Cabot Weekly Review (Video)
In this week’s video, Tyler Laundon reviews the reasons behind the big market move after the Fed’s rate hike and he discusses some of the changes in Powell’s press conference. Tyler also gets into talks about the market’s rejection near its December highs, which isn’t great--but Mike also didn’t see any real damage, with few stocks breaking any key levels and with the broad market remaining resilient. He’s still holding plenty of cash but now’s the time to have your shopping list ready--should the market hold here and accelerate higher into earnings season, there should be many good opportunities.
Stocks Discussed: AI, SPT, PWSC, PATH, GTLB, SSTK, INTA, DUOL, EXFY, STEM, WCLD, CLOU
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Cabot Growth Investor
Bi-weekly Issue January 26: Nobody is going to argue that there aren’t still issues when looking at the market’s evidence. The long-term trend, which by our measures has been down for a full year at this point, is still bearish. The intermediate-term trend remains effectively neutral, with most indexes stuck within two-month ranges.
Bi-weekly Update February 2: WHAT TO DO NOW: The market continues to improve its standing, with our Cabot Tides now positive and, barring a meltdown tomorrow, a green light is likely from our Cabot Trend Lines, too. Individual stocks remain trickier, especially on the growth side of things, so we’re not cannonballing into the pool. But with things looking better we’re continuing with our path of putting money to work. Tonight, we’re adding a new half-sized position in Las Vegas Sands (LVS), filling out our stake in Academy Sports (ASO), and putting another 3% position into ProShares S&P 500 Fund (SSO). That should leave us with around 50% cash; we hope to deploy more of that in the days ahead.
Cabot Top Ten Trader
Movers & Shakers February 3: While this morning is a bit of a downer, the week as a whole has been a great one for stocks, with the major indexes up in the 2.5% to 5% range generally speaking. But more important to us is where that strength has taken the indexes—specifically, above their December highs, which turns the market’s intermediate-term trend up.
Weekly Issue January 30: If you’ve been expecting a straight-up advance with dozens of leaders lifting off, the past couple of weeks have been disappointing—but after the damage seen last year, we’re not going to make the perfect the enemy of the good: At this point, the intermediate-term trend is still sideways but a couple of good days could change that, and the broad market remains in fine shape despite some potholes of late (including today). Obviously, things can change, but with the evidence continuing to crawl in the right direction, we’re nudging our Market Monitor up to a level 6 today
Cabot Undervalued Stocks Advisor
Weekly Update January 31: One of the immutable laws of technology investing is that all tech stocks go through the Hype Cycle. Well over a century ago, leading-edge tech stars like railroads went through their boom-and-bust phases. The 20th century included the notable enthusiasm-and-disillusionment in radio, television, automobiles, copy machine and IBM (its own industry for years) stocks, ending with the exceptional dot-com bubble.
Monthly Issue January 3: Our letter describes our view that 2022 was a bridge year and that we may need some or all of 2023 to complete the bridge-crossing. We also provide our outlook for the stock market, the economy and the geopolitical environment, with some caveats about forecasting and model use provided by Yogi Berra and George Box.
Cabot Stock of the Week
Weekly Issue January 30: It’s been an encouraging start to the year for stocks, but another Fed rate hike – and whatever choice words Jerome Powell has to say – could throw the brakes on the rally this week, at least temporarily. To prepare for another potential pullback, today we’re adding some protection in the form of a high-yield dividend payer from the healthcare industry. It’s a stock with some real momentum – up 18% in the last five weeks – but still trades at about half of where it was a year ago. And Tom Hutchinson just upgraded it to Buy in Cabot Dividend Investor.
Bi-weekly Issue January 26: Tesla doesn’t look sick to me. Last night it reported Q4 net income of $3.69 billion and revenue of $24.3 billion, up 59% and 37%, respectively, from a year earlier. Tesla sold 405,278 vehicles, up 31% from a year earlier and stated it knows it needs to produce cheaper EVs to become a bigger automaker. With EVs on the brain, this week we go to Sweden for an under-the-radar electric vehicle maker that is gaining momentum based on performance and styling.
