Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo discusses a couple of modest positives he saw in the market this week, though overall, nothing much has changed -- we’re still in a correction, and while the odds favor the next major move being up, it’s best to be patient and wait for the selling pressure to cease. Mike reviews a ton of potential “resumption buy” patterns should things turn up, but his advice is to be both cautious and flexible as the market works its way through the downturn.
Stocks Discussed: APO, VMC, MNDY, IOT, ACLS, RCL, DASH, NOW, TOL, VRT, BOOT, FRPT, FRSH, NVO, LLY
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad give an instant reaction to Jerome Powell’s Jackson Hole speech, discuss Nvidia’s (NVDA) blowout earnings quarter and what it means for AI stocks, and break down Better’s (BETR) catastrophic take-public results. Then, they welcome Cabot Money Club’s Nancy Zambell to discuss investor sentiment, the state of the housing market and whether you should buy housing stocks with mortgage rates at 20-year highs.
FREE WEBINAR: Thursday, August 17 at 2:00 PM ET
Quarterly Cabot Analyst Meeting
The recording of the Cabot Prime Members Meeting with the Analysts from April 26, 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 Augustly 24: In the last issue, we wrote that the market was definitely down but not out, and since that time, we’ve seen the market sink further—from top to bottom, the Nasdaq fell about 9% while the S&P 500 was off nearly 6%, with interest rates perking up near (or in some cases, out to) new multi-year highs. But it wasn’t out, as this week things have generally snapped back nicely, led by the tech stocks that were the hardest hit during the past month. Let’s hop right into a few thoughts we have.
First, we’re not obsessed with precedent analysis, but so far this pullback is playing out fairly closely like the ones in 2003 and 2009, each of which pulled back 8% over about a month and then marched higher. It’s a similar story with our Aggression Indexes, too, with the relative strength of the Nasdaq (and equal-weight Nasdaq 100, which we showed in the last issue) compared to consumer staples hanging in there very nicely.
Bi-weekly Update August 17: WHAT TO DO NOW: Remain cautious. The selling is spreading out now, so much so that our Cabot Tides have flipped to a sell signal as the number of new lows picks up. The odds still favor this being a correction, not a massive new downtrend, but most stocks (and especially growth stocks) remain under the gun. Tonight, we’re forced to sell our small remaining position in Shift4 (FOUR), which we gave every chance to hold up but has decisive broken down. We’ll also place ProShares S&P 500 Fund (SSO) on Hold given the Tides signal, though we’re holding onto what we own. All told, our cash position will be around 55%.
Cabot Top Ten Trader
Weekly Issue August 14: The market’s nascent downturn remains in effect, with the short-term trend of most indexes and sectors pointed down and with growth stocks bringing up the rear (though today was a good first step to reverse that). Even so, the pullback from a top-down perspective continues to look normal, so we’re not hiding in our storm cellar, either—we’re hanging onto our resilient, profitable stocks while nibbling here or there on high-odds opportunities. We’ll leave our Market Monitor at a level 6 today.
One of the more encouraging things of the past three weeks is that we’re not having trouble finding good-potential names with solid charts, and this week’s list is no different. Our Top Pick is a great growth story and now, after a couple of bad years, all of the firm’s metrics are pointed in the right direction.
Movers & Shakers August 25: It’s been a fairly wild week, which isn’t a surprise given the recent volatility, Nvidia’s earnings and this morning’s Jackson Hole Fed speech—as we write this morning (about 45 minutes after the Fed speech was released), most indexes are flat to down by 1% on the week, though the Nasdaq is up a bit more than 1%.
Cabot Options Trader and Cabot Options Trader Pro
Cabot Value Investor
Monthly Issue August 1: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the August 2023 issue.
The surge in the stock market this year reminds us of 1987. Also similar to 1987 is the sharp increase in interest rates from unusually low levels.
Several of our companies reported strong earnings this past week and are approaching their price targets.
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.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Weekly Update August 22: Comments on earnings from Cisco Systems (CSCO) and Aviva plc (AVVIY). Stock market is starting to get really interesting now.
Cabot Stock of the Week
Weekly Issue August 22: Dog days of August, indeed! The market’s late-summer swoon continues, but that doesn’t mean the bull market party is already over; the power simply went out and we’re waiting for the generators to bring it surging back to life. In the meantime, opportunities to buy good companies at discounted prices abound. With that in mind, today we add a former market darling that fell on very hard times in 2021 and 2022 but is having a solid 2023, with even better growth likely to return in 2024 as the Fed is poised to (likely) cut sky-high interest rates next year. It’s a new addition from Cabot Early Opportunities Chief Analyst Tyler Laundon.
