Cabot Weekly Review (Video)
In this week’s video, Tyler Laundon explains why the most recent inflation data and Fed meeting ignited a market rally on Wednesday and Thursday. With the market’s path of least resistance pointing higher, Tyler covers those areas of the market having the biggest positive impact and discusses how a broadening out of the rally is likely healthy. Tyler wraps up the video covering a number of ETFs showing great momentum before moving on to intriguing stocks, most of which have received positive analyst coverage or put out positive news in the last three days.
Stocks Discussed: IBB, IHI, CLOU, FDMO, RSP, AYX, GKOS, RIVN, BLD, OPEN, FL, OPRA, LILM
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad discuss softening interest rates, the expectations for rate cuts in 2024 following the latest Fed meeting, and how stocks are responding as the year comes to a close. Then, they pay the price for their bad takes with another round of hot sauce roulette hosted by the recently returned Producer Madison. If you’re listening to the audio-only podcast version, consider watching the suffering for yourself on Cabot Wealth Network’s YouTube channel.
Save the Date: Thursday, December 14 at 2:00 PM ET
#1 Investment Strategy for 2024: Your Key to Outperformance in Today’s Market
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 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 December 14: The Fed’s actions (holding rates steady) and words (seeing three rate cuts next year) has supercharged the broad market this week, keeping our market timing indicators positive while most leaders are in fine shape. We will say that, with the good news out, sentiment has picked up, so we’re still content to move gradually and pick our spots with new buying. Tonight, we’re filling out our position in one name while starting a half-sized stake in a new leader, leaving us with around one-quarter in cash.
Bi-weekly Update December 7: WHAT TO DO NOW: Continue to lean bullish, though keep an eye on things in the short term. Overall, our indicators look very good, so we’re aiming to put more money to work—but near-term, we are seeing a few warning signs, so we’re picking our spots and stocks carefully. On yesterday’s special bulletin we sold Noble (NE) and added another half position in PulteGroup (PHM), but tonight, we’ll stand pat and see how things go in the coming days. Our cash position is now 36%.
Cabot Top Ten Trader
Weekly Issue December11: We continue to see some near-term tremors, but beyond that, the evidence looks pretty great, both from a top-down perspective and, even more so, among leading stocks, which continue to behave themselves, with a lot of controlled pullbacks and tight action among those that have dipped—while many others are still pushing higher. All in all, we’re encouraged, though for the moment we do think it’s best to pick your spots. Our Market Monitor stands at a level 7.
This week’s list has another balanced collection of ideas, with many different sectors and types of stocks. Our Top Pick is one of many turnaround-type retailers that’s cheap, has new-ish management and should have solid growth ahead—and the stock is perking up, too.
Movers & Shakers December 15: The big events this week were the November inflation report and the Fed’s meeting, and both (especially the latter) were very pleasing to the market—the fact that the Fed is forecasting three rate cuts next year tells us at the very least that the rate hike cycle is almost surely over, which helped stocks and bonds rally nicely. As of this morning, big-cap indexes are up about 2.5% on the week, while small- and mid-cap indexes are up more than 5%.
Cabot Value Investor
Monthly Issue December 5: Artificial intelligence-inspired investors are partying like it’s 1999. We’re finding attractive value elsewhere, in discarded industrials like our new Buy recommendation, CNH Industrial (CNHI).
Weekly Update December 12: When a band interviews a possible new hire, a common question is, “Who are your influences?” No musician was raised in a vacuum – everyone gets their musical foundations and inspirations from someone else. The Rolling Stones, for example, were heavily influenced by the Chicago blues and R&B scene including Muddy Waters and Bo Diddley. Learning someone’s influences helps the interviewer understand how a musician got to where they are and perhaps where they are headed in terms of their musical style, and provides some insight into what motivates the musician’s passion.
Cabot Stock of the Week
Weekly Issue December 11: We enter the last few weeks of the year with plenty of momentum, and this week’s macro data-heavy slate (CPI and PPI reports, the latest Fed announcement) can only do so much damage to our portfolio on the heels of a very strong couple months. Nearly half our holdings – 10! – are trading at 52-week or all-time highs as of this writing. So today, we take another big swing on a mid-cap biotech newly recommended by Carl Delfeld in his Cabot Explorer advisory.
