Cabot Weekly Review (Video)
In this week’s video, Tyler Laundon talks about how the market has held up and even inched higher through the debt ceiling debate and surprisingly strong jobs data reports. He covers market expectations for the next FOMC meeting - and for the rest of the year - then takes a look at a few late-season earnings reports and discusses prospects for those stocks. Tyler wraps things up with a quick look at small cap sector ETFs and suggests that for the market to stay strong we’ll need to see participation from a wider group of stocks into and through the June 14 FOMC meeting.
Stocks Discussed: CRWD, AI, CHWY, IOT, SNOW, PSCD, PSCC, PSCE, PSCF, PSCI, PSCT, MSFT, AAPL, TEX, CAT, BA
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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 1: The market still has many of the same issues that have been hanging around for weeks, including an extreme narrowness, with the vast majority of the market struggling while mega-cap indexes do pretty well. Even so, we do think the evidence has taken a step in the right direction -- the AI boomlet is a positive sign, and many non-AI leaders acted well in May and have rested normally since. We’re not flooring the accelerator, but given our monstrous cash position, we’re dropping a couple more lines in the water tonight, adding two half-sized stakes in old favorites. Elsewhere in tonight’s issue, we give our thoughts (and some ideas) within the AI advance, write about a long-term growth area that could be re-emerging and, as always, go over our stocks, an expanded watch list and some other new ideas to chew on.
Bi-weekly Update May 25: Remain cautious but stay tuned. The market remains very narrow, with a few powerful stocks but the vast, vast majority of names either in no man’s land or acting poorly. For potential leaders, we see many that had been perking up before running into a wall this week—but not (yet) selling off abnormally. If these names can hold soon and resume their upmoves, we’ll like to add at least a couple (maybe more) to the Model Portfolio. Tonight, though, given the extreme narrowness of the advance, we’ll grit our teeth and sit tight, holding about three-quarters in cash and see if these potential leaders can get moving.
Cabot Top Ten Trader
Weekly Issue May 30: For the first time in a while we started to see big investors floor the accelerator last week, with some names really letting loose on the upside. Moreover, even the “non-AI” nascent leaders that perked up earlier in May are acting fine, with most digesting gains in normal fashion. All of that is to the good—though the top-down flaws that we’ve written about are all still out there, too, with relatively few stocks hitting new highs, a good number of blowups each week and most areas of the market still struggling. Right now, we’re keeping our Market Monitor at a level 5, but we’re watching things closely—if more leaders emerge, it would certainly add to the bullish side of the ledger.
This week’s list has a bunch of solid growth and earnings-related plays from a variety of industries. Our Top Pick is practically a blue chip name from the software field that’s emerging from a solid launching pad.
Movers & Shakers June 2: The trends that have been in place continued early this week, though as we look at things this morning the picture is improving somewhat. The Nasdaq and S&P 500 are still in the lead, up about 1.5% as we write this, though after being down most of the week, even the broader indexes are back in the black.
From a top-down perspective, let’s call it a baby step in the right direction—we’ve seen a slight broadening of the advance (more new highs, etc.), but things are definitely still narrow overall, with most areas of the market not just south of their highs but stuck in the mud and below key moving averages.
Cabot Options Trader and Cabot Options Trader Pro
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 May 30: Longer-term subscribers are no doubt familiar with our immense patience with beleaguered discount retailer Big Lots (BIG). Its shares initially sagged due to bloated inventory, similar to other more highly regarded retailers like Target and Walmart, leading to our initial recommendation. We had expected that its earnings would be weakened as it offloaded its excess goods at sizeable discounts, but also that it would ultimately work its way out of its difficult but by no means impossible situation. At the time, Big Lots had a cash-heavy, nearly debt-free balance sheet, was generating positive free cash flow and traded at a depressed 3x EV/EBITDA multiple. What could go wrong?
Cabot Stock of the Week
Weekly Issue May 30: A debt ceiling deal appears imminent, though that’s ultimately up to our ever-dysfunctional Congress. If it does get done, another Fed interest rate hike may be right behind it. So, the long-awaited rally may be on hold a while longer. But that doesn’t mean individual stocks (see artificial intelligence and semiconductors) can’t get a move-on, so today we add a small-cap MedTech stock that’s showing a lot of promise in addressing a very common – and thus very lucrative – health problem. It’s a new recommendation from Cabot Early Opportunities Chief Analyst Tyler Laundon.
Bi-weekly Issue June 1: It was another good week for Explorer recommendations led by ChargePoint (CHPT), up 17%, and Butterfly (BFLY), up another 8%.
Some of you will remember when George Gilder’s Wealth and Poverty hit the market in 1981 like a thunderclap. It was intellectual capital and political firepower for both the Reagan Revolution and a big bull market.
