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Cabot Prime Plus Week Ending September 6, 2024

Latest Summary

CABOT EVENTS

Cabot Weekly Review (Video)

In this week’s video, Mike Cintolo talks about the sharp selling this week--while the long-term looks fine, the Nasdaq is already close to a re-test of its August closing lows and many old leaders (especially chip stocks) look sick. What does it mean? Mike rules nothing out, including a quick re-test (the timing of it for the Nasdaq looks right) that leads to a rebound, but with the breakouts he was hoping for running into trouble, he’s in a cautious stance, preserving capital for the next sustained upmove.

Stocks Discussed: ARGX, NTRA, GWRE, IOT, CWAN, DASH, PLTR, HALO, RKT, DHI

Cabot Street Check (Podcast)

This week on Street Check, Chris and Brad make a friendly wager on the upcoming Bills-Cardinals game and Brad makes the case that the utility stock trade is already showing signs of crowding. Then, they discuss widespread selling in September after Wall Street returned from summer vacation with a hangover, whether the jobs numbers are as disappointing as the market is making them seem, and why homebuilders are some of the first beneficiaries of the upcoming Fed rate cuts. In the main segment, they highlight four sectors that they’re most bullish on and the two sectors to avoid for the rest of the year.

Cabot Webinar

Boost Your Profits: 4 Experts & Their Top Picks for Fall 2024

Join seasoned Cabot analysts Mike Cintolo, Tyler Laundon, Tom Hutchinson, and Nancy Zambell as they share their wealth of wisdom.

Register Here

Quarterly Cabot Analyst Meeting

The recording of the Cabot Prime Members Meeting with the Analysts 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 September 5: To say it’s been a hectic past few months would be an understatement—following a beautiful advance from November of last year into March, the market has seen a sharp correction in the spring, an extremely narrow rally into July, a mini-crash into early August and then, of course, a steep comeback where many indexes recouped most or all of their losses.

Bi-weekly Update August 29: WHAT TO DO NOW: We think the strong action from the mini-panic low in early August is a good sign the next big move is up—but the timing of that move is less certain, possibly getting going soon, but it could also take more time to set up. Our market timing indicators are improving, and so we’ll do a little more buying tonight, but we’re OK going slow here to see how the rally progresses from here. In the Model Portfolio, we’re adding a half-sized stake in Shift4 Payments (FOUR) and putting On Holding (ONON) back on Buy—though we’re also holding on to a cash position of around 32% and want to see further upside soon before putting more cash to work.

Cabot Top Ten Trader

Weekly Issue September 3: Last week had a few potential potholes for the market’s nascent rally, including some influential big-cap earnings releases and an inflation report before the long weekend—but despite some selling that popped up here and there, the market and fresh leaders handled themselves well. Stepping back, we’re definitely encouraged by the market’s snapback and the numerous upside moves in individual, growth-oriented stocks during the past month; we think the odds favor the next major, sustained move is up. That said, a lot of stocks have set up (but not broken out), old leaders (chip names in particular) look suspect and it’s a fact that defensive areas continue to ramp higher, which is a sign that big investors are hunting for some safety. Again, we’re encouraged overall, but continue to think going slow makes sense, especially now that some selling pressures are beginning to emerge, stickign with mostly small positions and keeping some cash on the sideline. We’ll keep our Market Monitor at a level 6 today.

This week’s list is a bit of a hodgepodge, with some recent earnings winners, some fresh names and a few stodgier types. Our Top Pick is Rocket Cos. (RKT), which is basically a cyclical (mortgage lending) company that should be lean and mean after the multi-year dry period—meaning its earnings power should be big as rates head lower.

Movers & Shakers September 6: In last week’s update we reviewed the market’s good and bad, and we wrote that “we think the odds strongly favor the next big move being up. But, near-term, there’s still a decent chance that growth and other Top Ten-type names could see more backsliding (or bottom building, if you prefer) before breaking out.” Our Market Monitor has crept up of late but is still at a level 6 (out of 10).

Cabot Value Investor

Monthly Issue September 5: The Fed is on the precipice of cutting interest rates for the first time in years; when that happens, homebuilder stocks tend to benefit first. But that’s not the only reason to be bullish on the sector. Homebuilders have changed the way they do business in recent years to become more like car makers, only with greater upside and higher internal rates of return. With both those short- and long-term winds at their sails, homebuilder stocks are a good – and still undervalued – bet. And today, we add a big name in the space that has the best combination of growth and value.

Enjoy!

