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CABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo dives into the moderate (for many areas) to sharp (for growth stocks) retreat to start the year--in a nutshell, most of the intermediate-term evidence remains positive, so he remains bullish, but the next week or two will be key to see if the near-term outlook is shifting. In the meantime, he goes over a bunch of names from different areas that are pulling back normally of late--and could provide nice entry points if the market finds support.
Stocks Discussed: PLAY, KKR, GDDY, PANW, NVO, PINS, VRT, WING, SHOP, DHI, ITCI, TRIP
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad offer their perspectives on the brief selloff that’s started the new year, debate whether the upcoming election cycle is likely to impact the markets, and try and pinpoint which trends will usurp the AI/GLP-1 narrative of 2023. Then, they welcome on Bruce Kaser of Cabot Value Investor and Cabot Turnaround Letter to discuss his value-based approach, investing in China, the Magnificent Seven stocks, and what he’s learned from famed investor Charlie Munger.
Cabot Webinar
#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 28: Happy New Year! The market remains in great shape, with the vast majority of evidence positive—and, given that we are coming off of two years in the muck, with big declines in 2022 and (for the most part) lots of bottoming-out action in growth stocks and the broad market in 2023, we see great potential going ahead for a real bull phase. That doesn’t mean we’re complacent or leaving our brain at the door, but we’re leaning bullish and putting money to work. Tonight we’ll add one half-sized position in a leveraged long index fund, leaving us with around 20% in cash.
Bi-weekly Update January 4: WHAT TO DO NOW: Continue to lean bullish, but let’s see how this growth stock selling wave progresses. The top-down evidence remains in fine shape when it comes to the overall market, and most growth stocks have fallen off this week, but done so normally (while a few others may be trying to emerge). Thus, we’re giving names some rope, but we’re not tolerating any intermediate-term breaks. In yesterday’s special bulletin, we sold half of DraftKings (DKNG) and placed Duolingo (DUOL) on Hold, leaving us with 27% in cash. We’ll stand pat tonight, though are watching things closely and will be in touch if we have any more changes in the days ahead.
Cabot Top Ten Trader
Weekly Issue January 2: Happy New Year! Now that the calendar has flipped, early January is upon us, and as we saw today, that’s almost always a tricky time: There are many crosscurrents that pop up, and when you combine that with the market’s straight-up move since the start of November, today’s sour (and rotational) action wasn’t a total surprise and is a reason why we’ve been advising picking your spots of late. If you’re looking for something to worry about, we’d say that growth stocks (which led the way up in November) stalled out three weeks ago, so if the selling continues, that could be a canary in a coal mine of sorts—but at this point, we’re seeing normal (albeit unpleasant) downside action in many stocks. Right now we’re thinking the next couple of weeks will likely prove tricky, yet the path of least resistance remains up. We’ll keep our Market Monitor at a level 8, though we’ll be in touch if that changes.
This week’s list has something for everyone, from newer names trying to emerge to established leaders that have rested for two or three weeks. Our Top Pick has moved out on the upside and has excellent numbers, all while its sector remains in favor.
Movers & Shakers January 5: The New Year has gotten off to a poor start, with just about everything selling off and with growth-oriented names taking the worst of it. As of this morning, the S&P 500 is down about 1%, the Nasdaq is off nearly 3%, broader indexes are off 2%-plus and growth-y funds are off 4% to 7%! Even interest rates are reversing their recent trend, with the 10-year Treasury yield up around 0.11% this week (though they have made a nice reversal lower so far today).
Cabot Value Investor
Monthly Issue January 2: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the January 2024 issue.
We review the stock market’s remarkable performance in 2023 and highlight our recommendations that produced notable gains along with our clunkers. Our view on the 2024 market is that stocks will have an average year, with the Magnificent Seven producing flat/modest returns at best. Readers should keep in mind quotes from Yogi Berra and Warren Buffett when considering market forecasts. Onward to 2024.
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 December 19: Updates on current recommendations. The Katy Perry stock market.
Cabot Stock of the Week
Weekly Issue January 2: Happy 2024! Here’s hoping the new year can pick up right where the old one left off. There are plenty of reasons to think this year will be good for stocks – the Fed cutting interest rates instead of hiking them, inflation cooling, recession fears fading, etc. But there’s no doubt a few sectors (tech?) are a bit overcooked at the moment, at least in the short term. So we kick off the new year by doing a bit of bargain shopping, starting with the most bargain-basement sector out there: cannabis. We haven’t had much luck trying to buy into strength with cannabis. So today, we instead buy after the sector has been knocked back again, adding the largest holding from Michael Brush’s Cabot Cannabis Investor portfolio.