Mr. Gilder has been active ever since and has a new book out that I highly recommend, Life After Capitalism.
Bi-weekly Update May 25: The Explorer had a good week with Butterfly (BFLY) up 15% and Solid Power (SLDP) up 10% this week. The S&P 500 has risen 8% in 2023 but the market gains are very narrow and concentrated, with the top five stocks accounting for most of the gains.
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 May 25: The market was looking pretty good through last week. Then this week, with no meaningful progress on the debt ceiling, momentum has deteriorated.
Yesterday afternoon U.S. House Speaker McCarthy was on a roll, saying that things are going a little better, that he won’t put a bill on the floor that spends more than last year and that the President is realizing he has to spend less.
JPMorgan says they put the odds of no debt ceiling deal by early June at around 25% and rising.
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 31: The technology sector is on fire. Before the market opened on Tuesday, the sector was up 5% for the past week, 15% for the last month, and 34% YTD. It’s also up more than 2% on Tuesday. What happened?
The outlook for many sector stocks greatly improved last Thursday. AI, or artificial intelligence, had been seen as a huge growth engine going forward as companies invest heavily in the technology. Those growth projections got a huge shot of adrenaline and the AI phenomenon got real when semiconductor company Nvidia (NVDA) reported earnings last week.
Cabot Early Opportunities
Monthly Issue In the May Issue of Cabot Early Opportunities, I profile a potential turnaround story in a well-known stock that is returning to its roots. We also take a closer look at one of the highest-end luxury brands in the world, an unknown green tech company, an emerging MedTech star and a construction materials specialist that’s spreading across the U.S. Enjoy!
Cabot Profit Booster
Weekly Issue May 31: Despite a couple concerning days to start the week, the bulls took control on Thursday and Friday as tech titan Nvidia’s (NVDA) earnings blowout triggered a “risk-on” bull run. By week’s end the indexes were mostly mixed as the S&P 500 gained 0.32%, the Dow lost 1%, and the Nasdaq rallied 2.51%. Today we are adding a retailer that reported strong earnings last week.
Cabot Micro-Cap Insider
Monthly Issue May 10: Today, I’m recommending a “buy when there’s blood in the streets” type of stock:
- 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 31: These days, AI, or artificial intelligence, is the buzzword du jour. And it’s easy to understand why. Play around with ChatGPT, and you will find it to be an incredibly helpful tool. Just don’t follow it blindly (I’ve caught some obvious errors!). Nonetheless, AI will continue to improve and work its way into more and more aspects of our lives. On conference calls this quarter, mentions of AI skyrocketed.
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 May 30: Last week was a big week in the market. Game-changing news in the technology sector that significantly improves future earnings projections for many companies is causing the sector to soar.
AI or artificial intelligence had been seen as a huge growth engine going forward as companies invest heavily in the technology. Those growth projections got a huge shot of adrenaline and the AI phenomenon got real when semiconductor company Nvidia (NVDA) reported earnings and guidance that blew the doors off expectations because of much higher investment and spending in the technology than previously thought.
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 2: This week, we comment on earnings from Duluth Holdings (DLTH) and Macy’s (M).
We also include the Catalyst Report and a summary of the June edition of the Cabot Turnaround Letter, which was published on Wednesday. We encourage you to look through the Catalyst Report. This report is a listing of all of the companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.
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 May 10: Cannabis stocks rose sharply in early May on news that Congress is getting serious again about allowing banks to serve cannabis companies. The Senate banking committee will hold hearings on the favorable bank reform May 11.
The reform bill, called the Secure and Fair Enforcement (SAFE) Banking Act, was recently refiled by a bipartisan group of lawmakers in both branches of Congress. The co-sponsors were: Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT), and Reps. David Joyce (R-OH) and Earl Blumenauer (D-OR).
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 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 Mike: Mike, I remember during the Friday video a few weeks ago that you showed a chart of Boeing (BA). Not exactly a super-growth stock but it might be a good long-term play. The stock seemed to find support right where I think it should (horizontal), right about 198. I’m impressed by their backlog. Any insight?
Mike: Yep – I like the free cash flow story (their official guide is $3B to $5B this year with a goal of getting to $10B down the road). They have had repeated execution issues (or some suppliers have) but overall, good.I agree the stock has held support, but I guess my big thing is the stock is just stuck in a range.
I could see a nibble here with a stop under the recent range (high 180s?) and then aim to buy more if it can get through 220 in a real way. I wouldn’t be plowing in just yet – but I do have it on sort of a distant watch list and if I see any solid accumulation (big day or two or three) I would be more intrigued.
Overall, like it, but like many things, waiting for launch.