Cabot Weekly Review (Video)
In this week’s video, Tyler Laundon discusses the major macro events that moved the market over the last week and talks about what he’s expecting from Fed’s September meeting next week. While it continues to be a choppy market Tyler’s review of the week’s investor conferences turned up more of the same - management teams remain conservative but aren’t expecting a recession. Turning to stocks, Tyler reviews a number of names from different sectors that look good today. But he also notes that September is typically a weak month for the market and that the next major move higher will likely be driven by confirmation that the Fed is done raising rates and beginning to consider cuts in 2024.
Stocks Discussed: ARM, ADBE, U, APP, TJX, UBER, GSHD, FIX, ELF, DUOL
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad talk rising oil prices and how they’re hitting the economy, the Fed’s favorite inflation trackers, the most heavily shorted stock currently on the market and the Aaron Rodgers injury and investing world parallels. Then, they discuss the recent ARM IPO, what IPO investing looks like for retail investors and what signals they’re sending the broader markets.
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 September 7:The market showed some promise in the past couple of weeks, but our indicators never could turn up and now the sellers are back at it, driving the broad market back down. All in all, then, the correction that started in earnest in early August remains in place, so we’re remaining relatively cautious. To be fair, there are some positives, not the least of which is growth stocks, many of which reacted well to earnings last week and a bunch have been resilient of late. That’s not enough to start a buying spree, but it’s another sign that there should be fresh leadership to sink our teeth into whenever the correction finishes up.
In tonight’s issue, we talk about one fundamental transition that three potential leaders are in the midst of, review our Growth Tides and go over a bunch of enticing candidates, be them cyclical or growth stocks.
Bi-weekly Update September 14: WHAT TO DO NOW: Remain cautious. Most stocks, sectors and indexes are still stuck in the throes of a corrective phase, though we do like some things like our resilient Aggression Index and (relatedly) some sturdy action among growth stocks. While we could add another small position if the market firms up a bit, we’re comfortable with the stocks we have in the Model Portfolio and our positioning right now. Thus, we’ll stand pat tonight and practice more patience—our cash position is in the low 40% range.
Cabot Top Ten Trader
Weekly Issue September 11: Some of the positives that we saw in the latter half of August are still hanging around, not the least of which is a good amount of resilience from growth stocks that popped higher on earnings or otherwise saw good-volume buying. That said, the market as a whole doesn’t look ready, with last week bringing another round of selling in the broad market and the major indexes—the intermediate-term trend never could turn up, and few stocks are really moving up at this point. Long story short, there are some encouraging pieces of evidence, but more patience is likely needed. We’ll leave our Market Monitor at a level 6.
This week’s list is pretty well-rounded, with stocks from a variety of groups and of different sizes and profiles. Our Top Pick is a clear winner in the drug space with two big sellers; we’re OK grabbing a few shares here or (preferably) on dips.
Movers & Shakers September 15: It’s been a relatively quiet week despite a big inflation report on Wednesday—most indexes are up but in the 0.5% range, while interest rates have perked up a bit more (six basis points on the 10-year note).
Cabot Options Trader and Cabot Options Trader Pro
Cabot Value Investor
Monthly Issue September 5: Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the September 2023 issue.
We do a deep-dive into what ails Citigroup (C) shares and remain steadfast in our conviction.
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 September 12: While nearly dormant last year, the market for initial public offerings (IPOs) is starting to warm up. Mediocre or obscure companies like Pixie Dust Technologies (PXDT) and BioNexus (BGLC) inspired no one with their IPOs earlier this year. Shares of Vietnamese electric car marker VinFast Auto (VFS) surged over 300%, to $90, following their recent deal at $22, but have now collapsed to about $16 as the shares were subjected to all of the market manipulations that one would expect from an exceptionally thinly traded, poorly executed offering. Even Oddity (ODD), up about 6% from its issue price, left much to be desired.
Cabot Stock of the Week
Weekly Issue September 11: Stocks took a predictable early-September hit last week, but the damage was minimal, and it appears the indexes want to go up – pending the results of this Wednesday’s inflation data, of course. Chinese stocks, meanwhile, haven’t gone anywhere but down for a while, but today we take a contrarian view by adding a big-brand Chinese company that Carl Delfeld just added to his Cabot Explorer portfolio. Sure, China’s economy has underwhelmed, but that’s not likely to be the case for long. And today’s addition is poised to lead China’s recovery.
Bi-weekly Issue September 7: China’s economy is struggling due to lackluster growth, falling property prices, high local debt, poor demographic trends, and lack of consumer confidence. In some ways, my thought is – join the club. The U.S. may be facing 2% GDP growth and has its own challenges such as excessive federal spending and national debt. My point is that we should remain skeptical but not discount China coming back strong with the right policies. In my view, China is both strong and brittle. And today, we add a high-profile stock that’s a play on China’s strength.
Bi-weekly Update September 14: This was an interesting week with news ranging from inflation to AI, tech struggles between the U.S. and China, and Tesla’s edge in terms of labor costs.
On Capitol Hill in Washington, Elon Musk, Mark Zuckerberg and Bill Gates and others worth an estimated $500 billion, according to Forbes, met for a closed-door Senate summit on AI.
Consumer prices rose 0.6% in August, the largest increase since June of 2022. An 11% jump in gasoline prices was the main problem, which led to a fall in average real earnings.
