Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo continues to grow more bullish, as the market has done almost exactly what a bull would want during the past few weeks--including a continuing spate of new breakouts in growth-oriented names. Short-term, Mike does see the potential for some weakness, and is in fact already seeing some growth names retrench, but he’s thinking further pullbacks will generally be buyable, while some non-growth areas could see fresh breakouts if there’s a batch of rotation.
Stocks Discussed: ACLS, MDB, INSP, SPOT, DUOL, NOW, DKNG, RMBS, IOT, HUBS, MTZ, UAL/JETS, BA/HXL, FTI/CHRD, CMG
Cabot Street Check (Podcast)
This week on Street Check, Chris makes a case that the most anticipated recession in history is ... actually not coming, then he and Brad discuss the Fed’s response to the latest inflation numbers, the one-day selloff in insurers, and what impact the ongoing Writer’s Guild strike could have on content platforms. After that, they test out a new “Jump Ball” segment and break down head-to-head expectations for big tech vs. the field, oil and bitcoin, box office receipts and more.
FREE WEBINAR: July 13, 2023 Sign up now.
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.
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 June 15: The market has been following a very bullish script for the past few weeks, doing just about everything it “needed” to do -- our Cabot Tides have turned positive, as has our Two-Second Indicator, while our Aggression Index tells us growth-ier names are in favor. And more important, individual names are now breaking out (not failing) and following through on the upside. Obviously, the market has come a long way in a short time, and we are starting to see a few strong names wobble a bit, so we’re not going whole hog right here, but we are continuing with our plan of steadily putting money to work -- tonight, we’re filling out our position in one current holding and starting a new half-sized position in a new name. That should leave us with around 40% in cash.
Elsewhere in tonight’s issue, we go over all our new stocks and our watch list, write about one strong sector outside of growth and dive into some solid longer-term positive signs for the market as a whole.
Bi-weekly Update June 8: WHAT TO DO NOW: Remain optimistic. The market has steadily shown improvement during the past two or three weeks, with even yesterday’s rotation helping the broad market—and today’s snapback in leading stocks is good to see. Our Cabot Tides have effectively turned positive, and our Two-Second Indicator is close, too. Having just put a slug of money to work (including three new half-sized buys on Tuesday’s special bulletin), we’ll sit tight tonight, but if the good vibes continue, we’ll probably add more exposure next week. We have no changes tonight. Our cash position stands around 50%.
Cabot Top Ten Trader
Weekly Issue June 12: If you had written a script of what you wanted to see from the market a few weeks back, most of that has come true; simply put, the evidence continues to improve. Now, of course, things aren’t perfect—we’re seeing a bit of rotation out there that could continue to play out, and there are some potential leaders that are getting wobbly; throw in the fact people are feeling more comfortable and we’re not advising anyone to go hog wild. But with the evidence continuing to impress, we’ll bump our Market Monitor up another notch to a level 7.
This week’s list is heavy on medical and infrastructure-type names, with a smattering of other areas, too. Our Top Pick won’t be the fastest horse but should be a straight-on play on what is looking like a building, construction and infrastructure boom.
Movers & Shakers June 16: What can we say? It’s been another impressive week for the market, with pullbacks limited to a few hours before buyers pile in. Coming into Friday, the big-cap indexes were up 3% to 4%, while broader indexes were generally up in the 1% to 2.5% range. The action keeps the intermediate-term trend pointed up, and the broad market remains in generally good health, with few stocks hitting new lows and more names joining the upside parade.
Cabot Options Trader and Cabot Options Trader Pro
Cabot Value Investor
Monthly Issue June 6: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the June 2023 issue.
The U.S. presidential election, “only” seventeen months away, is shaping up to follow a predictable script. Investors should keep their personal views and their investing process separate.
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 June 13: In baseball, on an infield hit with a runner on third base, the fielder will look directly at the runner before throwing the ball to first base for a sure out.This “look” prevents any attempt by the runner to score – if he takes off to home base, the fielder will throw him out.
Cabot Stock of the Week
Weekly Issue June 12: We’ve entered a new bull market, and boy are those fun words to type!
Sure, the rally has been thin, led by seven or eight mega-cap tech stocks and, more recently, artificial intelligence. And yes, with inflation and another Fed meeting on the docket this week, a huge bucket of cold water could be thrown in the market’s face in the next 48 hours. But as of this moment, stocks are the healthiest they’ve been since 2021, and that means we’re keeping our foot on the growth pedal. So today we’re adding another potential technology leader that’s a very recent recommendation from Mike Cintolo in Cabot Growth Investor.
Bi-weekly Issue June 15: Yesterday’s Federal Reserve meeting and Tuesday’s consumer price index data showed inflation and interest rate hikes are pausing but remains well above what markets would like.
