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Cabot Prime Plus Week Ending May 12, 2023

Latest Summary


Cabot Weekly Review (Video)

In this week’s video, Mike Cintolo is still seeing a neutral intermediate-term trend, and he’s still holding a lot of cash given the repeated air pockets among leading stocks. That said, he’s also starting to see some intriguing action in names that are “gap-and-go’s” and “shake-and-snaps” (Mike’s terms), which hasn’t been seen in a long time. All in all, Mike isn’t having trouble building a watch list but, as has been the case, he’s waiting for a spark that has institutional investors clicking the buy button.


Cabot Webinar

How to Profit from the Biotech Bear Market

FREE WEBINAR: May 18, 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 May 4: The market remains in a rough spot, with a hawkish Fed that continues to raise rates into what’s become a rolling bank crisis, with some big names going under and others walking the plank. Far more important to us than the news is the market’s reaction to the news--and it remains mixed when it comes to the indexes (intermediate-term trend neutral), but growth stocks remain iffy at best, with many good-looking setups falling apart on earnings of late, and with relatively few really powering ahead. All of this can change in a hurry, but until it does, we continue to think growth investors should remain generally cautious and flexible as we wait for a more certain environment that will entice big investors to pile in.

Bi-weekly Update May 11: WHAT TO DO NOW: It remains a mixed environment, with a few mega-cap names doing well but most of the broad market under pressure—and for potential leaders, there remain a good number acting OK but the repeated air pockets make it challenging to make progress. After this week’s sale of Axon (AXON), our cash position is a bit over two-thirds of the Model Portfolio; we could add a couple of small positions if names on our expanding watch list remain intact—but tonight, we’ll stand pat to see if more strength can develop.

Cabot Top Ten Trader

Weekly Issue May 8: We don’t want to write the same thing week after week, but the story remains mostly the same as it has for the past two months: There are definitely some positives out there, including a good number of setups, some positive earnings reactions and a resilient set of major indexes, especially given the banking worries—but the broad market is mostly iffy while we continue to see repeated air pockets and selling on strength. We still think there’s lots of bullish dry tinder that could spark if things go right, but until it happens, we think it’s best to remain cautious. This week’s list sports more than a few recent earnings winners, as well as a few tight setups. Our Top Pick is a growth name that’s getting costs under control—combined with its cookie-cutter story, that could produce reliable bottom-line growth soon. Try to buy on dips.

Movers & Shakers May 12: The story remains mostly the same once again—coming into today, the big-cap indexes are relatively flat, but anything with exposure to names outside of a few mega-caps is down in the 1.5% range. (Even within the S&P 500, the index is down 0.14% coming into Friday, while the equal-weight S&P 500 is down 1.12%.)

Cabot Options Trader and Cabot Options Trader Pro

Cabot Options Trader Pro Weekly Update

Cabot Options Trader Weekly Update

Cabot Value Investor

Monthly Issue May 2: Thank you for subscribing to the Cabot Value Investor. The new name for the former Cabot Undervalued Stocks Advisor more clearly and broadly describes our mission to serve value-oriented investors. We hope you enjoy reading the May 2023 issue.

Fitting for a value investment newsletter, your chief analyst will be making the pilgrimage to the Berkshire Hathaway Annual Shareholders Meeting this coming weekend.

In this month’s letter, we include our recent new Buy recommendation: NOV, Inc. (NOV). This high quality mid-cap company ($7.3 billion market cap) appears to be in front of an upshift in demand for sophisticated drilling equipment even as its shares trade at a modest valuation.

We also cover earnings reports and provide other relevant updates on our recommended companies.

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 March 28: This past week, among the 1,000 largest companies by market cap, the average percentage share price change was zero. Half of the stocks had moves of no more than +/- 1%. And, only 14 stocks had share price movements of +/- 10% or greater.

