days have seen the buyers back at it, helping many leading stocks of all stripes pop. Now, we don’t consider the action as a brand-new buy signal, but the major evidence of the market (trends are up for most indexes and sectors) never wavered, so we’re holding most of our winners and looking to increase exposure in names that are enjoying big-volume accumulation. We’ll nudge our Market Monitor up at level 8.
This week’s list is a bit of a hodgepodge, with different types of names from varying sectors. For our Top Pick, we’ll go with a name from a strong sector that has seen its business turn up in a major way while the stock’s recent action looks like a major change in investor perception.
Movers & Shakers March 28: It’s been a relatively quiet holiday-shortened week from the big-cap indexes, with all of them about unchanged on the week. That said, there have been two main themes in recent days.
The first is rotation—small-cap, mid-cap and equal-weight indexes are up in the 1% to 2.5% range on the week, and not only that, we’ve seen more and more old world/value-type names perk up, with more than a few bounding to new highs. (The Russell 2000 and S&P 600 SmallCap are both testing recent highs as well.)
Cabot Value Investor
Monthly Issue March 5: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the March 2024 issue.
We discuss the similarities between poker and value investing. This past month we moved two stocks from Buy to Sell – Allison Transmission (ALSN) as it reached our price target, and Sensata Technologies (ST) as its management continues to take a path that is not shareholder friendly.
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 March 26: It is with mixed emotions that I am writing my last Cabot Value Investor issue. My nearly four years as part of the Cabot team have been exceptionally rewarding. I have had the opportunity to work with an exceptional research team – who bring talent, dedication and investment results that readily match and likely exceed most Wall Street sell-side and buy-side analysts. Our Cabot analysts, despite their very different investing styles, have helped me become a better investor.
Cabot Dividend Investor
Monthly Issue March 13: The rich get richer. Now, you can too.
Growing businesses with big ambitions need large amounts of money to grow and expand to the next level. But these enterprises can’t get the necessary capital from stodgy and risk-averse bankers. And they are still too small to access the capital markets by issuing stock or bonds. Thus, they are forced into the domain of wealthy individuals and institutions that have money and are itching to reap high returns.
These venture capitalists provide desperately needed money to up-and-coming businesses that can’t get it anywhere else. Thus, they are in a position to negotiate very favorable terms for themselves.
As financial markets have grown in sophistication, venture capital investing is no longer the exclusive domain of the wealthy. There is a little-known class of security that enables regular investors to mimic the very same moneymaking strategies employed by the rich and famous. These securities are called Business Development Companies (BDCs).
In this issue, I highlight one of the most successful BDCs on the market. It pays dividends every single month, has a long and consistent track of raising payouts, and has delivered fantastic total returns.
Weekly Update March 27: A bullet was dodged, and the bull market forges on.
It looks like the Fed is going to play ball. There was much worry among investors that the Fed would abandon the three-rate-hike goal for this year amid higher-than-expected inflation. But they didn’t. The Fed reiterated its intention for three cuts this year. The odds of a first cut in June increased to 70%.
Cabot Early Opportunities
Monthly Issue March 20: In the March Issue of Cabot Early Opportunities we spread things around with a diverse group of mid-caps, plus one large cap from our Watch List that’s one of the biggest stories in MedTech.
Cabot Income Advisor
Monthly Issue February 27: The Goldilocks scenario of falling inflation and a still-strong economy is unlikely to last. Interest rates will have to come down before long or the recession that the market is dismissing might be just a little further down the road. But recent higher-than-expected inflation is making lower rates less likely.
Sure, the rally could last for a while. The economy always seems to be more resilient than people expect. But the circumstances behind the rally since October are unlikely to last. This environment will change. For that reason, it doesn’t make sense to chase stocks that have been working so far this year. It’s better to position ahead of a new dynamic that is likely coming.
Change creates opportunity. There are many great income stocks that are not benefiting from this rally. Yet these stocks are selling at historically very cheap valuations with high yields. These stocks also can thrive in a slowing economy. In this issue, I highlight two stocks in particular that are cheap and high-yielding ahead of a period of likely market outperformance.