Cabot Explorer
Bi-weekly Issue January 4: Although markets have stumbled a bit out of the gate, investors looking to see the S&P 500 build on the 11% advance in the final quarter of 2023 may not have long to wait. U.S. companies are due to start reporting results next week, with the big banks leading the way.
An election year like 2024 with a sitting president running is historically a bullish scenario for U.S. stocks. Since 1949, the S&P 500 is averaging a gain of nearly 13% in those election years, per the Stock Trader’s Almanac.
So let’s kick off the year by adding another aggressive growth stock.
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 January 4: This month we’re jumping into a small software company that provides solutions for a specific small- and mid-sized business (SMB) market.
While the market for SMB software has been tough for the last two years, this company’s revenue growth has accelerated and customers that bailed in 2022 are coming back. In short, best-of-breed software isn’t dead! And this player is about to become profitable too. Enjoy!
Weekly Update December 21: First off, just a little housekeeping. I’ll be taking time next week to spend with my family, parents, siblings and new niece in Vermont. Much of our production staff will also be taking some time off, so there won’t be a Weekly Update next Thursday. If there is any pressing news I’ll address it via Special Bulletin.
I hope you have a Happy Holiday season!
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 January 3: The new year is starting with big momentum. The S&P 500 had a torrid late-year rally where it soared about 16% between late October and the end of the year. Stocks closed out the year with nine straight up weeks, the longest streak since 2004.
Cabot Early Opportunities
Monthly Issue December 20: In the December Issue of Cabot Early Opportunities, we continue to lean into the market’s bullish trend. We dig into five modest growth companies with exposure to AI, social media/advertising, footwear, HR software and the exciting world of road paving.
As always, there’s something for everybody!
Cabot Profit Booster
Weekly Issue January 3: After a big run higher for the market to end 2023, 2024 got off to a rough start yesterday, especially for growth stocks. And while yesterday was sloppy, this action isn’t terribly surprising as crosscurrents in the new year are typical. This week we are adding a covered call in a leading retailer, though because of the choppy January trading, we are doing so via an in-the-money call sale.
Cabot Income Advisor
Monthly Issue December 19: The market has had seven consecutive higher weeks. And the positive momentum should continue into the new year.
The S&P 500 is up 12.5% in the last seven weeks and 23% for 2023. But those returns are deceiving. Until the market rally broadened out recently, only seven large technology company stocks accounted for nearly all the gains.
Many stocks are still in a bear market. In fact, certain more interest rate-sensitive stocks recently fell to the lowest level since the trough of the pandemic market more than three years ago, although they have rebounded with falling interest rates recently.
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 January 2: The final numbers are in. And they’re impressive.
After a bear market in 2022, the market indexes came back sharply in 2023. That’s not unusual. Prior to last year, there had been nine years of negative S&P 500 returns since 1980. Seven of those down years were followed by up years, and four of those seven up years posted returns of 20% or higher. The market doesn’t usually stay beaten down for long.
Cabot Turnaround Letter
Monthly Issue December 27: In this issue, we discuss our Top Five Stocks for 2024. We also dissect and review what happened in the capital markets in 2023 and offer our outlook for the coming year.
This month’s Buy recommendation, Mohawk Industries (MHK), is a major global flooring manufacturer whose shares are deeply out of favor. We discuss three key questions when considering an investment in a cyclical company and describe how Mohawk passes all three with flying colors.
Weekly Update January 5: 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 January edition of the Cabot Turnaround Letter, which was published a week ago Wednesday.
Cabot Cannabis Investor
Monthly Issue December 27: Our cannabis trades continue to perform very well, beating the market by more than tenfold since the last update, depending on the index position considered.
The AdvisorShares Pure U.S. Cannabis (MSOS), is up 10.5%, and the AdvisorShares MSOS 2X Daily (MSOX) is up 18.7% since I last suggested getting long cannabis on December 13. I suggested both as proxies for the sector, at the time.
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 January: Most of us never take practical economics classes that dive into everyday finances, how to save, how to invest, or how to plan for the future. If you’ve taken an economics class at all, you probably learned more about supply and demand than you did about setting aside an emergency fund. That means that most of what we “know” about money we learned from our parents or just sort of picked up as we went along. So this month, let’s put to rest some of the most pernicious money myths and unfounded beliefs that keep us from achieving our long-term financial goals.
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 Jacob: Please provide your thoughts on FedEx (FDX), which is down 10% $30 today.
Jacob: I don’t follow FDX too closely, mostly because it doesn’t trade many options.
However, my thought on situations like this, where a stock takes a steep dive on earnings, is to not get involved for a couple of days as it will take some time for the big funds to sell if they are looking to liquidate their positions.
After those couple days, if I was looking to buy the dip, I would target an at-the-money call with 6 months until its expiration. Perhaps the FDX July 250 calls.