Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo says he’s still encouraged: Yes, the broad market is a bit iffy, led by financials, and he’s certainly not taking anything for granted -- but when looking at the leading indexes, sectors and individual stocks, the buyers are clearly still in control and the odds favor the next big move being up (likely after some more shaking and baking). Best of all, Mike sees a bunch of emerging setups out there as the pullback allows leaders to consolidate their gains.
Stocks Discussed: NOW, DKNG, ORCL, NFLX, LRCX, ASML, FND, SHAK, SHOP, GFL, CCJ, APO, DAL, HUBS
Cabot Street Check (Podcast)
This week, Chris and Brad discuss whether the market is digesting the rally or losing steam, the standardization of EV infrastructure via Ford, GM, and Rivian’s deals with Tesla, and they take a look at promising international opportunities. Then, they welcome Cabot Options Institute’s Andy Crowder to discuss the VIX, volatility in the market and the impact on options traders. Listeners interested in attending Andy’s upcoming options webinar can register here.
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 22: WHAT TO DO NOW: Remain optimistic. The market and leading stocks have finally begun to pull in somewhat, but the action has been completely normal so far and our market timing indicators are bullish. We’ve put a good chunk of money to work of late, and tonight we have one small addition—we’ll add a half-sized position (5% of the portfolio) in DraftKings (DKNG), which seems to be set up well. That will leave us with around 35% in cash, which we’ll aim to put to work (including, ideally, by filling out some existing positions) if the market continues to behave itself.
Cabot Top Ten Trader
Weekly Issue June 20: The market has been in something of a takeoff or lockout rally, but near-term, we’re finally seeing some profit taking set in; coming into today, the Nasdaq was 9% above its 50-day line, so some wobbles are to be expected. Even so, we’re not changing our advice any at this point—we like to play the odds, and right now the odds favor (a) near-term trickiness but also (b) that pullbacks should generally lead to higher prices. We’ll leave our Market Monitor at a level 7 and see how it goes.
While growth could be set for a dip, the broadening of the rally is seeing more non-growth names actually show strength. Our Top Pick is one of many cyclical-type stocks that, after a big hiccup in March with the banking worries, has come alive amidst a vacuum of selling pressure. Dips of a couple of points would be tempting.
Movers & Shakers June 23: The much-anticipated market pullback seems to have begun this week—the S&P 500 and Nasdaq look set to snap their streak of weekly gains, with each index down about 1.5% since a week ago as of this morning.
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 20: Here in New England, the weather can change quickly. A sunny morning can seemingly without warning turn into a rainstorm by the afternoon. Not that long ago, we had three seasons in a single day – snow in the morning, followed by rain, then summer-like temperatures by three in the afternoon. There’s an old saying, “If you don’t like the weather, wait a few minutes.”
Cabot Stock of the Week
Weekly Issue June 20: A week ago, it felt like a bull market in name only. Now, it feels like a full-fledged bull market, with participation coming from places other than just mega caps and artificial intelligence. That’s reflected in our portfolio, where roughly half our stocks are hitting or near 52-week highs. Still, there’s always a chance things could crater, especially with the S&P 500 up 14% year to date and the Nasdaq up 30%. So today we add some needed value, with the bonus benefit of giving us more overseas exposure, in the form of an undervalued U.K. life insurance company courtesy of Cabot Value Investor Chief Analyst Bruce Kaser.
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 22: Fed Chairman Jerome Powell again threw a wrench into the market by warning that a couple of more interest rates hikes are probable this year. “The process of getting inflation down to 2% has a long way to go,” he told the House Financial Services Committee during a three-hour hearing. Not sure why they don’t get this over with.
Indian Prime Minister Narendra Modi arrives in America on his first official state visit with India’s geopolitical pull higher than at any point since he took power in 2014.
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 22: Small caps are off about one percentage point over the last week while the S&P 500 is almost dead flat.
All things considered, that feels like a win to me – largely because the Fed signaled potential for two more rate hikes throughout the year. The Fed’s rate hike program has been the market’s bogeyman for over a year. The message the market is sending now is that, yeah, you might keep us on our toes, bogeyman, but we’re not scared any more. You can be dealt with.
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 21: The impressive rally that has confounded so many may be running out of gas.
As of Friday’s close, the S&P 500 is up about 15% YTD and over 20% from the October low, making it officially a new bull market. Investors are optimistic that inflation is falling, the Fed is almost done hiking, and there is no recession in sight. The market is sensing that we can get through this rate-hiking cycle without much pain.
But this rally is not as impressive as it seems. Only about 10 large technology stocks account for just about all the YTD gains. The other 490 stocks on the index have collectively gone nowhere.
Cabot Early Opportunities
Monthly Issue June 21: In the June Issue of Cabot Early Opportunities we talk Artificial Intelligence (AI) and break down the technology into a few buckets of opportunity that make it a little easier to understand. I also profile five ways investors can put their money to work in companies with AI exposure. Enjoy!
Cabot Profit Booster
Weekly Issue June 13: Ahead of a big week for the market, the S&P 500, Dow and Nasdaq all rose marginally last week. That being said, while the indexes were modestly higher, there was plenty of daily rotation last week, and there likely will be more of the same this week ahead of the Federal Reserve announcement on Wednesday.
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 21: “Don’t fight the tape” is a famous expression that I’ve learned to appreciate.
I don’t know who coined the expression, but it refers to the practice of not going against the prevailing trend or momentum of the market.
The phrase emphasizes the idea that it is generally unwise to take positions that oppose the direction of the overall market trend.
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 20: It has been a fabulous rally that has proven naysayers wrong. The S&P 500 is up about 15% YTD just before the midpoint. Stocks have also rallied more than 20% from the October low into a new bull market.
How much gas is left in the tank?
Inflation is falling and the Fed is almost done hiking rates. It is also looking less likely that there will be a recession this year. Investors are optimistic that we can get to the other side of this hiking cycle without too much pain.
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 23: This past week, none of our companies reported earnings and there were no ratings changes.
Shares of ESAB Corp (ESAB) are approaching but remain below our 68 price target. We like the company’s fundamentals, and the valuation isn’t stretched, so we see no reason to change our rating, at least until the shares reach or exceed our price target.
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 Mike: Hi Mike. I have recently become a member of the Cabot Wealth Network. I have couple of questions about Top Ten Trader.
In the introductory video, I observed that you mentioned that the stocks that get on the list (a) have strong short-term strength and (b) (you) would like to ride the stock for a year.
I’m a small-account trader. I don’t have the budget to buy 100 or 50 stocks of each on the recommendation. Is the list good if I buy option calls for next year at 5 to 6 points higher than the current price?
Do you have any recommendations for the small account traders and how to (benefit) from Top Ten Trader?
Mike: Thanks for writing, and for giving us a try.
So, first, we don’t necessarily aim to ride stocks for a year – if they continue to work, we’ll hang on, if not, we won’t. We usually would take partial profits on the way up and then ride the rest – as long as it’s working. If it goes up forever, great, but if not, we’ll take the gain and move on.
Thus, I wouldn’t worry about having 50 stocks – even if you had a $1 million account I wouldn’t recommend that. Just get a good idea or two or three every week or two and go from there. It’s not about what you don’t own, it’s about what you do.
As for options – many subscribers do use options with success, but that is not my ballgame. You could certainly try it, yes, but I think starting with a portfolio of a handful of stocks if fully invested (not buying all at once, but one or two a week as opportunities arise) is a better way to start.