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CABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo talks about the market’s interest rate-related wobbles this week, but he’s not changing his tune--while he remains flexible, all of the primary evidence remains encouraging, with the odds continuing to favor this choppy period being a normal rest phase before the next leg up. Moreover, he’s seeing a lot more names approach attractive entry points in a variety of sectors, as he runs through a ton of names to consider.
Stocks Discussed: HUBS, CFLT, NOW, NFLX, APO, ACLS, ADBE, MDB, MTZ, SHOP, DDOG, CELH, PLAY, BILL, NE
Cabot Street Check (Podcast)
This week, with Chris on vacation, Brad is joined by Tyler Laundon of Cabot Early Opportunities and Cabot Small-Cap Confidential to discuss the current state of the market. Then, Brad and Tyler explore investing in companies benefiting from major trends (like artificial intelligence), separating the signal from the noise, and how an analyst identifies co-beneficiaries or “picks and shovels” that are likely to ride the trend’s coattails. To register for Tyler’s upcoming webinar, “3 Little-Known Stocks to Take Advantage of the AI Boom,” click here.
Cabot Webinar
3 Little-Known Stocks to Take Advantage of the AI Boom
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 29: It’s not a perfect picture, but the vast majority of evidence out there remains bullish, and that’s especially true for the vital leading index (Nasdaq) and leading growth stocks, which have rested normally after beefy, big-volume advances. We’re putting a bit more money to work today by averaging up in a current name, and will ideally put more to work when either (a) a couple of our current holdings overcome resistance (to average up), and/or (b) when some names on our watch list consolidate a bit longer.
In tonight’s issue, we talk about some of the confusion we’re hearing out there about sentiment (not a worry at all in our book), talk about one non-growth sector that reminds us a lot of oil stocks a couple of years ago (before that big run) and go in-depth on some new ideas and, of course, all our holdings.
Bi-weekly Update July 7: WHAT TO DO NOW: Remain optimistic but keep an open mind. At this point, our market timing indicators remain bullish and we’re seeing little abnormal action among leading stocks—that said, the Fed/interest rate situation refuses to go away, and near term, some more shaking of the tree is certainly possible to raise the fear level. Tonight, we have no new buys or sells, but we’ll place Inspire Medical (INSP) and Monday.com (MNDY) on Hold and see how things progress. Our cash position will remain in the 30% range.
Cabot Top Ten Trader
Weekly Issue July 3: Overall, the market’s action remains as close to pristine as you could hope for. Under the hood, there has been a touch of rotation, with some growth stocks chopping around while cyclical, construction and materials names perk up. All in all, we wouldn’t be surprised if growth continued to catch its breath, as the recent pullback was very brief, but that’s short-term nitpicking: While dips and potholes will come, the bottom line is that the vast majority of evidence is bullish, so you should be, too. We’ll bump our Market Monitor up to a level 8, and think adding exposure (ideally on dips) makes sense.
This week’s list reflects the broadening we’re seeing out there, with a few tech names but many others from other corners of the market. Our Top Pick is a long-term winner in the aerospace and defense field whose stock just broke out.
Movers & Shakers July 7: Despite the holiday trading action on Monday and no trading on Tuesday, things have been a bit dicey this week, with the major indexes (especially the broader indexes) down as the market’s old bugaboo—interest rates—spike toward new multi-year highs. Moreover, this week, we saw some leading stocks take hits as well, as some of the laggard areas of the market (like financial stocks) took the selling in stride.
Cabot Options Trader and Cabot Options Trader Pro
Cabot Options Trader Pro Weekly Update
Cabot Options Trader Weekly Update
Cabot Value Investor
Monthly Issue July 5: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the July 2023 issue.
Almost like an annual rite of passage, major banks reported their Federal Reserve stress test results last week. All major banks passed, in that their capital levels were in excess of the minimum requirements under the Doomsday Scenario conditions outlined in the test assumptions. We’re not the biggest fans of these tests, for reasons outlined in our monthly letter.
Citigroup remains a riskier bank relative to other majors, but also has a higher return-potential share valuation, plus a 4.5% dividend yield to reward patient investors.
Weekly Update July 6: The S&P 500 delivered an impressive 16% return in the first half. Can the good times continue in the second half?
A big part of the latest surge higher has been the artificial intelligence (AI) excitement. After Nvidia (NVDA) blew away expectations citing far greater demand for AI technology, the market-leading tech sector caught fire. But returns were impressive even before then as the market is sensing a soft landing.
Cabot Stock of the Week
Weekly Issue July 5: I hope everyone had a wonderful Fourth of July! On Wall Street, the celebration continues, as stocks have stretched to new 2023 highs as we enter the second half of the year. Several of our stocks are hitting new 52-week or even all-time highs, as the bull market is no longer just a mega-cap tech or AI stocks phenomenon, with many sectors and subsectors now along for the ride. So today, we add a cyclical stock that has been acting like a growth stock – so much so that it caught the attention of Mike Cintolo, who recommended it to his Cabot Top Ten Trader readers.
