Our focus this week will be on Home Depot (HD), Target (TGT) and Walmart (WMT).

We’ve gotten back on track the past few weeks with another small winning trade, a one-day, 4.2% gain in Disney (DIS). In total we’ve placed six trades this earnings season, with a cumulative loss of -11.9%. With a few more weeks left on the earnings calendar, we have three to four more opportunities to bring our returns back to breakeven for this cycle or possibly into positive territory.

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!).

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.

The fundamentals are in place for prices to average a lot higher than they are now over the next few years. And that will lift stock prices. Stocks are also cheap, have among the best dividend yields on the market, and tend to perform well during times of inflation.

This issue highlights one of the highest-growth energy companies on the market. It has the ability to grow production by double digits for many years to come and at very low cost.

Today, I’m recommending a “buy when there’s blood in the streets” type of stock:

Key points:

• 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!

Despite a concerning start to the week for the bulls, Friday’s big rally provided some hope that the market could get back in gear. By week’s end the S&P 500 had lost 0.8%, the Dow had fallen 1.24%, and the Nasdaq had gained 0.07%.

We don’t want to write the same thing week after week, but the story remains mostly the same as it has for the past two months: There are definitely some positives out there, including a good number of setups, some positive earnings reactions and a resilient set of major indexes, especially given the banking worries—but the broad market is mostly iffy while we continue to see repeated air pockets and selling on strength. We still think there’s lots of bullish dry tinder that could spark if things go right, but until it happens, we think it’s best to remain cautious.

This week’s list sports more than a few recent earnings winners, as well as a few tight setups. Our Top Pick is a growth name that’s getting costs under control—combined with its cookie-cutter story, that could produce reliable bottom-line growth soon. Try to buy on dips.

Stocks continue to chug along in the same range they’ve largely been in since the end of March. We’ll see if this week’s inflation reports (CPI on Wednesday, PPI on Thursday) move the needle in either direction. In the meantime, one sector that is finally showing signs of life after two years of being beaten to a pulp is cannabis. And so today, we add one of the top cannabis stocks recommended by Cabot Cannabis Investor Chief Analyst Michael Brush. It’s a familiar name to even intermediate-term Stock of the Week readers – and it was up 25% last week!

Details inside.

Our focus this week will be on PayPal (PYPL) and Disney (DIS).

We got back on track this past week with a small winning trade. In total we’ve placed five trades this earnings season, with a 60% win ratio and a cumulative loss of -16.1%. With a few weeks left on the earnings calendar, we have several more opportunities to bring our returns back to breakeven for this cycle or possibly into positive territory.

Our overall return is 28.9% - certainly nothing to write home about, but also no complaints as we thankfully sit in positive territory during what has been an incredibly challenging market for all participants over the past year.

We locked in a small 6.8% profit in our SPY iron condor last week and added another bear call spread, in SPY, to the mix later in the week. Our total cumulative return stands at 124.52% with a win ratio of 87.1% (27/31 winning trades) since we started Quant Trader just under one year ago.

We have two positions on at the moment, both due to expire at the June 16 expiration date. Fortunately, both are hovering around the same price we sold them for, so all is well at the moment. And given we are leaning bearish in both positions, a move lower will obviously immediately help both positions and possibly lead to some early profit taking.

Not much has changed since last week, other than that we are seven days closer to the May 19, 2023, expiration cycle coming to a close. Thankfully, our three remaining May positions all remain in good standing.

We locked in profits in both PFE and KO and immediately sold more premium just over a week ago and I will most likely do the same in our May 19, 2023 positions this week which should bring our total return to around 75%.

Despite a concerning start to the week for the bulls, Friday’s big rally provided some hope that the market could get back in gear. By week’s end the S&P 500 had lost 0.8%, the Dow had fallen 1.24%, and the Nasdaq had gained 0.07%.

Despite a concerning start to the week for the bulls, Friday’s big rally provided some hope that the market could get back in gear. By week’s end the S&P 500 had lost 0.8%, the Dow had fallen 1.24%, and the Nasdaq had gained 0.07%.

Almost everywhere in the mainstream media and across most Wall Street research firms, there is a common implication that a recession will bring a bear market for stocks.

We’ve been delivered. In just two short weeks the market has gone from a toxic 2022 market sliding toward bear territory to a huge rally that brings back the hope of a mediocre year. Enjoy the high country.

