Cabot Weekly Review (Video)
In this week’s video, Chief Analyst of Everything Awesome, Tyler Laundon talks about the push and pull between the equity and bond markets. The bottom line is the 10-year yield has become a problem and has pushed equity indices lower. Tyler talks about why, and what’s needed for yields to back off and stocks to get going again. He then digs into a diverse group of stocks, including some building service providers that have been (and remain strong), some oldies that are showing promise again and a number of software stocks that are down, but not out.
Stocks Discussed: FIX, PRIM, LMB, DTC, DLO, ADBE, HUBS, GTLB, DDOG, APP, FRSH
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad debate whether the ongoing market pullback is healthy, earnings season blowups and why the market is punishing good news, and the “bend, don’t break” consumer. Then they discuss talking head “doomsayers” and why it’s important to take their predictions with a grain of salt. After that, they wrap up the podcast with a conversation about the failure of China’s post-covid comeback, struggles of Chinese real estate developers and whether the country is facing a Japan-like “lost decade.”
FREE WEBINAR: Thursday, August 17 at 2:00 PM ET
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 Plus 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 Augustly 10: The overall market has started to pull back, and the encouraging news is that, from a top-down perspective, things are under control--our trend-following indicators are positive and the retreat to this point has shown little, if any, abnormal qualities. The problem, though, is growth stocks, as many of them haven’t just fallen, but decisively cracked their intermediate-term uptrends, often after quarterly results--that’s not something we can ignore, and so we’ve been selling and have quickly built up a big (50%-ish) cash position. Near-term, we expect this correction to go further, but the odds continue to favor a resumption of the bull trend once the selling finishes up.
In tonight’s issue, we write a lot about this earnings season and some slightly different tactics we may use going ahead, aiming to still give us long-term upside but better protect ourselves against trends that don’t persist. We also review a bunch of new names and offer plenty of commentary about the good, bad and ugly of the stocks we own and are watching.
Bi-weekly Update August 17: WHAT TO DO NOW: Remain cautious. The selling is spreading out now, so much so that our Cabot Tides have flipped to a sell signal as the number of new lows picks up. The odds still favor this being a correction, not a massive new downtrend, but most stocks (and especially growth stocks) remain under the gun. Tonight, we’re forced to sell our small remaining position in Shift4 (FOUR), which we gave every chance to hold up but has decisive broken down. We’ll also place ProShares S&P 500 Fund (SSO) on Hold given the Tides signal, though we’re holding onto what we own. All told, our cash position will be around 55%.
Cabot Top Ten Trader
Weekly Issue August 14: The market’s nascent downturn remains in effect, with the short-term trend of most indexes and sectors pointed down and with growth stocks bringing up the rear (though today was a good first step to reverse that). Even so, the pullback from a top-down perspective continues to look normal, so we’re not hiding in our storm cellar, either—we’re hanging onto our resilient, profitable stocks while nibbling here or there on high-odds opportunities. We’ll leave our Market Monitor at a level 6 today.
One of the more encouraging things of the past three weeks is that we’re not having trouble finding good-potential names with solid charts, and this week’s list is no different. Our Top Pick is a great growth story and now, after a couple of bad years, all of the firm’s metrics are pointed in the right direction.
Movers & Shakers August 18: The sellers continued to do their work to the market this week, and instead of the selling being concentrated in “just” growth titles, the weakness is now spreading to most nooks and crannies of the market. Coming into today, all of the major indexes were lower by 2% to 4%, with the worst performers the broader (small- and mid-cap) indexes.
Cabot Options Trader and Cabot Options Trader Pro
Cabot Value Investor
Monthly Issue August 1: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the August 2023 issue.
The surge in the stock market this year reminds us of 1987. Also similar to 1987 is the sharp increase in interest rates from unusually low levels.
Several of our companies reported strong earnings this past week and are approaching their price targets.
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.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Weekly Update July 25: As interest rates were roiling the stock market last year, it seemed like the long bull market was over. By mid-October, the S&P 500 had slid 27% from year-end 2021. Since then, however, stocks have surged. Today, the S&P 500 is 30% higher than that Halloween-month nadir. And, the index is only 5% away from reaching its prior all-time high. Clearly, the bear market has ended.
For nearly 40% of stocks in the index, their stock prices are now above their year-end 2021 level. It’s not just mega-cap tech stocks like Nvidia (NVDA), which is now 51% higher, or Apple (AAPL), up 8%, or Microsoft (MSFT), up 2%. More prosaic stocks like Occidental Petroleum (OXY), up 110%, Cardinal Health (CAH), up 81% and Lamb Weston (LW) up 78%, have rebounded sharply, as well.