Bi-weekly Update February 2: It is only a month into 2023 but playing safe has not paid off as the Nasdaq 100 (QQQ) is the best-performing U.S. index ETF with a gain of 10.6% thus far. The small-cap Russell 2,000 (IWM) is next, up 9.8%. The Dow Jones 30 (DIA) – which fared the best in 2022 – is up only 2.95%.
Cabot Small-Cap Confidential
Weekly Update January 26: Our area was nailed with rain last night, knocking out internet service at our house. After spending a good part of the day skipping around town to get WiFi and doing what I can on a cell signal, my patience with technology is about gone. Coffee shops are great, but where are my mega screens?!
Monthly Issue February 2: This month we are dialing up the risk a little with a small software company that has a potentially disruptive platform that streamlines back-office processes for small and mid-sized businesses.
There are risks. The economy isn’t super strong, and this is a competitive market. But this company has a truly innovative set of solutions, is in one of the market’s most beat-up sectors and has new products and a low-cost customer acquisition strategy.
It’s also profitable and generates positive free cash flow, two attributes that make it an attractive acquisition target.
Cabot Dividend Investor
Monthly Issue January 11: Sure, it was a tough year for stocks. But 2022 was the worst year ever recorded for bonds.
The benchmark 10-year Treasury lost more than 15% in 2022, the worst calendar year performance ever recorded since it started being tracked in the 1920s. The 10-year + Treasury Bond Index lost 29.45% for the year, also the worst performance on record.
But the disastrous year creates an opportunity.
Weekly Update February 1: The market is doing everything it can so far this year to be unlike 2022. It’s up. And the best performing sectors are cyclical.
So far this year, the S&P 500 is up about 5% and the technology stock-heavy Nasdaq is up almost 10% in just a month. Not only are the indexes higher but they are being driven by last year’s worst performing sectors, technology and consumer discretionary.
Cabot Early Opportunities
Monthly Issue January 18: In the January issue of Cabot Early Opportunities, we take heed of the improving market breadth and dig into five companies from different industries that look compelling now.
Alerts February 2: The FOMC met this week, and the meeting wrapped up with a 25bps hike, as expected. A subtle hint of what was to come (easy to point out in hindsight) was that the FOMC’s statement removed the reference to inflation being elevated due to supply and demand imbalances relating to the pandemic.
Cabot Profit Booster
Alert January 20: Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.
Weekly Issue January 31: This week could be a doozy for the market as traders are eagerly awaiting the “big” Federal Reserve announcement on Wednesday, as well as a monster week of earnings reports, and the January Jobs Report on Friday. Buckle up!
Cabot Micro-Cap Insider
Monthly Issue January 11: Today, I’m recommending a biotech company.
· I expect a dividend within 15 months representing 126% of its market cap.
· Asymmetric upside potential beyond the upcoming dividend.
· High insider ownership and insider buying.
Weekly Update February 1: The stock market finished January on a strong note which bodes well for the remainder of the year. Despite a rally in the market, I’m adding new ideas to my watch list on a weekly basis. I’m continuing to find plenty of ideas that look attractive on an absolute and relative basis. I look forward to sharing my latest idea in next week’s new issue of Cabot Micro-Cap Insider.
Cabot Income Advisor
Weekly Update January 31: The year has certainly started out in fine fashion. The S&P 500 has delivered positive returns for all four weeks so far this year. The S&P is up 6% YTD and the Nasdaq is up 11% YTD, as of Friday’s close.
But earnings have been lousy so far this quarter, with the average S&P 500 company that has reported so far posting -5% earnings growth from last year’s quarter. But the market was expecting that. Investors know there will be a declining economy this year, and the sooner it declines, the sooner the Fed will be done hiking rates.