Cabot Small-Cap Confidential
Monthly Issue September 7: This month we’re jumping into a highly specialized financial services company that helps immigrants send money to friends and families overseas.
You can think of it as the modern version of Western Union (WU). But there’s more to the story than that. Starting with a vision that’s a lot more about helping customers than overcharging them.
The hook is that revenue growth is off the charts. And it’s profitable!
All the details are inside this month’s Issue.
Weekly Update September 14: There have been a number of conferences going on lately, so today’s update is partially focused on what our attending companies had to say.
There were no really big reveals, but also no change in tone from the management teams I listened to – and certainly nothing edging toward the more negative side of the scale.
Big picture, I’d say leadership teams continue to be somewhat conservative. Given that we only have a couple weeks left of Q3 they should have a pretty good handle on how the quarter should shake out (and the year for that matter).
Cabot Dividend Investor
Monthly Issue September 13: This year’s strong market has surprised most pundits. Hopefully, the good times last. Anything is possible.
I don’t want to get into the business of trying to predict what the market will do over the rest of the year. Even if you get things right, some stupid headline can come out of nowhere and change all the math. There’s a much better way than market timing.
Buying good stocks cheap is perhaps the best way to assure good returns over time. Different market sectors go in and out of favor all the time. Technology stocks were out of favor at the beginning of this year. No one wanted energy stocks at the beginning of 2021.
You may not think there are a lot of bargains anymore. Sure, it’s a bull market for the indexes. But it is still the darkest days of the bear market in certain places. Defensive stocks in utilities and other sectors are wallowing near the lows of last October while the indexes are whooping it up.
In this issue, I highlight three defensive portfolio positions. These stocks are all selling near 52-week lows and, in some cases, multi-year lows. But operational results at these companies have been as strong as ever. And all these currently out-of-favor stocks have long histories of superstar performance that blows away the returns of the overall market.
Forget the Fed, and inflation, or the velocity of the landing. Buying some of the very best dividend stocks on the market near the lowest valuation at which they ever sell should be a money-making strategy regardless of what happens with all that other stuff.
Weekly Update September 6: The summer is over. The post-Labor Day market has arrived. What can we expect?
Historically, September is the worst month for the market. Sobered up investors back from vacation tend to be cranky when they take a fresh look at things. But seasonality doesn’t always apply. And there are some reasons for optimism.
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 September 12: 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 September 12: The market is starting this week higher on optimism about a “soft landing.” But the CPI inflation number for August that comes out on Wednesday could derail or support the rally.
Things seem upbeat Monday morning. Treasury Secretary Janet Yellen said on Sunday that she is “feeling very good” about avoiding a recession while still reining in prices. Of course, she called inflation “transitory” in early 2021. There were also some encouraging numbers about the Chinese economy. Also, the Fed is widely expected not to raise the Fed Funds rate later this month.
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 September 15: Comments on Brookfield Re (BNRE), Frontier Group Holdings (ULCC), Advance Auto Parts (AAP), Walgreens Boots Alliance (WBA), Vodafone (VOD) and Wells Fargo (WFC). Lehman failed 10 years ago today, and why Ozempic could be a tailwind for junk food companies. Post-season possibilities for the Chicago Cubs?
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 September 5: You are receiving this unscheduled update due to recent strength in cannabis names. Your regularly scheduled update will be published on September 13.
For all of the past year, I have been steadfastly bullish on cannabis names. The group was hated, but several underlying trends told us that was likely to change. This set it up as an ideal contrarian play.
Now, the steady buying I’ve been suggesting is paying off.
Cabot Money Club
Monthly Magazine September: The expanding senior population is a major demographic trend that’s driving higher costs in senior living and senior care services across the country. If you’re retired (or planning to), unexpectedly high living expenses can put your entire retirement picture in doubt. This month, let’s explore assisted and unassisted living options for seniors, how to plan for those expenses even as they climb, and important factors to consider before you shake up your living situation. Plus, we’ll pick a few of the best-looking stocks taking advantage of the trend.
Stock of the Month Septembner 14: We’re still playing the seesaw game in the markets—up, down, up, down, etc. I don’t see any need for excess worry; just a little caution that we buy the right stocks. I’m still very long-term bullish, and why not?
The economy continues to strengthen; 79% of the companies in the S&P 500 Index reported positive earnings surprises for the second quarter, and the third quarter looks even better; home building continues to be strong, although low inventory levels continue to pressure resales. Home prices appear to be stabilizing, and employment remains strong.
The soothsayers seem to think that the Fed will keep rates steady at its next meeting, and the probability of a recession has fallen to 16%. What’s not to like?
Ask the Experts
Prime Question for Mike: Hi Mike. I was wondering why Toll Brothers (TOL) is shown on your “Wait” list. When you recommended it last week, I bought some at less than $80, under your buy range of $83.5-$85.
Mike: So the buy range is the actual range – in TOL’s case, we advised buying on a rebound (above the current price), which isn’t the norm but we do occasionally when we feel the chart is looking a certain way. Basically, it’s a buy if the stock resumes higher, but if not, we leave it be. Again, not the norm, but we might do that with one out of 20 or 25 names type of thing. All that said, if you did buy it, I’m fine holding it here – albeit with a relatively tight stop in the mid/upper 70s. The story is solid and it’s holding up far better than most builders, and very impressively given interest rates.