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xCABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo is singing the same tune -- he’s bullish and very encouraged, with this week’s rebound in the broad market a good sign, especially as most leaders continue to act well. Short-term, he is 50-50 on whether some of the growth leaders may have more mini-wobbles in store, but he’s continuing to put money to work and is seeing a growing set of opportunities out there.
Stocks Discussed: MNDY, CFLT, DKNG, ONON/ALGM, FOUR/WING, DAL/UAL, NVDA, LRCX, BLD, ABNB, LI, NET, FTI/CHRD/DO
Cabot Street Check (Podcast)
In this week’s podcast, Chris and Brad discuss the strong consumer sentiment shielding the economy from a recession, the “revenge travel” summer boosting airlines and travel stocks, and the recent coup in Russia that wasn’t. Then, they each offer 3 “sure to be wrong” predictions for the second half of the year about small caps and the broader market, biotech, artificial intelligence, crypto and the economy. Email Street Check at streetcheck@cabotwealth.com with questions, feedback, or commentary, we may just share it on the podcast.
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 June 22: WHAT TO DO NOW: Remain optimistic. The market and leading stocks have finally begun to pull in somewhat, but the action has been completely normal so far and our market timing indicators are bullish. We’ve put a good chunk of money to work of late, and tonight we have one small addition—we’ll add a half-sized position (5% of the portfolio) in DraftKings (DKNG), which seems to be set up well. That will leave us with around 35% in cash, which we’ll aim to put to work (including, ideally, by filling out some existing positions) if the market continues to behave itself.
Cabot Top Ten Trader
Weekly Issue June 26: The much-anticipated market dip finally arrived last week, and so far, when you look at the leadership of this market—the Nasdaq and leading individual stocks—the action has been completely normal, and in fact, seems to be producing some higher-odds entry points as names dip toward support. Once again, though, we need to keep a close eye on the broad market—the intermediate-term trend remains up, but it’s getting close to the edge, with another bad week possibly putting the broad market back in the soup. We’ll leave our Market Monitor at a level 7 today but we’re watching things closely in case weak breadth causes the selling pressures to build.
This week’s list has a growing number of pullback-related setups. Our Top Pick quacks like a new technology leader that’s pulled back reasonably after a strong rally. It’s volatile, so start small and use a loose leash.
Movers & Shakers June 30: It’s been a very nice snapback week for the market as a whole, with all of the major indexes up, led by the laggards of the prior week—the broader indexes—which have encouragingly pushed back toward (or in some cases out above) their recent highs, and the market is likely to build on its gains after this morning’s inflation report. All in all, this keeps the evidence positive: The market’s intermediate-term trend is up, and while the broad market has been having the occasional wobble, it’s still in the healthy camp.
Cabot Options Trader and Cabot Options Trader Pro
Cabot Options Trader Pro Weekly Update
Cabot Options Trader Weekly Update
Cabot Value Investor
Monthly Issue June 6: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the June 2023 issue.
The U.S. presidential election, “only” seventeen months away, is shaping up to follow a predictable script. Investors should keep their personal views and their investing process separate.
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 June 20: Here in New England, the weather can change quickly. A sunny morning can seemingly without warning turn into a rainstorm by the afternoon. Not that long ago, we had three seasons in a single day – snow in the morning, followed by rain, then summer-like temperatures by three in the afternoon. There’s an old saying, “If you don’t like the weather, wait a few minutes.”
Cabot Stock of the Week
Weekly Issue June 26: The market has pulled back after a huge run-up, which is normal action and likely not a product of renewed Fed fears that didn’t exist a week ago. These types of pullbacks in bull markets, like the new one we’ve just entered, are buying opportunities. And so today, we add a high-profile growth stock that is already up more than 80% year to date but may be just scratching the surface of its artificial intelligence potential, which could open up new revenue streams. It’s a new recommendation from Tyler Laundon in Cabot Early Opportunities.
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 June 22: Fed Chairman Jerome Powell again threw a wrench into the market by warning that a couple of more interest rates hikes are probable this year. “The process of getting inflation down to 2% has a long way to go,” he told the House Financial Services Committee during a three-hour hearing. Not sure why they don’t get this over with.
Indian Prime Minister Narendra Modi arrives in America on his first official state visit with India’s geopolitical pull higher than at any point since he took power in 2014.
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 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 June 28: Last week, I wrote about how the U.S. markets look expensive both on an absolute basis and relative to international stocks.
Since then, the market has pulled back by about 3% following a couple of hawkish comments by Jay Powell.
Nonetheless, the S&P 500 chart looks relatively healthy and I’m not in a rush to “fight the tape.” Upward trending markets tend to continue to trend upwards.
But I can’t get excited about buying any large-cap stocks or the S&P 500.
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 June 20: 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 June 30: This week, we comment on earnings from Walgreens Boots Alliance (WBA). We also include the Catalyst Report and a summary of the July 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 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: Dear Mike. As recommended, I started small with Confluent (CFLT), doing 50% of a normal position. Would you advise keeping it smaller than usual or looking to expand at some point? If I should look to expand, any guidelines to have in mind about when to do that? (Up 10%? Wait until it’s mentioned in Top 10 again? Something else?) Thanks very much in advance.
Mike: Thanks for writing and all good questions. So, I don’t have a hard/fast rule about averaging up, but...
A) Yes, we’d look to buy some more if it gets off to a good start. Yesterday was a first step, but obviously back down today, so maybe if sometime in the next week or two it’s up in the 36-37 area type of thing.
B) That said, it’s best to have a plan either way – there’s nothing wrong with buying more at a set level (up 10% or whatever), though I wouldn’t make the % too big (don’t buy up 20%; even 10% is a bit much) and it does take a little chart knowhow. Even so, in general, yes, I’d look to buy more (maybe another half position), and would probably do so on a swing high from here – and then, importantly, treat the two loaves as one full position and use a stop for that.
Last note – honestly, I do like CFLT, but a few more days putzing around and letting some moving averages catch up, followed by strength, would be pretty enticing. So even if it doesn’t take off right away, I still like the setup.