It was ugly two weeks ago. The Russia/Ukraine war was unpredictable and sending ripples through the global economy with soaring food and energy prices. The Fed was a million miles behind the curve in fighting this persistent high inflation.

For more than a year, gold remained stuck in a holding pattern while other metals roared higher in response to global manufacturing demand and supply shortages. All the while, the global economic and geopolitical situation was becoming increasingly tenuous, prompting us to repeatedly wonder when a flight to the safety of gold would transpire.

As market conditions continue to shift, with large-cap U.S. stocks resuming an uptrend in the past two weeks, we are once again making some changes within the tactical Undiscovered Portfolio.

This week’s Friday Update includes our price target increase for one of our energy companies, as well as updates on several recommended companies. We’re not macro-driven, but we are macro-aware, and are thinking about the reserve status of the U.S. dollar. Also, we bid farewell to Ned Johnson, legendary former CEO of Fidelity.

Brazil-based StoneCo (STNE) surged in its first week as an Explorer recommendation, recovering from a sharp sell-off and spurred along by stellar fourth-quarter 2021 financials in which revenue grew by 87% compared to the last quarter of 2020 and the company reported 1.8 million active customers – 2.3 times more than in 2020.

As NATO leaders meet in Brussels and the Russian stock market opens, the Ukraine-Russia conflict continues to send energy and commodities up (see graphic below, courtesy of Bloomberg, as to why). The Euro Stoxx 50 is down 8.7% this year, versus -5.3% for the S&P 500.

The market is looking a lot better than it did a couple of weeks ago even though the Russia-Ukraine conflict continues and the Fed has become more vocal about the need to hike interest rates in order to battle inflation.

What a difference a few days can make. A little over a week ago the market looked like it was about to roll over and die. But since the close on March 14 the S&P 500 has soared more than 8% and the Nasdaq has spiked more than 12%. Will the magnificence last?

I doubt it.

Greentech is in the midst of its best run, on a weekly basis, since the huge bull advance from spring 2020 into the start of 2021. By our Greentech Timer’s definition, it’s a bull market now. Our benchmark index, the Wilderhill Clean Energy Index, is trading over its 20-day and 40-day moving averages, both of which are trending higher, a condition that started Monday. We’re also seeing the most consistently strong buying volume in Greentech in 13 months. Breadth is excellent. Over the past week, 92% of Greentech stocks are higher – 267 out of the 291 we track – and over the past month 83% are higher. It’s quite a swing in sentiment: over the past three months only 37% of Greentech stocks are higher, even after the past four weeks of excellent performance.

One common belief shared by Cathy Wood and the Cabot Undervalued Stocks Advisor. We comment on the impressive recovery of one of our recommendations as they reported strong fourth-quarter earnings, as well as updates on other recommended stocks.

This educational provider is set to pay a walloping $7.01 in special dividends if you are a stockholder as of October 29, 2021.

Following up on today’s weekly earnings review we have a few positions we’re going to step aside from. Big picture, I like the way the market is shaping up. However, we have a portfolio flush with positions and while most are looking good to great we have a few that are slipping, and some that lack near-term catalysts yet have a modest profit. It feels like a good time to lighten up. Here’s what I suggest.

Earnings season kicked off in our portfolio this week and will accelerate into November. Here are brief updates on what we’ve heard, and what I think.

This private equity firm beat EPS estimates by $0.26 last quarter. The shares have a current dividend yield of 4.86%, paid quarterly.

This holding company is set to release earnings on November 1. The company is expected to see earnings rise by 14.03% annually over the next five years.

This giant auto manufacturer is expected to grow its annual earnings by 24.5% over the next five years. The shares have a current dividend yield of 2.5%, paid semi-annually.

Earnings for this Ireland-based airline are forecasted to grow at an annual rate of 58.4% over the next five years.

This Israeli-based baby food company is spreading its wings with its toddler and kid shakes moving into Walmart stores. Please note, these shares are speculative, so please don’t load up on them.

The shares of this utility company were recently upgraded at Wells Fargo to ‘Overweight.’ The shares have a current dividend yield of 5.49%, paid quarterly.

This company stands to gain market share by applying its systems to the current shipping logjams. Descartes is expected to grow at an annual rate of 39.8% over the next five years.

This preferred stock is backed by a giant financial company.

This household name consumer products company beat analysts’ earnings estimates by $0.07 last quarter. The shares are trading at a discounted level, and have an annual current dividend yield of 3.53%, paid quarterly.

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.