Bi-weekly Issue December 7: Led by the Magnificent Seven, the S&P 500 is a bit overcooked at the moment. Small and mid-caps, on the other hand, are cheap - and appear poised for outperformance in the New Year. So today, we add a mid-cap life sciences company with high upside potential in an emerging area of biology.
Bi-weekly Update December 14: Welcome news: The Fed holds interest rates steady in a sign tightening has peaked and that rates cuts may be coming in 2024. Big positive for stocks.
One of the Explorer’s themes is the exciting and potentially profitable sector of medicine and life sciences. A success story is Novo Nordisk (NVO), which is up about 45% this year. The Denmark-based company has been the talk of the pharma and medical world and even Hollywood with stars trying the firm’s diabetes and weight-loss medicines, Ozempic and Wegovy.
Cabot Small-Cap Confidential
Monthly Issue December 7: This month we’re adding a small company that specializes in software that helps organizations train their employees and the partners they work with.
The company has a market cap of $1.5 billion, is growing revenue by about 25% and throws off a ton of cash relative to its size. Moreover, I rarely see this stock in the media, despite impressive growth and achievements. I think that’s about to change.
Weekly Update December 14: Small caps are having a very nice week as a lot of rate-sensitive areas of the market zoom higher following the Fed’s meeting and Jerome Powell’s press conference yesterday.
I’ve been saying I think small caps are very attractive lately, so the directional move here isn’t a surprise, though the pace of this week’s gains is rather eye opening. The S&P 600 Small Cap index is up about 7% over the last two days through midday Thursday!
Cabot Dividend Investor
Monthly Issue December 13: Despite the index returns this year, many stocks are still in a bear market.
Some interest rate-sensitive stocks recently fell to the lowest level since the trough of the pandemic market more than three years ago. But interest rates have likely peaked. And the main reason for the decline is over.
Buying stocks in the throes of a bear market has proven to be a winning strategy over time. Buying stocks after they have already started to climb out of the lows has proven to be a winning strategy sooner.
The timing may be perfect for a rare opportunity to generate much higher returns than can normally be expected from stocks of defensive companies. In this issue, I highlight a defensive stock that had been a stellar performer before inflation and rising interest rates took hold. It is priced near the lowest valuations in its history and has recently been generating upward momentum.
Weekly Update December 6: The superb rally that began after October is fading.
November was the best month for the S&P 500 in over a year. But now some reality is starting to set in. Wall Street took the good news about peak interest rates to another level and started pricing in Fed rate cuts early next year. The market is pulling back after the Fed dismissed that notion.
Cabot Early Opportunities
Monthly Issue November 15: In the November Issue of Cabot Early Opportunities we lean into the strengthening market with a group of companies doing everything from providing security for new AI applications to paving roads in the Sun Belt to making packaged foods for health-conscious consumers, and more.
Cabot Profit Booster
Weekly Issue December 5: The bulls once again pushed the market higher last week as the S&P 500 gained 0.77%, the Dow was the big winner with a rally of 2.42%, and the Nasdaq rose marginally by 0.38%.
Cabot Income Advisor
Monthly Issue November 21: There has been a dramatic turnaround in the market this month. After falling for three straight months, the S&P 500 has rallied 7.6% in the first three weeks of November. The main reason for the turnaround is interest rates. If the current Wall Street expectation that the benchmark 10-year Treasury rate peaked at 5% is true, it should be positive for stocks, or at least eliminate a big negative.
Weekly Update December 12: The rally that began in November is slowing down, but not dying.
Things are still good. Inflation is falling, the Fed is probably done hiking rates, longer-term rates have peaked, and the economy is still strong. But it’s that time of year. The holidays have a way of taking investor focus away from the market. Stocks tend to do whatever they were doing when investors stopped paying attention, which in this case is edging higher ever so slowly.
Cabot Turnaround Letter
Monthly Issue November 29: Every investor has loser stocks. We discuss two ways to convert this year’s losers into assets and winners, including tax loss selling and buying shares that others have discarded for artificial reasons. Last year’s crop of bounce stocks performed exceptionally well. We discuss five for this year that look promising.
One of our more productive methods for sourcing new ideas is to see what other like-minded investors are buying. We discuss how to refine the vast data in 13F filings and review four from the most recent batch of filings that look attractive.