Overall inflation is cooling in large part because energy prices have fallen sharply — a huge relief for consumers. But the core gauge, which excludes energy and food prices, shows inflation is still too high.
Nevertheless, investors welcomed the news as it spurred markets and confidence that the market performance might advance beyond big tech and the artificial intelligence (AI) story.
Bi-weekly Update June 8: Explorer stocks gained or held their ground this week as the so-called “Mega-Cap 8” stocks dominate a narrow market for now.
China has become the 20% market – 20% of world GDP and 20% of multinational total revenue. This explains the steady stream of CEOs to China while Washington and Beijing top officials traded insults at a Singapore defense forum.
Cabot Small-Cap Confidential
Monthly Issue June 1: This month I’m featuring an innovative software company with an AI angle.
While AI is all the rage, bordering on hype, this company’s learning platform has been harnessing the technology for a few years. The latest iterations of AI are likely to help make its product better and open new monetization opportunities.
It’s a neat story and the company has terrific products that are loved by users. Because of the recent run in tech stocks, we’ll start with a half-sized position. Enjoy!
Weekly Update June 15: The big news this week was, of course, that the FOMC decided to pause and not hike interest rates at the June meeting. But as expected they suggested that a couple more 25-basis point hikes are in the cards throughout the rest of the year.
It feels like this “we want to keep you guessing” messaging is partly due to wanting to see how more data comes in and partly to keep investor expectations in check. The latter seems especially relevant given the S&P 500 just moved into a new bull market and AI enthusiasm has pushed a number of the MegaCap stocks to new highs.
Cabot Dividend Investor
Monthly Issue June 14: Despite all the current issues, the market is doing gangbusters.
The S&P 500 is up over 12% YTD. And the year isn’t even half over. The index has also rallied more than 20% from the bear market low in October. That’s the definition of a bull market.
But things aren’t as rosy as they seem. This is the thinnest rally I’ve ever seen. Just ten stocks account for the entire YTD rise in the S&P 500 index. The other 490 stocks have collectively gone nowhere.
Sure, these same stocks can continue to drive the market higher for a while. But the situation is precarious. Eventually, this rally will have to broaden out or peter out. Either scenario should bode well for defensive stocks.
There is still lots of risk. Even if a recession never happens, it’s reasonable to expect that the economy will slow in the second half of the year. And overall market earnings have already contracted for the last two quarters.
The relative performance of defensive stocks historically thrives in a slowing economy. If the rally broadens in such an environment, it will need participation from the defensive sectors. If the market pulls back, defense should be the best place to be.
Sector performance rotates. Things change. Defensive stocks have been dogs in the first half of this year. But that half is about over. The second half is what’s important now. It’s time to embrace the defensive plays ahead of a likely period of relative outperformance.
In this issue I highlight three of the best defensive stocks on the market.
Weekly Update June 7: This is, dare I say, a good market.
The S&P 500 is up 11.31% YTD, and the year isn’t even half over. Stocks have rallied more than 20% from the October low. The index is within bad breath distance of last summer’s high. The S&P is only 10% below the all-time high.
Why is the market so strong? There are several reasons. Inflation is coming down. The Fed is almost done hiking rates. And there is no recession. Throw in a booming artificial intelligence business and you have a rising market.
Cabot Early Opportunities
Monthly Issue In the May Issue of Cabot Early Opportunities, I profile a potential turnaround story in a well-known stock that is returning to its roots. We also take a closer look at one of the highest-end luxury brands in the world, an unknown green tech company, an emerging MedTech star and a construction materials specialist that’s spreading across the U.S. Enjoy!
Cabot Profit Booster
Weekly Issue May 31: Despite a couple concerning days to start the week, the bulls took control on Thursday and Friday as tech titan Nvidia’s (NVDA) earnings blowout triggered a “risk-on” bull run. By week’s end the indexes were mostly mixed as the S&P 500 gained 0.32%, the Dow lost 1%, and the Nasdaq rallied 2.51%. Today we are adding a retailer that reported strong earnings last week.
Cabot Micro-Cap Insider
Monthly Issue June 14: Today, I’m recommending a biotech that is well capitalized and has an approved drug that is growing 100%.
Key points about the company:
- Over $300MM of cash on its balance sheet
- Key drug to hit $500MM in annual sales in 2023
- Obscure tax law points to an acquisition offer in November or December.
All the details are inside this month’s Issue. Enjoy!
Weekly Update June 7: This week, I wanted to share a few charts before getting into my weekly update.
The first chart shows the amazing valuation discrepancy between small stocks and large-cap stocks.
Mega-cap stocks are trading at a PE ratio of 29.4x while small-cap stocks are trading at a 12.8x.
Cabot Income Advisor
Monthly Issue May 23: This is a tough one. The overwhelming majority of the time the market goes up in the year following a down year. The S&P 500 is up over 9% YTD. That’s a better than 20% annual pace.