Cabot Stock of the Week
Weekly Issue August 14: August has been a slog for investors, as an uneven earnings season has given the sellers the full buckets they needed to throw a bit of cold water on the 2023 bull market. While high-flying growth stocks have certainly taken it on the chin, especially on earnings, the overall market pullback has been fairly modest, and probably healthy in the long run. With prices lower than they were in July, particularly among growth stocks, today we add a big name with a revolutionary product that many people already use regularly – though only about half the country has access to it. That will soon change, which is why Cabot Growth Investor’s Mike Cintolo is high on it.
Bi-weekly Issue August 10: In this week’s Cabot Explorer issue, Novo Nordisk (NVO) stock surges on the back of positive data on its best-selling weight loss drug Wegovy, U.S.-China tensions rise again, and we add one of the signature growth stocks on the market to our portfolio. Enjoy!
Bi-weekly Update August 17: Beginning on a positive note, I’d like to remind you of the power of compounding returns when you stay in the stock market over time. For example, $100 invested in three-month Treasury bills in 1928 grew to only $2,141 by the end of last year while it became $46,379 invested in medium-grade corporate bonds and a stunning $624,534 if invested in a broad basket of stocks, according to data from New York University finance professor Aswath Damodaran.
Cabot Small-Cap Confidential
Monthly Issue August 3: This month we’re digging into an emerging software star that specializes in helping brands communicate with consumers like you and me.
The details behind the technology are a bit technical. But if you’ve noticed an uptick in personalized emails and text messages letting you know it’s a good night to get takeout, or that those shoes you’ve been pining for are back in stock, you get the picture. Enjoy!
Weekly Update August 17: Welcome to this week’s Cabot Macro Investor update.
I’m joking. We’re still all about small-cap stocks. But now that earnings season is over it’s all about the macro again. So we’ve got to address it.
In the second half of July, I felt like we were due for a pullback.
Cabot Dividend Investor
Monthly Issue August 9: The market looks great right now. Inflation is falling fast, the Fed is just about done hiking rates, and there is no recession in sight. It looks like we will get through the steepest rate-hike cycle in decades without much economic pain.
But nothing is certain. Inflation could rise again. The Fed may keep rates high for longer than the market expects. The economy may turn south in the quarters ahead. There could be more trouble with bank failures or the war in Ukraine. S&P earnings have been contracting for three straight quarters.
We’ll see if the market can add to the 30% rally from the low, or if it turns south again. A reasonable argument can be made for either scenario. Instead of trying to guess the possible short-term gyrations, let’s look to investments that should be longer-term winners no matter what.
In this issue, I highlight a stock that diversifies the portfolio into the consumer space. The company operates in an incredible niche market that has provided earnings growth for 31 consecutive years and enabled the stock to outperform the market in every measurable period over the last 15 years. The company is positioned for strong growth in the years ahead and the stock has a long track record of delivering stellar returns in all kinds of markets.
Weekly Update August 16: A pullback of sorts isn’t unusual or unexpected, especially in the waning days of summer. Many investors are focused on squeezing in more summer before it slips away and they aren’t paying attention to the market.
Cabot Early Opportunities
Monthly Issue August 16: In the August Issue of Cabot Early Opportunities, we talk about what happened to the summer stock rally and dig into five companies selling everything from coffee to sporting goods to mobile advertising tools.
Cabot Profit Booster
Weekly Issue August 15: This week we are adding a recent earnings winner to the portfolio, though because the market has been weak, we are again doing so defensively.
Cabot Micro-Cap Insider
Monthly Issue August 9: Today, I’m recommending a company that has been on my watch list for several months. It looks too compelling to ignore.
- No debt and 37% of its market cap in cash.
- Cheap valuation. Good dividend yield and share buyback program.
- High insider ownership.
All the details are inside this month’s Issue. Enjoy!
Weekly Update August 16: In terms of micro-cap news, we had two updates that I want to highlight (more details below):
1) 2seventy bio (TSVT) reported earnings and hosted an earnings call. I still believe in the stock’s long-term outlook.
2) Unit Corp (UNTC) announced a $2.50 dividend and strong earnings.
3) P10 (PX) announced a strong quarter.
4) Medexus (MEDXF) announced a strong quarter.
Cabot Income Advisor
Monthly Issue July 25: The population is aging. And it’s aging at warp speed. People 50 years of age and older now comprise a third of the U.S. population. The fastest growing segment of the population is 65 and older as an average of 10,000 baby boomers are turning 65 every single day. And it’s not just this country – aging is a global phenomenon.