This month’s Buy recommendation, Fidelity National Information Services (FIS), was used in a February 2023 article about how we evaluate candidates. It was too expensive then, but its recent 26% share price slide and encouraging fundamentals make it attractive to buy now.
Weekly Update December 15: Comments on Macy’s (M), Nokia (NOK), Walgreens Boots Alliance (WBA) and Agnico Eagle Mines Ltd (AEM). Loose bull in New Jersey train station is perfect analogy for stock market.
Cabot Cannabis Investor
Monthly Issue November 29: Cabot Cannabis Investor has delivered several excellent trades in the past month.
* Back on October 31 I was very bullish on the cannabis group which was weak because of the nomination of Rep. Mike Johnson (R-LA) as House speaker. He has always opposed cannabis legislation. I argued there were several other catalysts in the mix regardless of how Congress acted on legal reforms. “Cannabis stocks are a strong buy in the weakness,” I wrote.
I suggested any of the names in our portfolio, or the AdvisorShares Pure U.S. Cannabis (MSOS) exchange-traded fund (ETF) and the leveraged version, AdvisorShares MSOS 2x Daily (MSOX), for simplicity. “I am adding to MSOS and MSOX in the weakness, and I will continue to add, particularly if they get weaker from here.” Since October 31, here’s how those trades have done.
Monthly Update November 13: There are three big developments in the cannabis space to report.
* A buyout of one of our portfolio names, which nets us 105% gains in four months.
* A confirmation that the Biden administration is serious about some major cannabis reform, which would be a huge catalyst for the group.
* A buyable selloff. Cannabis stocks sold off sharply Tuesday probably based on false fears that rescheduling won’t happen. I think that’s wrong, and the weakness is a buy.
Cabot Money Club
Monthly Magazine December: The end of the year is a time for friends, family, holidays, and celebrations of all stripes. It’s also (unfortunately) a time to do some year-end clean up of your portfolio, harvest some tax losses, and get started on planning for 2024. So, to give you a head start before you have to meet your accountant, this month we’re exploring tax credits, including some you may have never heard of, and the most important numbers you need to know when planning for the year ahead. Plus, we’ll highlight some tax-efficient investments to save you money next year.
Stock of the Month December 14: Well, I’d call November a pretty good month! The Dow Jones Industrial Average soared by around 2,000 points since our last issue. Wall Street seems positively optimistic that the Fed will begin to lower interest rates mid-year, according to a recent CNBC survey. Also, the risk of a recession continues to decline, with Goldman Sachs saying the probability is now around 15%.
Both of those instances may create a very good market in 2024.
Ask the Experts
Prime Question for Chris: Hi Chris. I have a question about managing the Stock of the Week portfolio.
In terms of strategies, I note in the recent letter that you suggest selling about a quarter or so of a couple stocks.
I’m wondering about a strategy of setting up trailing sell orders for each stock between 10 to 14%, as a means of protecting gains. The issue with this is forgoing a potential run-up after dropping to the sell position.What I’m noting is by the time the sell order is made in the newsletter, stocks have often dropped to between 15% to 20%.
Wondering if you have some thoughts on management strategies.
Chris: Yes, my general rule of thumb for booking profits on winning stocks is to sell a few shares – maybe a quarter of your position – when a stock has risen 50%. Sell another quarter, or perhaps a third, of what’s left when it doubles. And so on. But I don’t like the idea of trailing sell orders because it could bounce us out of a stock like UBER, which fell 17% in Sept./Oct. but is now at new highs and is one of our best performing stocks, up 84% YTD. Or DKNG, which struggled out of the gates after our August recommendation, falling 17.5% in Sept/Oct, but which we now have a 27% gain on. And, of course, the biggest example is if Tim (my predecessor) had sold TSLA when it was going through some growing pains early on!
As for Sell orders, I hear you – while I have at times sent out alerts when a stock drops precipitously, on earnings or whatever, I have tended to give certain positions a bit more “rope,” waiting to see if it bounces back prior to the next issue. That is something I will strive to be more nimble about in 2024, so that we can cut bait quickly on stocks before they turn into 20-30% losers (I don’t think I’ve waited much past 30% on any of them; I generally try and limit losses to 15-20%).
At any rate, very good question/suggestions. Thanks for reading.