Of course, much of that YTD return has to do with the strong performance of the large technology stocks that comprise more than 25% of the index. Nevertheless, stocks have climbed a wall of worry and shown impressive resilience so far.
Weekly Update June 13: It’s a new bull market! The S&P 500 has rallied over 20% from the low, the technical definition of a bull market. The index is also up about 12% YTD. Are stocks topping out or are we off to the races?
Despite inflation, the Fed, and increasing forecasts of recession, stocks have defied conventional wisdom and rallied strongly.
Cabot Turnaround Letter
Monthly Issue May 31: It’s no secret that a fresh fascination with artificial intelligence has ignited shares of companies like Alphabet (GOOG), Microsoft (MSFT) and Nvidia (NVDA), while “safety stocks” like Apple (AAPL) have rebounded on recession fears. Shares of more prosaic technology companies have lagged, but a few offer highly relevant albeit slow-growth products and services, making their businesses highly resilient. They are often well-supported by durable balance sheets and capable management. We highlight four such companies.
As a follow-up to our April edition that featured banks, we have found additional interesting financial stocks by looking at the 13F filings of like-minded value investors. We discuss three that saw sizeable new purchases or meaningful additions to already-sizeable holdings by well-respected value managers.
Our feature recommendation this month is Tyson Foods (TSN), a major producer of chicken, beef and pork products. Its earnings and shares have tumbled due to an unusual simultaneous downturn in all three protein groups. The hardest time to buy a commodity cyclical is at the bottom of the cycle, as there appears to be no end in sight to the malaise. We think this is the time to buy Tyson.
Weekly Update June 16: This past week, none of our companies reported earnings and there were no ratings changes. Shares of ESAB Corp (ESAB) are approaching our 68 price target, so we continue our review of this recommendation. The next earnings report is from Walgreens Boots Alliance (WBA), scheduled for June 27.
Cabot Cannabis Investor
Monthly Issue May 31: Now that Florida Gov. Ron DeSantis (R) is officially in the race for the Republican presidential nomination, it’s worth knowing more about his views on cannabis policy.
After all, DeSantis will now play an even bigger part in the election debates, even if polls say DeSantis has a slim chance against frontrunner Donald Trump. His voice matters – since cannabis is such a politically driven sector.
Monthly Update June 14: Cannabis stocks are about to make a big move over the next several weeks. This is a good trading opportunity.
What is going to send the group higher?
The Senate should take significant steps to advance key bank sector reform that would help cannabis companies, say lobbyists.
Cabot Money Club
Monthly Magazine June: Teaching your children basic financial literacy pays serious dividends throughout their lives. It helps them avoid debt, practice responsible budgeting and can even help them pay for college and retirement. In this month’s issue, we’ll explore the best ages to teach your children important financial skills, the best apps and tools for learning about money, and even the best games to make financial learning less of a chore.
Stock of the Month June 8: The markets have been fairly volatile this past month. The Dow Jones Industrial Average sits at just about the same place we were in last month’s issue. But the S&P 500 has been on a tear, up about 140 points, and the Nasdaq has risen some 50 points due to the momentum in the tech sector, where the average stock is up more than 33% year to date.
Communication Services and Consumer Discretionary stocks have moved along nicely in the past month, on average up 32% and 22%, respectively.
Growth stocks are still outperforming value in all capitalization categories.
Ask the Experts
Prime Question for Chris: Chris, I love your work and I invest in the growth part of the (Stock of the Week) portfolio.
I am wondering how you get the next Tesla (TSLA); what makes you let a stock run its course vs. cutting your losses. Basically, when do you trade and when do you let it sit?
Let’s say Ulta Beauty (ULTA), which is a great company. When do you let it run and when not? Or Onon Holding (ONON). Just curious to hear your thoughts on this.
I love when you mix small and big companies, (from) Si-Bone (SIBN) to Microsoft (MSFT).
Chris: If I had the answer as to how we unearth the next Tesla, I’d probably be retired by now!! But to answer your question, it generally depends on the stock: If, for example, a stock like ULTA falls 25% in a month, I look at the circumstances behind the fall. If it’s simply a correction after a big run-up like the one ULTA had, particularly if the market as a whole is weak, then I’d probably leave it alone. In ULTA’s case, the pullback was mostly related to underwhelming earnings and, worse, negative guidance. On top of that, it was falling precipitously despite an improving market. So, I figured it was time to book what gains we had left and move on.
Like I said, I don’t have a hard-and-fast sell limit in terms of what percentage a stock needs to fall from its highs – if I did, I probably would have bailed on Xponential Fitness (XPOF) by now and possibly even Tesla last year. It’s more looking behind the curtain and finding out what is causing the drop-off.
Hope this helps. Good question. Thanks for reaching out!