We don’t know how sticky inflation will be or what the Fed will do. We don’t know if there will be a recession this year or next year or what the recovery will look like, or who will be the next president. But we do know that the population is shifting and companies on the receiving end of the torrent of dollars that will flow as a result should benefit mightily.
In this issue, I highlight another new stock to buy. This stock is cheap with strong momentum and properties that should help it perform well in any kind of market. It’s a healthcare stock ahead of a huge megatrend, the aging population.
Investing with the tailwind of a megatrend makes it so much easier to make a successful investment. It makes mediocre stocks great and good stocks one of your best investments ever.
Weekly Update August 15: Earnings season is about over. And the end of the summer is upon us.
This is a weird time of year for the market. Investors tend to pay less attention because many of them are focused on trying to squeeze in the last bit of summer fun and laxness before it slips away. The market tends to do whatever it was doing before people stopped paying attention.
It was going sideways, and that is what it will likely continue to do for the next several weeks. Of course, a major headline could certainly change that. But most often these waning days of summer tend to be less eventful.
Cabot Turnaround Letter
Monthly Issue July 26: Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the August 2023 issue.
In this letter, we include our Mid-Year 2023 updates for our stock market and high yield bond market outlooks. After being totally wrong with our stock market outlook for 2023, what do we see for the rest of the year, and why? We were nearly spot-on with our high yield bond market outlook. How does this market look to us now?
Our feature recommendation this month is Kopin Corporation (KOPN), an obscure optical display company that previously was run like a hobby by a brilliant scientist. Its primary output was a chronic stream of operating losses and share offerings that heavily diluted its investors. Now, under completely new leadership, the company is being run like a for-profit commercial enterprise with a vast market opportunity ahead.
Weekly Update August 18: There were no earnings reports this week. Macy’s (M) is now scheduled to report earnings next Tuesday, August 22. Kohl’s (KSS) will report the following day, August 23. Duluth Holdings (DLTH) will report on August 31.
Today we are moving shares of four companies, Toshiba (TOSYY), Holcim AG (HCMLY), First Horizon (FHN) and ESAB Corporation (ESAB) from BUY to SELL.
Cabot Cannabis Investor
Monthly Issue July 26: Politicians in Washington, D.C. let cannabis investors down once again.
Commentary from lobbyists and Senators had suggested the Senate banking committee might make progress on cannabis sector banking reform (allowing banks to work with companies) in late July.
That turned out not to be the case. I cautioned at the time that a risk here is that the actions politicians are hard to predict. But it was worth having exposure, in case there actually was progress on so-called SAFE banking, which seemed possible at the time.
Monthly Update August 9: At least four states posted record cannabis sales in June and July, Illinois, Maryland, Massachusetts and Missouri.
These sales trends and ongoing legalization around the world are why global cannabis sales will hit $104 billion a year by 2030, says a recent report from Vantage Market Research. That would represent an annual growth of 26% a year from 2023 to 2030.
Despite these positive trends, cannabis stocks are being held back by delays in reform efforts in Washington, D.C.
Cabot Money Club
Monthly Magazine August: Remote work has disrupted the employment landscape and appears to be here to stay; it’s also reshaped real estate as more and more workers are now untethered from the office. This month, let’s dive into how to take advantage of better affordability by relocating, moving for your lifestyle and not your employer, and what states will actually pay you to relocate.
Stock of the Month August 10: Job openings are steady, as is manufacturing. However, employment continues to improve, rising to 324,000, considerably better than the 175,000 forecast, dropping the unemployment rate for July to 3.5%.
The housing market continues to be challenging, especially resales—due to a lack of inventory and higher interest rates. However, the builders are having a banner year, and with supply issues being resolved, the time to build a new home is declining, helping to further boost the industry.
Zillow just released its quarterly survey, reporting that “23% of homeowners are already selling or considering selling over the next three years, the highest percentage since at least the beginning of 2021.” Consequently, that lifts the hope of the resale market.
Ask the Experts
Prime Question for Mike: I’m very interested in On Holding (ONON). Looks to have broken support at $30 and next is just south of $25. What’s the play? Patience?
Mike: You and me both. But, yes, I think patience is the key, as (a) the market is iffy of course, (b) the gap, and (c) this comes after sort of a double top thing on the chart too. Fundamentally, who knows if the currency issue is going to cloud the story for a while longer. That said, I am not taking my eyes off of it – might be something that could be in play within a few weeks if not sooner if all goes well. Not opposed to a nibble or something but I would wait for any size to see the market/stock find their footing.