Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo talks about many encouraging factors he’s seen this week, including the fact that a couple of his key indicators are close to turning green and there were a bunch of bullish earnings gaps in growth world. As with last week, he’s still mostly patient, but he did do some new buying this week and is ready to follow up on that should the market return from the long weekend in a good mood.
Stocks Discussed: LULU, MDB, IOT, CRWD, PSTG, CRM, BKR, FTI, RCL, FRSH, BOOT
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 August 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 31: WHAT TO DO NOW: Do a little buying. The market’s evidence has improved somewhat, as have our indicators, though we haven’t seen any fresh green lights just yet (Cabot Tides on the fence, Two-Second Indicator getting there, etc.) and growth stocks are still hit and miss. Given the improvement and the big-picture positives (including our bullish Cabot Trend Lines), we’re putting a little money to work but are still to hold plenty of cash. Tonight, we’ll average up on Noble (NE) and start a half-sized stake in CrowdStrike (CRWD), which will leave us with about 40% on the sideline. If the rally falters, we’ll prune, but obviously if the buyers flex their muscles after Labor Day, we’ll be looking to add more.
Cabot Top Ten Trader
Weekly Issue August 28: Last week had a couple of big news items and, not surprisingly, the market was all over the place, with some strong up action, a wild reversal and then some support after the Fed’s talk. All in all, we consider the shows of support modestly encouraging, along with the fact that sentiment has taken a sharp turn lower as the worries of the world come back into focus. But nothing has really changed with the here and now: The intermediate-term trend of the major indexes and most stocks is pointed down, with few names making any progress. That can obviously change, but for now, we’re still patiently waiting for the buyers to retake control. We’ll leave our Market Monitor at a level 5 tonight.
This week’s list is another mixed set of stocks, though we like the fact that we’re seeing a few more positive earnings moves. Our Top Pick is trying to leave behind a multi-month range after its recent earnings surge.
Movers & Shakers September 1: It’s been a very solid week for the market, with a batch of so-so economic data and falling interest rates (the 10-year Treasury is down about 13 basis points on the week as we write this) bringing in the buyers. As of this morning, all of the indexes we track are up in the 2% to 3.5% range, with the Nasdaq leading the way.
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 28: Stocks are finally showing signs of life after a brutal August, and many of our Stock of the Week positions have fared even better than the market of late. Don’t expect much movement this week as investors will likely play out the summer string until they lock in after Labor Day. Will the (modest) recent gains hold in September, notoriously the weakest month on the investment calendar? We’ll start to find out next week. In the meantime, we won’t try and do too much, which is why today we’re adding a solid-if-unspectacular big-cap retailer that has a habit of beating the market. It’s a new addition from Cabot Dividend Investor Chief Analyst Tom Hutchinson.
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 31: This week, markets took slower economic growth numbers to mean no more interest rate hikes and higher stocks. That’s the logic of Wall Street today.
Laszlo Birinyi (pronounced BUH-ree-nee), an investor who “listened” to the market rather than corporate or financial news, passed away this week. He was someone who thought differently. His theory about the flow of money that made him one of the nation’s foremost stock pickers in the 1990s will endure.
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 31: Small caps had a decent week with the S&P Small Cap 600 ETF (IJR) rising just over 2% since our last update. This is a welcome relief on a number of levels, including from a technical perspective.
In late July the ETF looked like it was going to challenge the year’s high (from February) near 108. Momentum stalled at 105 as the calendar turned to August. By the 18th (two weeks ago) the IJR was just below 100, sitting on its 200-day moving average line.
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 30:After a strong first seven months of the year, stocks retreated in August. Is this a normal consolidation or the start of a bigger correction after Labor Day?
Anything is possible. On the one hand, such pullbacks are normal and healthy after a strong run higher in the market. The economy still appears nowhere near a recession. There is still an enormous amount of cash on the sidelines. It’s near the end of the rate hike cycle. And artificial intelligence is triggering a new tech boom.
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 29: Ahead of the long holiday weekend the market had yet another good week. The S&P 500 gained 1.75%, the Dow rallied 1.5%, and the Nasdaq rose another 1.9%.
This week in an attempt to diversify the portfolio we are adding an energy play.
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 29: The market tends to be lackluster in the late summer. But that goes double for the last week of the summer.