Cabot Stock of the Week

Weekly Issue May 8: Stocks continue to chug along in the same range they’ve largely been in since the end of March. We’ll see if this week’s inflation reports (CPI on Wednesday, PPI on Thursday) move the needle in either direction. In the meantime, one sector that is finally showing signs of life after two years of being beaten to a pulp is cannabis. And so today, we add one of the top cannabis stocks recommended by Cabot Cannabis Investor Chief Analyst Michael Brush. It’s a familiar name to even intermediate-term Stock of the Week readers – and it was up 25% last week!

Cabot Explorer

Bi-weekly Issue May 4: The Federal Reserve yesterday raised the target for its benchmark interest rate by 0.25% to a new range of 5%-5.25%, the highest since September 2007. This will impact the value and stability of the U.S. dollar and stock markets in several ways.

During the only stable dollar eras of the last century, annual GDP growth averaged 4.9% from 1922-29, 4% from 1948-71, and 3.7% from 1983-2000.

Bi-weekly Update May 11: Consumer prices in April showed inflation pressures remain high but backed off a bit. The consumer price index came in at 4.9%, slightly less than the 5% from March. Not a big deal but a step in the right direction as the below graph highlights.

Electric vehicle (EV) prices and profits are also going down for the most part. Tesla reported $2.5 billion of profits in the first quarter, down from $3.7 billion in the last three months of last year, and $3.3 billion in the first quarter of 2022.

Cabot Small-Cap Confidential

Monthly Issue May 4: For the second month in a row we’re going where the growth appears most resilient. Which means MedTech.

This month it’s another company focused on the spine. But a very specific area. The company specializes in implants for sacroiliac joint (SI) fusion. It already reported Q1 results (beat expectations) and the stock is acting well.

Weekly Update May 11: Our portfolio companies wrapped up their reporting season this week, which means I have a chance to come up for air after an intense couple of weeks.

Somewhat as expected we had some nice winners, but also some losers too. It’s just that kind of market; and while I wish we could have had 100% of our stocks post terrific performance after reporting, that’s just not realistic.

Cabot Dividend Investor

Monthly Issue May 10: Energy stocks have been by far the best-performing market sector over the last couple of years. They went from worst to first in dramatic fashion. And the good times may be just beginning. The industry has had very low capital spending and expansion in recent years. Crude oil inventories have fallen below the five-year average and are likely headed far lower. OPEC has pledged dramatic production cuts to push prices higher. There is also a high degree of geopolitical risk. In fact, Goldman Sachs analysts are forecasting oil prices to get back to $95 per barrel before the end of this year.

Weekly Update May 3: A big week in the market has started badly. The failure of First Republic Bank (FRC) and fears of further fallout have sent stocks reeling ahead of more news the market may not like later this week. The market moved on from the banking crisis. But it is rearing its ugly head again. There is now worry of more bank failures and an escalating crisis. More small regional banks could fail. But the situation is still unlikely to devolve into a major crisis, at least at this point.

Cabot Early Opportunities

Monthly Issue April 19: In the April issue of Cabot Early Opportunities, we take a quick look at what to expect from portfolio positions set to report in the coming weeks and dive into fresh opportunities that are shaping up nicely now. At the top of the buy list is a software name we just added to our Watch List last month. We also take a position in a cosmetics stock that looks superb, pull back the curtain on a rising biotech star, tour an enterprise software name based in Canada and revisit a MedTech stock that’s finally getting some respect from the Centers for Medicare and Medicaid Services (CMS).

Cabot Profit Booster

Weekly Issue May 2: This week has the potential to be volatile as earnings season continues and the Federal Reserve interest rate decision on Wednesday afternoon could shake up the market.

Cabot Micro-Cap Insider

Monthly Issue May 10: Today, I’m recommending a “buy when there’s blood in the streets” type of stock:

Key points:

  • The company owns valuable real estate in Manhattan and Brooklyn.
  • The underlying asset value implies 7x upside to the stock’s current price.
  • Insiders have been buying aggressively over the past year.

All the details are inside this month’s Issue. Enjoy!

Weekly Update May 3: This week, I wanted to highlight two quick things before getting into our regular update.