Bi-weekly Issue August 24: Warren Buffett became the world’s most famous investor in part by investing in companies with strong economic “moats.” Today, we add a well-known company that fits that description. We also say goodbye to two stocks to make room for more reliable opportunities as the market teeters.
Bi-weekly Update August 17: Beginning on a positive note, I’d like to remind you of the power of compounding returns when you stay in the stock market over time. For example, $100 invested in three-month Treasury bills in 1928 grew to only $2,141 by the end of last year while it became $46,379 invested in medium-grade corporate bonds and a stunning $624,534 if invested in a broad basket of stocks, according to data from New York University finance professor Aswath Damodaran.
Cabot Small-Cap Confidential
Monthly Issue August 3: This month we’re digging into an emerging software star that specializes in helping brands communicate with consumers like you and me.
The details behind the technology are a bit technical. But if you’ve noticed an uptick in personalized emails and text messages letting you know it’s a good night to get takeout, or that those shoes you’ve been pining for are back in stock, you get the picture. Enjoy!
Weekly Update August 24: After three rough weeks in August, small caps have finally begun to stabilize around their 200-day moving average line.
I’d like to say blame for the weak performance rests fully on the shoulders of small-cap financials due to rising yields, commercial real estate mortgage default risk, etc.
But the truth is most sectors have been weak. Small-cap health care looks downright awful, with the Invesco S&P Small Cap Healthcare ETF (PSCH) hitting a new low for the year late last week.
Cabot Dividend Investor
Monthly Issue August 9: The market looks great right now. Inflation is falling fast, the Fed is just about done hiking rates, and there is no recession in sight. It looks like we will get through the steepest rate-hike cycle in decades without much economic pain.
But nothing is certain. Inflation could rise again. The Fed may keep rates high for longer than the market expects. The economy may turn south in the quarters ahead. There could be more trouble with bank failures or the war in Ukraine. S&P earnings have been contracting for three straight quarters.
We’ll see if the market can add to the 30% rally from the low, or if it turns south again. A reasonable argument can be made for either scenario. Instead of trying to guess the possible short-term gyrations, let’s look to investments that should be longer-term winners no matter what.
In this issue, I highlight a stock that diversifies the portfolio into the consumer space. The company operates in an incredible niche market that has provided earnings growth for 31 consecutive years and enabled the stock to outperform the market in every measurable period over the last 15 years. The company is positioned for strong growth in the years ahead and the stock has a long track record of delivering stellar returns in all kinds of markets.
Weekly Update August 23: After a fabulous first seven months of 2023, stocks are pulling back so far in August. What can we expect from here?
A pullback or consolidation in the market at this point is normal and even healthy. And that’s what this will have been if the market gets back on track. There are also two potential catalysts to reignite the rally this week: Nvidia (NVDA) earnings and Jackson Hole.
Cabot Early Opportunities
Monthly Issue August 16: In the August Issue of Cabot Early Opportunities, we talk about what happened to the summer stock rally and dig into five companies selling everything from coffee to sporting goods to mobile advertising tools.
Cabot Profit Booster
Weekly Issue August 22: This week could be interesting as the long-awaited Fed Chairman speech at Jackson Hole could potentially set the stage for more market volatility.
Cabot Income Advisor
Monthly Issue August 22: This market has confounded a lot of people over the past few years. Individual market sectors have been as perplexing as the indexes. Last year, the worst performing market sector by far was technology. This year it is by far the best performing sector. Last year, energy was the best performing sector. In the first half of this year, it was the worst performing.
Other sectors like consumer discretionary stocks that had been among the worst sectors last year are among the best this year. Defensive sectors including health care and utilities that delivered stellar returns last year have been dogs this year. In fact, the utility sector has displaced energy as this year’s worst performing S&P 500 sector.
The last few years have also illustrated a tendency for downtrodden stock sectors to rise from the canvas and become among the market’s best performers. Many utility stocks are currently near multi-year lows. But not because of the operational performance of the companies, which has largely remained solid. It’s mostly because of high interest rates, which may be peaking, and the mood of investors so far this year, which always changes.
Utilities are dirt cheap in an expensive market. They are also stellar relative performers in a slowing economy. But they are likely to rise from the current dark depths even if the economy remains buoyant. In this issue, I highlight one of the best performing utility stocks over the past 10 years that is currently selling near a multi-year low in a changing market.