Unless there is a riveting headline, the overall market is likely in a holding pattern until the rubber hits the road next week after Labor Day. Sobered up investors back from vacation will take a fresh look at things after they wrap up the summer and come back from vacation. What will they see?
Cabot Turnaround Letter
Monthly Issue August 30: The attention of most investors, commentators and analysts has been on the winners, notably the Magnificent Seven, driving this year’s stock market rally. As contrarians, we are fine with letting a few overpriced trendy stocks capture the spotlight. One place that draws our attention is the other end of the spectrum – those with the worst performance. While most of these stocks fully deserve the market’s dour judgment, some have favorable changes underway. We look into four large and mid-cap stocks that fit this description and one that does not. We also discuss a tactic to help improve one’s success in investing in out-of-favor stocks.
Our feature recommendation this month is Advance Auto Parts (AAP), one of the four major auto parts retailers. The shares have fallen sharply out of favor, but a comprehensive and much-needed overhaul is now starting.
We also include our recent Sell recommendations: Toshiba (TOSYY), Holcim AG (HCMLY), First Horizon (FHN) and ESAB Corporation (ESAB), and our suspension of our rating of shares of Kopin Corporation (KOPN).
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 August 30: One down, one to go.
Cannabis stocks soared today (August 30) on news that Health and Human Services (HHS) recommends cannabis get downgraded to Schedule III under the Controlled Substances Act, from Schedule I.
I predicted this a few days ago on the Cabot website, and in my last Cabot Cannabis Investor update on August 9.
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 Mike: Mike, similar to what you wrote about how to handle winning stocks, I have been thinking of how to handle portfolio gains when at a given time, it either has a good profit or a great profit. For the longest time, I have been thinking of the strategy as described below but have not actually executed it yet.
Here’s the strategy, which is all mechanical, no emotion involved:
- At any time of the year, when my portfolio has a good/great profit, I’ll sell half (dollar value) of every stock in my portfolio. The thinking is, if my portfolio is doing well, the market as a whole should be doing well too, so there will be some profit taking that is going to happen soon. So, if I sell half of everything before the big boys start selling, I’ll lock in my gain first before the market starts trending down. (Note: The thought is I’ll treat every stock the same, whether they are making good money or losing some money. This way, if I sell half of every stock, it’s all mechanical and therefore there is no emotion involved).
- If the market continues to go up after I sold half of everything, it’s okay because I have locked in my gain but I’m still making money, albeit less because I sold half already. Since the market doesn’t go up in a straight line, once I see that the market has pulled back, stabilized, and has started to trend up again, I’ll buy back the half that I have sold. See also next scenario below.
- If the market does drop after I sold half of my portfolio, and do see that it continues to drop over the next several weeks, I’ll sell another half of every stock in my portfolio; meaning, I only have 1/4 left in my portfolio, so its okay to continue to hold because I shouldn’t suffer a great loss if it continues to drop.
- On the other hand, if the market does drop after I sold half of my portfolio and I do see that it was able to stabilize and starts to trend up again, I’ll buy back all the half I have sold, meaning I will have a full position once again on all the stocks in the portfolio.
What do you think?
Mike: Thanks for writing. A lot to unpack there.
So, first, let me say that having a plan is a lot of the ballgame – so having something like this in place is big. Congrats on that.
I have three main thoughts besides the above:
First, while the initial part is mechanical, there’s a lot subjective stuff after that (“if the market stabilizes and runs, I’ll buy back”). That’s OK, but you have to keep playing it out – when would you buy it back? And what if you buy it back but THEN the market pulls in? I don’t mean you need to write out a 10-page complicated memo or have a computerized system, but just something I noticed about a lot of subjectivity about what to do after the initial sale.
Second, my experience is a lot of your gains will come from few of your stocks. So I would be less willing to sell some of everything – but I hear you. I tend to deal more with individual stocks.
Third, I would say there’s no real in between for you in this method between heavily invested (say 85% to 100%) and half that – which is a big difference. Not sure if there are “steps” where you go from 90% to 70% sort of thing.
All told, though, I’m just pointing out potential areas for improvement. Each system is personal to the investor and, like I said, a lot of it is about having some sort of logical system, which I think this is.
Hope that helps or at least gives you something to ponder over the long weekend!