Cabot Explorer
Bi-weekly Issue June 29: Fed Chairman Jerome Powell’s continued warnings of future rate hikes weighed on markets as did the Biden Administration’s suggestion that there should be new restrictions on selling advanced chips to China. Despite this, chip stocks such as Nvidia (NDVA) and the PHLX Semiconductor index were down by less than 1%.
Artificial intelligence (AI) calculations largely take place in data centers full of servers with graphics processing units (GPU)s from Nvidia and its competitors. It is estimated that 20% to 25% of the company’s revenue from Nvidia’s AI chips have been coming from China. To avoid further upsetting Beijing, no action is expected until after Treasury Secretary Janet Yellen’s visit to China in July. Washington is also preparing legislation to screen China-bound investments by U.S. companies. AI, quantum computing, biotechnology and large-capacity batteries are at the top of the list.
Bi-weekly Update July 6: This is a short week as we begin the second half of 2023 with inflation down, recession fears fading, and the animal spirits of investors alive and well.
In the first half of 2023, market performance was positive and narrow, largely driven by the big tech names, and especially artificial intelligence (AI) related stocks. The Dow was up 3.8%, the S&P 500 gained 15.9%, and the tech heavy Nasdaq was up 31.7%. We will continue to explore the world for the best value and growth stocks providing both conservative and aggressive ideas. EVs across the supply chain, resources, and emerging markets remain the focus but we have the flexibility to change course as opportunities arise
Cabot Small-Cap Confidential
Monthly Issue July 6: This month we’re digging into a recovering healthcare specialist that is both a self-help and an AI automation story.
After a few missteps in 2022, a significant acquisition and a new management team have the stock on the right track again.
Moreover, high healthcare utilization and a rapid acceleration in the company’s automation capabilities suggest strong revenue and profit margin growth throughout 2023 and into 2024. Enjoy!
Weekly Update June 29: Small caps put together a decent week as the iShares Core S&P 600 Small Cap ETF is up 3.6% from last Thursday’s close.
Digging a little deeper, we’ve seen a lot of strength in small-cap industrials and tech plus some stability in small-cap financials and energy.
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 28: Things are looking up. Inflation is falling. The Fed is almost done hiking. And there is no recession to be found.
The market has surprised just about everybody in the first half of the year. The S&P had risen 13% as of days before midyear and over 24% from the October low. This new bull market is not what was expected.
After an abysmal 2022, most pundits were expecting more ugliness in the first half of this year and a recovery somewhere in the second half. But investors sensed that we could get through this Fed rate hiking cycle with minimal pain. Then artificial intelligence (AI) gave stocks a further boost.
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 21: The good times for the bulls continued as the S&P 500 rose for a fifth consecutive week, its longest such streak since November 2021, and it was also the best week for the S&P 500 since March.
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 July 6: Hope you had a wonderful 4th of July!
The weather was less than ideal (raining all day in Wellesley, MA, where I live) but we made the most of it and had friends over for some hot dogs and hamburgers.
This has been the rainiest start to the summer in a long time. Fingers crossed better weather awaits us in the second half of July and August.
Cabot Income Advisor
Monthly Issue June 27: Few stocks have participated in the YTD rally. In fact, just ten large-cap technology stocks accounted for just about all the market gains this year. The market has so far shunned defense and favored growth. But that situation is unlikely to persist.
There is still lots of risk. Inflation could be stickier, and the Fed could be more hawkish than currently anticipated. 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.
I highlight a new buy-recommended stock in the issue. It is a legendary income stock that pays dividends on a monthly basis. It’s also near the lowest price level of the past two years.
Weekly Update July 5: 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 July 7: This was a quiet week for our stocks. Earnings season starts next Friday, with Wells Fargo (WFC) reporting, followed by Nokia (NOK) and First Horizon (FHN) the next week. Based on the preliminary calendar, the earnings deluge starts on Tuesday, July 27.
Cabot Cannabis Investor
Monthly Issue June 28: There is a potentially nice trading opportunity setting up in cannabis near-term.
When Washington, D.C. lawmakers return from their July 4th break on July 10, they are likely to get down to serious business on the SAFE Banking Act.
This proposed law would boost investor interest in the space because it would allow banks to work with cannabis companies. This would help cannabis companies in several ways.
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 July: With airline and cruise bookings eclipsing pre-pandemic levels, it appears that vacationers’ pent-up travel demands are finally being unleashed in this “revenge travel” summer. Here’s how you can save money as you tick a few items off your own travel bucket list and profit from the most in-demand travel companies.
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, Thought I’d get a second opinion on Salesforce.com(CRM). I own a tiny position and thinking of adding a bit more based on the chart configuration. Fundamentals are decent. Thoughts?
Mike: Good question. Yeah, I can’t argue with it, except to say (to nitpick) that the 220 area (the high before the recent earnings gap down) does seem to be a bit of resistance, so keep that in mind. But overall, yes, it’s settled down a bit and here and the 50-day is approaching – I think a good risk-reward, but if it really dives below 200, that would change things.