Buying great stocks cheap is never a bad strategy over time.
I also highlight a fantastic covered call opportunity in a stock that has been on fire over the past couple of months. It’s a great chance to keep the income rolling in.
Weekly Update August 15: Earnings season is about over. And the end of the summer is upon us.
This is a weird time of year for the market. Investors tend to pay less attention because many of them are focused on trying to squeeze in the last bit of summer fun and laxness before it slips away. The market tends to do whatever it was doing before people stopped paying attention.
It was going sideways, and that is what it will likely continue to do for the next several weeks. Of course, a major headline could certainly change that. But most often these waning days of summer tend to be less eventful.
Cabot Turnaround Letter
Monthly Issue July 26: Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the August 2023 issue.
In this letter, we include our Mid-Year 2023 updates for our stock market and high yield bond market outlooks. After being totally wrong with our stock market outlook for 2023, what do we see for the rest of the year, and why? We were nearly spot-on with our high yield bond market outlook. How does this market look to us now?
Our feature recommendation this month is Kopin Corporation (KOPN), an obscure optical display company that previously was run like a hobby by a brilliant scientist. Its primary output was a chronic stream of operating losses and share offerings that heavily diluted its investors. Now, under completely new leadership, the company is being run like a for-profit commercial enterprise with a vast market opportunity ahead.
Weekly Update August 25: Comments on earnings from Macy’s (M) and Kohl’s (KSS). Suspending our rating on shares of Kopin Corporation (KOPN). Brief updates on Capital One Financial (COF) and Kaman Corporation (KAMN).
Cabot Cannabis Investor
Monthly Issue July 26: Politicians in Washington, D.C. let cannabis investors down once again.
Commentary from lobbyists and Senators had suggested the Senate banking committee might make progress on cannabis sector banking reform (allowing banks to work with companies) in late July.
That turned out not to be the case. I cautioned at the time that a risk here is that the actions politicians are hard to predict. But it was worth having exposure, in case there actually was progress on so-called SAFE banking, which seemed possible at the time.
Monthly Update August 9: At least four states posted record cannabis sales in June and July, Illinois, Maryland, Massachusetts and Missouri.
These sales trends and ongoing legalization around the world are why global cannabis sales will hit $104 billion a year by 2030, says a recent report from Vantage Market Research. That would represent an annual growth of 26% a year from 2023 to 2030.
Despite these positive trends, cannabis stocks are being held back by delays in reform efforts in Washington, D.C.
Cabot Money Club
Monthly Magazine August: Remote work has disrupted the employment landscape and appears to be here to stay; it’s also reshaped real estate as more and more workers are now untethered from the office. This month, let’s dive into how to take advantage of better affordability by relocating, moving for your lifestyle and not your employer, and what states will actually pay you to relocate.
Stock of the Month August 10: Job openings are steady, as is manufacturing. However, employment continues to improve, rising to 324,000, considerably better than the 175,000 forecast, dropping the unemployment rate for July to 3.5%.
The housing market continues to be challenging, especially resales—due to a lack of inventory and higher interest rates. However, the builders are having a banner year, and with supply issues being resolved, the time to build a new home is declining, helping to further boost the industry.
Zillow just released its quarterly survey, reporting that “23% of homeowners are already selling or considering selling over the next three years, the highest percentage since at least the beginning of 2021.” Consequently, that lifts the hope of the resale market.
Ask the Experts
Prime Question for Chris: Chris, I’ve learned from watching your (Stock of the Week) portfolio and investing in it that the large-cap growth positions work the best, and (to) not try to go for a home run as it (has) backfired badly. The growth positions from the portfolio have underperformed the market badly and especially the Nasdaq. ... This same market (in which) the non-large caps have struggled was also in 2021. It doesn’t look to me that it has changed. Would like to hear your thoughts.
Chris: Yes, I think it’s fair to say that large-cap growth stocks have outperformed small/mid-cap growth this year – that’s evidenced by the fact that the small-cap index (Russell 2000) is only up 5.5% year to date. That’s also been true in our portfolio – our best performers this year have all been large caps (MSFT, TSLA, CMCSA, UBER, LLY, though that one’s not a growth stock). However, because I draw from seven different Cabot advisories, I can’t just recommend large-cap growth – there simply aren’t enough stocks in those portfolios to recommend a new one every week.
My goal is to have a reasonably well-rounded portfolio, with some value, dividends, international stocks and, yes, a few smaller-cap growth plays looking for home runs. Those haven’t worked out of late. But perhaps that will change as the bull market matures.