Weekly Update August 29: It is a late-summer/early-fall rite of passage on Wall Street: After Labor Day, the institutional investors and hedge fund types return from their summer vacation homes in the Hamptons and immediately start selling. They sell out of their weakest positions that have been neglected and left to rot during the summer months, in the hopes of beefing up their quarterly returns before October brings a new quarter. The result is that September is, far and away, the worst month for stocks, with an average decline of -1.17% in the S&P 500 dating all the way back to 1928. The next-worst month is February, with a mere -0.14% decline.

That’s the bad news as we enter September. Here’s the good news.

Cabot Stock of the Week

Weekly Issue September 3: September selling is already underway. Just remember that it’s almost always temporary. The S&P 500 has been down at least 4% after Labor Day in each of the last four years, with a bottom coming sometime in October. All four times, it has eclipsed pre-Labor Day levels by the third week of November. Thankfully, our portfolio enters September in very good shape, with 12 stocks up double-digit percentages and four others up by at least triple digits. To help weather another potential September storm, today we add a “safer” dividend stock recently recommended by Chief Analyst Tom Hutchinson to his Cabot Dividend Investor audience.

Details inside.

Cabot Explorer

Bi-weekly Issue August 29: While there are a lot of healthy signs of growth out there, stocks that do not meet high expectations are being punished.

Super Micro Computer (SMCI) was off 29% this past week after some allegations of faulty accounting by short sellers was followed by the company reporting yesterday that it was postponing filing of its annual report with the SEC to assess “internal controls over financial reporting.”

Given the uncertainty, we have little choice but to sell the stock. We took some profits earlier this year, and the stock is still up 43% so far this year. My guess is that we will be back to Super Micro at some point, and I will watch this stock carefully.

Bi-weekly Update September 5: This was a rather tough week for stocks though the financial media always goes overboard calling a 2% drop in the Nasdaq index a “plummet.”

For many analysts, copper prices have long been considered a better leading indicator regarding the health of the global economy. Bloomberg reports that Goldman Sachs has exited a long-term bullish position on copper while slashing its price forecast for 2025 by almost $5,000 a ton. The bank has been one of the biggest supporters of the industrial strategic metal, but the increasingly weak Chinese economy has crimped demand, plus excess inventories overhang supply resulting in copper prices being down almost 20% since May.

Cabot Small-Cap Confidential

Monthly Issue September 5: Everybody is talking about the potential of generative AI. But a lot of organizations haven’t yet organized their digital data in such a way that they can leverage it for AI, let alone protect it once AI applications gain access.

Today we’re jumping into a steady-growth software company that helps solve this problem.

Weekly Update August 29: The S&P 600 Small Cap ETF (IJR) closed out last week on a high note as the index rallied 3.4% on Friday following comments from Fed Chair Jerome Powell in Jackson Hole that confirmed what investors were expecting, that an interest rate cut in September is likely.

Small caps have chopped around this week, inching a little lower but not making any dramatic moves.

The market is now pricing in a roughly 35% probability of a 50-bp rate cut next month, and just over 100 bp of easing by the end of this year.

Cabot Dividend Investor

Monthly Issue August 14: The explosive growth of artificial intelligence, electric cars, and manufacturing is causing an explosion in the demand for electricity in this country.

After nearly two decades of stagnant growth, electricity demand is expected to soar in the years ahead. This year alone, electricity demand is growing 81% more than it did last year. Electricity demand is expected to grow at nearly twice the past rate for the rest of this decade.

The new demand transforms certain previously stodgy and boring utility stocks into growth investments.

In this issue I highlight one of the very best and fastest-growing electricity producers in the country. This company is in an ideal position to benefit from the increasing electricity demand from data centers and other sources. AI may be the cutting edge of technological innovation. But it doesn’t work without electricity. While most investors are running around chasing the same AI stocks, we can reap the rewards of the tremendous new opportunity from Thomas Edison’s invention.

Weekly Update September 4: It’s the post-Labor Day market. Investors tend to start paying attention again after the summer. This refocus prompted one of the worst selloffs this year.

Investors were positive about things in the middle of August before they went on vacation and stopped paying attention. The market rode out the rest of the month in the same form. But investors coming back to real life after the summer realized that there might be more to worry about.

Cabot Early Opportunities

Monthly Issue July 17: In the July Issue of Cabot Early Opportunities, we continue to lean into the strong market and focus our attention on the small end of the market cap curve.

We have small and mid-cap players in the software, semiconductor, green energy, industrial tech and AdTech spheres, each of which has compelling reasons propelling shares higher.