Weekly Update March 26: The title sounds counterintuitive. After all, the market has been terrific. And technology stocks, which rarely pay dividends, are leading the charge.
The S&P 500 has spent much of this year making new all-time highs. The index has rallied 27% since late October and 46% from the low in October of 2022. But most of those gains have been driven by the technology sector, which represents an outsized portion of the S&P. Returns for the rest of the market have been rather lame.
Cabot Turnaround Letter
Monthly Issue March 27: TThank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the April 2024 issue.
In this issue, we discuss the most effective and often the only way to reverse the fortunes of a struggling company: a change in leadership. We offer our views on four new CEO situations that are currently attractive and three that are not quite ready yet.
This month’s Buy recommendation, Barnes Group (B), is an aerospace and industrial components maker that is stepping up its efforts to become more valuable, helped by a new CEO and urged on by pressure from a credible activist investor that recently gained several board seats.
Weekly Update March 28: In today’s note, we discuss the recent earnings reports from Walgreens Boots Alliance (WBA). Our note also includes the monthly Catalyst Report and a summary of the April edition of the Cabot Turnaround Letter, which was published on Wednesday.
Cabot Money Club
Monthly Magazine April: Artificial intelligence (AI) is everywhere these days, and personal finance is no exception. In this month’s issue we’ll dive into the next generation of personal finance apps, the new tools available to savers and investors, and how to deploy them in your daily lives to optimize your financial wellbeing.
Stock of the Month March 14: The markets saw mostly sideways action in the past month—the soothsayers are still debating when the Fed will begin reducing interest rates.
Growth stocks held on to their leadership position, although value stocks are beginning to show life in 2024.
ASK THE EXPERTS
Prime Question for Mike: Dear Mike,
I’m not sure how to handle my overwhelm at the moment and maybe you can give me some advice.
(Last year) I entered stocks (and) they would drop after popping and I would exit with a loss. It was death by 1,000 cuts, or 1,000 trades. After 2022 and 2023, I became very gun shy and only entered with small positions (1% of the portfolio) and did not size up.
Since November ’23, it has been the exact opposite: everything seems to have gone up and I’ve done well. The problem is I have too many stocks all with small positions (about 1 1/2% ), and a large cash position of about 30%.
How do you handle this kind of problem?
Should I add to the existing positions and size up or follow new stocks and enter at all-time highs with a larger position? Do I just start cutting stocks by putting in a tighter trailing stop and lose the stocks with the lowest IBD relative strength, even if they are up on my entry?
Mike: Thanks for writing. So, first, don’t beat yourself up over it – bear markets are tough (and I don’t care what anyone says, 2022-2023 was brutal for growth stuff) and even I look at many things I could have pounced on/done better in November/December/January for sure.
But onto your issue.
First, I would say when you make a trade, you want it to be because you think it’s the best thing to do – don’t just buy more of what you have just to do it.
Anyway, my overall advice is this:
Pick a risk level you’re comfortable with. To me, you don’t have to kiss all the babies, so I would advise owning fewer names. But you should have a position size and stick to it – I can’t give overly personal advice on that, but going forward, it could be something more substantial. Think of the risk involved – if you buy a 5% position and lose 20%, you’ve lost 1% of the equity of the entire account. That might be too much, too little, etc. And the stop doesn’t have to be 20% (usually less). But you have to have a comfortable level for your personality.
Go through your list of things you own and sort them from biggest profit to biggest loser. Consider pruning from the bottom of the list.
To correct the position size, do it over time – new buys should be X% (whatever you decide in #1 above) and you’ll gradually get there.
- My guess (and it’s just a guess) is that you may be trading too often to have this many stocks. There’s nothing wrong with that, if it works for you, and I don’t want to suggest a strict artificial limit (“you can only buy one stock a week”) because that’s not how the world works – but if you’re putting on 4-5 positions a week and never selling anything, that is probably going to run you ragged. Just an idea.
I know these are general ideas, and I really can’t give overly personal advice, but suffice it to say try to correct this over time with larger (but comfortable) positions. Doesn’t mean you have to have giant positions, but I do think you could do better homing in on fewer names.