First, I’ve talked a lot about the biotech bear market and how it’s lasted longer than most previous biotech bear markets.

I just stumbled upon the below chart on Twitter which shows the length of the current biotech bear market versus the previous three.

Cabot Income Advisor

Monthly Issue April 25: In the middle of an earnings recession and a slowing economy, defensive stocks are probably the best places to be. These companies can maintain earnings growth while most companies are sliding and remain consistent even as the economy deteriorates further.

Defense is king right now. But defensive stocks are even better when they offer growth as well. In such uncertain times, it makes sense to bank on things that are more certain. Stocks poised in front of a megatrend are the best bet. A megatrend acts as a powerful tailwind for a stock that can make a mediocre pick very good and a good pick great.

In this issue, I highlight a defensive stock that is also one of the world’s largest producers of alternative energy. At the same time, it is also one of the best traditional regulated utilities in the country. It offers defense as well as growth and can thrive in any kind of market.

Weekly Update May 9: As I mentioned in the last update, last week was a big week for the market. Important earnings, the Fed meeting, and the jobs report all had implications for the near-term direction of the market. The market survived and came away about even for the week. Now what?

Earnings were generally positive. The Fed did what was expected by raising 0.25%, and the statements afterward were ambiguous. The employment report was solid as many more jobs were created. Also, the last two months of jobs figures were lowered. The readjustment quelled inflation fears while the current jobs report indicated no recession in sight.

Cabot Turnaround Letter

Monthly Issue May 3: We highlight three cash-rich companies that have real products and services whose shares are out-of-favor. We also discuss six additional companies that have both promising turnarounds ahead yet also discounted share prices. Our feature recommendation this month is Frontier Group Holdings (ULCC), a major ultra-low-cost airline focused on leisure travel. Its shares have fallen 50% from its IPO price due to investor concerns about demand, pricing and costs. We think these worries are overblown, leaving ULCC shares ready for take-off.

Weekly Update May 12: This week’s note includes our comments on Goodyear Tire (GT), Warner Bros Discovery (WBD) and Berkshire Hathaway (BRK/B), which reported late last week. It also includes comments on the 12 companies that reported earnings this week: Bayer AG (BAYRY), Brookfield Reinsurance Ltd (BNRE), Dril-Quip (DRQ), Elanco Animal Health (ELAN), Goodyear Tire & Rubber Company (GT), TreeHouse Foods (THS), Six Flags Entertainment (SIX), Viatris (VTRS), Toshiba (TOSYY), Volkswagen AG (VWAGY), Warner Bros Discovery (WBD) and Western Digital (WDC).

Cabot Money Club

Monthly Magazine May: Online scams are already more common than ever and unlikely to slow down anytime soon. Let’s look at the most common types of scams, red flags to avoid, steps to take if you’re worried you’ve been a target or victim, and what you can do to help keep your friends and relatives safe online.

Stock of the Month May 11: The markets traded sideways through most of April. But since then, the choppiness has returned—along with worries about the uncertainty regarding the debt ceiling, the expiration of the immigration-limiting legislation, and ongoing debate about the possibility of a recession.

Yet, economically speaking, the trends are still healthy. Manufacturing has held up, employment continues to rise, and job openings are still underutilized (as you can tell if you’ve been in a restaurant lately!).

Ask the Experts

Prime Question for Chris: Chris, I am curious, we have a nice couple of big winners on the growth side of the spectrum of the (Stock of the Week) newsletter. Are we going to start cashing in on these, or do you think that the market will go higher? It would hurt me to give up a nice winner.

Chris: I do think the market will go higher between now and the end of the year. The next 2-3 months? Maybe not. If you’re nervous about a pullback eroding gains in some of our bigger winners (XPOF, ULTA, NVO, etc.), then it might make sense to take partial profits by selling a quarter, a third or so of your position – in fact, I advised doing just that with XPOF (last) week now that we’re up more than 80% on it. However, I do not plan on selling completely out of any of our biggest winners – I like letting winners ride too, even if there may be some short-term pain ahead.