Cabot Profit Booster

Weekly Issue September 4: Ahead of the long weekend, and the unofficial end of summer for the trading community, it was a mostly quiet and mixed week as the S&P 500 was unchanged, the Dow gained 0.9%, and the Nasdaq fell 0.7%. Though that quickly changed Tuesday when the market got hit hard.

Cabot Income Advisor

Monthly Issue 27: New technology is driving huge demand growth in old technology. The growth of artificial intelligence, electric vehicles, and semiconductor manufacturing will generate huge growth in electricity.

After being stagnant for most of the last two decades, electricity demand is soaring. Most of the increasing electricity demand (from data centers, EVs, and chip manufacturing) is coming from climate-conscious technology companies that will likely try to secure carbon-friendly power sources whenever possible.

Companies that can provide low-carbon electricity generation should be the primary beneficiaries of this increasing electricity demand. Opportunity is being created for certain companies that also tend to be very recession-resistant at a time when the economy is slowing.

But there is one utility that stands above all others in terms of the current opportunity. And it is highlighted in this month’s issue.

Weekly Update September 4: Welcome to the post-Labor Day market. A sobered-up investor can be an ornery investor.

Stocks kicked off the first trading day after Labor Day on a decidedly negative note. The August manufacturing number was still somewhat weak, but all eyes are on the August jobs number that comes out Friday. It was the weak July jobs number that prompted recession fears and the market selloff in early August. Another bad number could reignite recession worries that had faded in the second part of August.

Cabot Turnaround Letter

Monthly Issue August 28: After the tumultuous sell-off in the broad equity market last month, the S&P 500 Index is back to within a few points of its all-time high as of this writing in what has been one of the fastest comebacks in recent memory.

Weekly Update September 6: In today’s note, we discuss the recent news developments concerning Nokia (NOK), Tyson Foods (TSN), Baxter International (BAX), Gannett (GCI), and Alibaba Holdings (BABA). We also discuss the latest nationwide headline development that could have a material impact on AMMO Inc. (POWW).

Cabot Cannabis Investor

Monthly Issue July 31: Cannabis is a highly politicized sector because it is extensively regulated.

The political news has been very good for cannabis. But cannabis investors have been slow to recognize this.

A late-July Fox News poll showed that Vice President Kamila Harris has caught up to and surpassed Donald Trump in five key swing states.

Cannabis stocks should have advanced on the news. Not only is Harris a better cannabis advocate than President Joe Biden, she’d obviously be more favorable to the sector than Trump.

Monthly Update August 14: The cannabis sector has a dream ticket with Kamala Harris and Tim Walz. Investors act like they haven’t even noticed. This seems like a big mistake.

The key takeaway: Cannabis stocks look buyable in the current bout of dramatic sector weakness. Cannabis investors are notoriously bipolar. Right now, they are in a dark mood. That’s usually been the best time to add to positions, especially when there are potential catalysts on the horizon like now. In today’s update, I outline the main ones and the possible timing.

Cabot Money Club

Monthly Magazine September: Despite emphasis on closing the gender wealth gap, women in (and approaching) retirement still face significant challenges. Not only do women live longer than men and thus need to stretch their retirement dollars further, they also have, on average, half the retirement savings and can expect to receive a smaller amount from Social Security. This month, we’ll tackle strategies that everyone can use to build a bigger nest egg, cut down on expenses, and achieve their retirement goals.

Stock of the Month August 8: I have to admit, a couple of weeks ago, on our Cabot Street Check podcast, Chris Preston, host and Chief Analyst for Cabot Value Investor, and I discussed the possibility of a recession and I commented that I thought recession fears were mostly over.

Well, I’m going to reconsider that (a bit) after Monday’s 1,000+ point loss in the Dow. Last week’s jobs reports came in at 114,000 jobs—considerably less than the 185,000 expected—spooking the markets and causing economic gurus to once again bring up the possibility of the dreaded “R” word. Additionally, the unemployment rate edged up to 4.3% and manufacturing and construction spending were also less than expected, furthering economic worries.

Ask the Experts

Prime Question for Mike: Mike, do you want a specific volume to occur when buying on breakouts? Like 100%, 200%, 300% more than the 50-day average?

Mike: I don’t have specific metrics, but yes, if we’re buying a breakout I want volume to be very heavy, at least 50% but preferably 100%, 300% or more, and just as important is whether the daily and weekly volume was the largest in a while (a year or more is best, excluding weird days or weeks when there is index rebalancing etc.). Usually the volume takes care of itself as our breakout buys are often (not always) on earnings or some decisive move.