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Cabot Prime Core Week Ending October 27, 2023

Latest Summary

CABOT EVENTS

Cabot Weekly Review (Video)

In this week’s video, Mike Cintolo talks about the market’s continued downtrend and how he continues to remain very close to shore -- his portfolio’s been mostly in cash for weeks and is now around three-quarters on the sideline as most everything heads south. That said, he’s still seeing some relatively strong performers from a variety of areas, and given the market’s huge oversold readings, any solid rally and/or some solid earnings reactions could have more than a few names ready to get moving if the bulls truly take control. Stocks discussed: RRC/AR, FRO, CRWD/ZS, ADBE, NOW, LLY, DELL, NVDA, PDD/EDU, ANF, WING

Cabot Street Check (Podcast)

This week on Street Check, Chris and Brad discuss the recent sell-off and the state of the market before bringing on special guest, Larry Cheung, CFA, for his perspective on investing in Chinese stocks and ADRs (19:34). Larry shares insights gathered from his recent time spent overseas and touches on the state of the Chinese consumer, real estate, and “green shoots” he sees amidst a period of overly bearish sentiment. Topics covered include, BYD’s (BYDDY) impressive market share and growth prospects, the regulatory hurdles facing AI and technological growth for established names, and he highlights an e-commerce play that’s actively gaining ground against competitors.

You can find more of his insights @LarryCheungCFA on X/Twitter, on his YouTube page, @LarryCheungCFA, and on his Substack, Letters from Larry: U.S. and China Investment Strategy.

Cabot Webinar

Save the Date: Thursday, November 9 at 2:00 PM ET

Dividend Growth & Megatrends: 2 Ways to Win the Long Game in Uncertain Markets

Register Now

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 October 19: The market remains under pressure as interest rates rise, which keeps us in a cautious stance -- we’re holding nearly as much cash as we have during the past two years as few stocks are able to sustain any upside. That said, we actually think the market has a solid setup here--there are a decent number of names forming normal launching pads, sentiment is awful and earnings season could be a catalyst. The bulls still have a lot to prove, but we’re remaining flexible should the buyers appear.

Tonight’s issue reviews our remaining names and market outlook in more detail, talks about some big-picture positives to keep in mind, as well as some things we want to see as a sign the buyers are taking control. More watchful waiting is needed, but we’re keeping our watch list up to date should the market’s character change.

Bi-weekly Update October 26: WHAT TO DO NOW: The market cave-in continues, with some sacred cows and resilient stocks catching up on the downside now. The trend clearly remains down, and while we’re not craving more cash (69% coming into today), have only smaller positions and see some legitimate oversold signs out there, we’re also not going to just hold and hope with things that are caving in. Tonight, then, we’ll sell the rest of our ProShares S&P 500 Fund (SSO) and one-third of what we have left in Uber (UBER), which will leave us with just over three-quarters of the portfolio on the sideline. Details below.

Cabot Top Ten Trader

Weekly Issue October 23: The market has continued to unravel, and there’s no need to review all the gory details from the prior few days—suffice it to say that the trend of interest rates remains up and the trend of most indexes, stocks and sectors remains down. It’s also true that emotions are starting to run high, with a few signs of panic out there as investors throw most everything overboard, bringing lots of stuff down to key levels. Because of that, we remain on the lookout for some sort of market turn, but until then, we advise holding plenty of cash and keeping any new positions on the small side as we wait for the sellers to run out of ammo. We’ll respect the latest leg lower and drop our Market Monitor to a level 4.

This week’s list is a great place to start building your watch list if you haven’t already, with many names that are clearly resisting the market’s pull. Our Top Pick is a tech name that looks to have the right mix of steady growth, big earnings expansion and huge AI potential—as well as a resilient stock.

Movers & Shakers October 27: It’s been another mostly sour week in the major indexes, this time led by the Nasdaq—even after this morning’s gap higher, most major indexes are down in the 1.5% to 2% range. Interestingly, the 10-year Treasury yield is down this week, albeit by a mere 7 basis points.

Cabot Value Investor

Monthly Issue October 3: We include brief updates from investor day presentations by Philip Morris International (PM) and Sensata (ST), as well as comments on our other recommended names. We also share a view on how streaming services are changing the sports viewing experience, along with a thought on why Comcast (CMCSA) should be fine.

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 October 24: The S&P 500 index, of course, is the most widely used benchmark for stock market returns. Individual investors, financial media and those overseeing complicated institutional portfolios use this metric as their core measure of absolute and relative performance.

Professional investment consultants may take umbrage with this statement. These highly trained analysts are well-versed in the intricacies of quantitative analysis and can parse portfolio returns, relative to potentially hundreds of alternative benchmarks, into dozens of marginally relevant categories down to the 8th decimal place.

Cabot Dividend Investor

Monthly Issue October 11: It’s a confusing market, to say the least. Six months from now we could be in an environment of high rates and sticky inflation, or we could be spiraling toward recession, or anything in between. And stock sector performance is highly dependent on which situation unfolds.