Monthly Issue January 24: This year was always going to be better than last year. And it’s off to a great start. But it is unlikely that stocks muster a sustained rally out of this bear market until there is more clarity on the extent and timing of an economic bottom.
That said, the current market still offers opportunities. Cyclical stocks have rallied and, for the first time in a long time, there is an opportunity to sell a covered call on one of the portfolio’s cyclical stocks. In this issue, I highlight a covered call opportunity in Visa (V) after the stock has rallied.
Cabot Turnaround Letter
Weekly Update February 3: This week, we comment on earnings from Janus Henderson Group (JHG), Meta Platforms (META), M/I Homes (MHO), Polaris Industries (PII), Vodafone (VOD) and Western Digital (WDC).
Monthly Issue January 25: While many initial public offerings (IPOs) have a quick price “pop” on their debut, most are speculative companies whose share performance is more accurately described as “pop and drop.” Our search for enduring post-IPO companies whose shares trade at attractive prices turned up four promising ideas. We also take a look at our research process using an approaching opportunity in shares of Fidelity National Information Services (FIS).
Cabot Money Club
Monthly Magazine February: With mortgage rates leveling off and housing prices still elevated, here’s everything you need to know to confidently buy a new home in less-than-ideal conditions.
Stock of the Month January 12: Welcome to our first annual TOP PICKS issue! For this month, I asked the Cabot analysts to give me a couple of their top picks for 2023. I think you will find they have produced a nice selection of companies in diverse sectors. And just as I did in my previous newsletter, Wall Street’s Best Stocks, I’ll keep track of their picks and let you know how they fare.
Ask the Experts
Cabot Top Ten Trader
Question: Hey Mike. What do you think about Revance Therapeutics (RVNC)? It’s been technically strong but their EPS in this current market environment scares me. Questions:
- 1) (I’m) interested in knowing why this stock is not on your watch list or potential buys in your Growth Investor letter. (As I’m sure it’s popped up in your research)
- 2) Can you provide any details on RVNC that I may want to know about as a potential investor?
Mike: So, RVNC – a bit speculative and thin for Growth Investor, but obviously very strong and has taken off since the good news a few weeks back. It did appear in Cabot Top Ten Trader as an idea a few months ago (we were kicked out on the ensuing dip with the market), but I cut/paste the write-up from then (October 10) just to give you a feel for the story. I’ll likely dig into it a bit more this weekend to see what’s what lately, but this should at least get you headed in the right direction.Revance has the next generation Botox, a neuromodulator called DaxibotulinumtoxinA, which is marketed as Daxxify. It’s a proprietary stabilizing peptide that is injected for the same aesthetic reasons as Botox—to temporarily remove wrinkles—and which has a promising extension into therapeutics for people with muscular dystrophy. The treatment gained FDA approval in September for treatment of glabellar lines, the frown lines that appear between peoples’ eyebrows. That comes on top of FDA approval for lip lines. Revance says Daxxify is a better version of AbbVie’s Botox because injections last up to 24 weeks, compared to as little as 12 to 16 weeks for Botox. The appeal is that consumers want fewer injections that last longer and presumably are willing to pay more for the product. Revance’s aesthetics division saw worldwide sales of $28.4 million in the second quarter, up 51% thanks primarily to Daxxify and a Botox biosimilar it produces with Viatris that sells in most places around the world. The aesthetics market is large: Botox itself sells $4.7 billion in cosmetic applications globally. Revance believes Daxxify will expand the market to interested consumers who are put off by Botox’ frequency. The company also has payments system, Opul, it pitches to beauty practices to replace traditional bank payments. Revance’s system charges about 0.5% to 1% of a transaction as fees, compared to up to 3.5% for existing networks. Still in clinical trials is applying Daxxify to treat muscle spasticity and cervical dystonia, together a $1.2 billion global market opportunity. The bottom line is still in the red, but sales are expected to rise 51% this year, with growth accelerating to 85% in 2023.
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.