Forget trying to predict the near-term market gyrations, or the Fed, or GDP. Instead, let’s focus on the bigger picture and what we do know. For example, know for a fact the population is aging at warp speed. The population is older than it has ever been all over the world. And the trend is accelerating.

We are in the midst of a tectonic shift in the human population that will have a profound effect on the market and economy. Companies that benefit from this megatrend will have a huge advantage. It’s not an accident that pharmaceutical stocks Eli Lilly (LLY) and AbbVie Inc. (ABBV) are the best performing stocks in the portfolio.

In this issue I highlight the stock of a company that serves a vital role in the pharmaceutical supply chain. It operates a near monopoly that grows every year. Performance has been spectacular and there is every reason to believe the good times will continue.

Weekly Update October 25: The market has lost all the October gains. Despite the strong economy and optimistic earnings, interest rates continue to cast a shadow.

The economy is killing it (for now). Third-quarter GDP is expected to exceed 5%. That’s an economy nowhere near recession. And earnings should reflect that economic strength. Strong earnings can lift many stocks higher.

Cabot Early Opportunities

Monthly Issue October 18: In the October Issue of Cabot Early Opportunities, I dig into a group of software companies that have upside potential from AI, automation and security. I also feature a diversified bioprocessing and advanced materials company that’s drawing attention right now and go deeper into a very small industrial company that few investors have ever heard of.

Cabot Income Advisor

Monthly Issue October 24: The market has been choppy and unpredictable. Optimism about a “soft landing” is being tempered by rising interest rates. Either the strong economy or high interest rates will dominate the market in the months ahead. We’ll see.

But what seems to be quite clear is that the economy is solid for now. Third-quarter GDP is expected to be over 5%. Even if the economy does slow, it will likely take several quarters to slow from here. That means gasoline demand should remain solid. And that should be good news for refiners.

In this issue I highlight one of the best performing large company stocks in the energy sector over the last several years. It is also one of the few plays out there that still has solid momentum, as the stock remains in an uptrend that began three years ago.

Good momentum means high call premiums as more investors are willing to be on higher prices in the future. The refiner stock highlighted in this issue has a great chance of providing the opportunity to sell covered calls in the near future. It should help generate a high income in this uncertain environment.

Weekly Update October 17: The market is rallying this month as the “Goldilocks” scenario gets renewed traction.

The economy is still solid. There are no signs of recession. At the same time, the Fed is making noises like it may be done hiking rates because of the higher longer-term rates. A good earnings season may also buoy stocks.

Cabot Turnaround Letter

Monthly Issue October 25: Much of the art of finding interesting turnaround stocks is looking at catalysts, tracking management changes and searching through lists of out-of-favor companies. Sometimes, however, good ideas can be found closer to home – literally – by looking through the roster of public companies in one’s home state. We discuss five turnarounds underway in our home state of Massachusetts.

Despite near-record gold prices, shares of gold producers remain depressed. We discuss two attractive companies. Our Buy recommendation this month is Agnico Eagle Mines Ltd (AEM), a premier gold mining company selling at a discounted price.

Please feel free to send me your questions and comments. This investment letter is written for you. A great way to get more out of your letter is to let me know what you are looking for.

Weekly Update October 27: This week’s note includes our comments on earnings from 10 of our companies. The deluge continues next week.

The note also includes the monthly Catalyst Report and a summary of the November 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 November: Getting an early head start on a career or trade that you’re passionate about can mean the difference between just punching the clock and doing meaningful work that’s satisfying in its own right. On top of that, you can potentially save hundreds of thousands of dollars on education expenses and make significantly more over the course of your career by tailoring your educational pursuits to match your career goals. This month, we’ll help you outline a blueprint to pursue your dreams while maximizing your earnings, and we’ll discuss the pros and cons of investing in your employer and industry.

Stock of the Month October 12: Investors weren’t surprised by the Federal Reserve’s decision to hold rates steady, but they also didn’t react by ramping up their stock purchases—too much uncertainty what with the election rhetoric heating up and the turmoil in Congress, after Kevin McCarthy was unceremoniously ousted as Speaker. And now, we have the war in Israel.

ASK THE EXPERTS

Prime Question for Mike: I read your article recommendation of Synopsys, Inc. (SNPS). I don’t have any cash. I’m fully invested. I own Amazon, Google, Nvidia, CrowdStrike, ServiceNow and Microsoft. Do I trade out of one to purchase SNPS? If so, which one? I have roughly the same dollar value in each. Thanks for your advice.

Mike: Thanks for writing.

So, a few things.

First, just to say this, I can’t give overly personal advice – exactly how you run your ship is up to you.

Second, I would say that, overall, I’m cautious on the market – we’re holding a good chunk of cash until the market turns up.

Third, you can’t kiss all the babies – even if this were a strong bull market, there are going to be good-looking stocks you can’t own as there will be too many of them.

Now, with all of that out of the way, yes, I do think SNPS looks good, though it’s a chip name so will broadly swim with NVDA most likely. It’s stronger than MSFT or AMZN, so if you’re intent on swapping, I would personally go that route if that were you; that said, I personally would probably be holding some cash, too, though your stocks are generally acting well; it’s unlikely much of anything is going to really run until the market turns.