We added four new positions last week, which brings us to five open trades. Our PFE position is due to expire this week and the four (KO, BITO, WFC, GDX) we added last week are due to expire on March 31, 2023.

Our PFE calls are essentially worthless, so I plan on buying them back today or tomorrow and immediately selling more calls against our shares. Otherwise there really isn’t much to do with our existing open positions as we are early in the trades.

We had the good fortune to lock in a gain in Home Depot (HD) early last week. The win marked our sixth this earnings season for a cumulative total of 36.9%. That’s a healthy return for this earnings season, especially when you consider the S&P 500 is basically flat since our first trade in JPM back on January 12, 2023. Hopefully the market offers up a few more opportunities to increase our current totals.

Following another week of hotter-than-expected inflation data and hawkish Fed speak, the leading indexes had their worst week of 2023. The S&P 500 fell 2.75%, the Dow lost 3%, and the Nasdaq declined by another 3.3%.

Following another week of hotter-than-expected inflation data and hawkish Fed speak, the leading indexes had their worst week of 2023. The S&P 500 fell 2.75%, the Dow lost 3%, and the Nasdaq declined by another 3.3%.

A renewed bout of worry over how much tightening the Fed has left to do has taken the market lower over the past two weeks, taking most stocks down in the process. Even so, to this point, we’re looking at the pullback at tedious, yes, but also acceptable--all of the indicators that turned positive in January have taken on some water, but remain positive, as have the vast majority of potential leaders. We’re far from complacent, and if the weakness spreads, we’ll pare back, but we remain optimistic and are standing pat tonight.

Tonight’s issue is heavy on new ideas, including some enticing names in Other Stocks of Interest and two chip stocks that we’re very high on--both quack like fresh leaders, and it’s good to see the (growthy) chip sector itself act well, too. Bottom line, our antennae are up, but going with the evidence, we’re still leaning bullish, though also remaining flexible if something definitive changes.

America’s economy has been resilient in the face of rising interest rates, pushing the 10-year Treasury to the cusp of 4%. Earnings have been pretty good but ironically, the threat of too strong an economy, or a recession, seems to be weighing on markets. Our Exscienta (EXAI) was stopped out while Centrus Energy (LEU) was up 14% yesterday after positive earnings.

What started out looking like another positive week for the market later turned into a week of little gains or losses, as economic data and Fed speak weighed on stocks on Thursday and Friday. For the week the S&P 500 and Dow fell marginally, while the Nasdaq rose just over 0.5%.

Though cannabis sector sentiment is extremely dark because of price compression and lingering bitterness after the December drubbing, there are several reasons to be bullish on the group.

This suggests that it’s a good time to add to cannabis names as a contrarian investment. Warren Buffett tells us that the market should serve us, rather than influence our moods. If I am right about the underlying bullish trends, the market is serving up an opportunity in cannabis. But you have to look at this as a medium-term play.

We know about all the negativity in the space – declining wholesale prices, overproduction, the failure of politicians to get the ball over the line in banking reform in December. But what about the positives?

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the March 2023 issue.

While large restaurant companies cruised through the pandemic, smaller companies struggled. Some, however, are now undertaking promising turnarounds. We highlight four new ideas and provide updates on two previously discussed small-cap restaurants.

For struggling companies, free cash flow is their lifeblood. By using free cash flow yield, we can identify undervalued companies with plenty of cash flow that provides a margin of safety. We discuss three interesting stocks.

Our feature recommendation this month is a high free cash flow yield situation. Retailer Kohl’s (KSS) is viewed by investors as a broken company left behind by time, trends and technology, with unsettled leadership, further pressured by bloated inventory, a possible recession, and rising labor and goods costs. We see a company with a history of stable revenues and cash flows, that now has a highly capable operator at the helm, whose shares have a free cash flow yield of 13%. The generous dividend pays out close to half of this cash flow, producing a 6.2% dividend yield.

Stop us if you’ve heard this scenario before: The market gets a head of steam going, but after some inflationary reports, the Fed begins to jawbone the market, which leads to the market giving up the ghost. That happened at least a couple of times in 2022, so our antennae are up given the recent inflation reports and some tough talk from Fedheads last week. That said, once again, the bottom line is that most of the key evidence is still bullish, so while we’re honoring stops and aren’t piling in here, but we’re also holding onto names that are acting normally. We will drop our Market Monitor down a notch (to a level 6) to respect the recent dip, but we’re most interested in how the market responds now that it’s down near support.

This week’s list again has something for everyone, with our Top Pick a well-situated firm that’s helping to lead a group move and just reacted well to earnings.

The market has hit its first real rough patch of 2023, but so far the damage has been fairly limited. Still, it makes sense to add some protection, so today we’re adding a value stock that’s been one of the better performers in Bruce Kaser’s Cabot Undervalued Stocks Advisor portfolio for the past six months – but still has plenty of upside. Also, with the Stock of the Week portfolio at max capacity, we are parting ways with several positions to clear out some room for better opportunities in the coming weeks.

Stocks have rallied so far this year on optimism that we can get through this inflation and Fed rate hiking cycle without much economic pain. That’s what seems to be happening so far. But this latest “soft landing” rally is facing a formidable foe – history.

Rate hikes almost always slow the economy. But there is typically a long lag time. Since 1961, the Fed has embarked on nine inflation-busting, rate-hiking cycles. Eight of those cycles have led to recession. The yield curve has inverted, a phenomenon that has almost always preceded a recession.

This week, I’m looking forward to Thanksgiving, my favorite holiday! What I love about Thanksgiving is there is minimal preparation (luckily, I don’t have to do the cooking!) and no gifts to give or receive. It’s just about getting together with friends and family and being thankful.

The market is beginning to more fully anticipate a post-Covid environment and economy. As such, investors are looking to slower/normalized/sustainable growth following the bulge from the pandemic stimulus programs and pent-up demand, higher interest rates, and a relenting of supply chain issues.

This week’s Update is being published on Wednesday due to the Thanksgiving holiday in the United States. The December edition of the Cabot Turnaround Letter will be published next Wednesday, December 1.

Inflation fears clipped growth stocks this week, so Greentech’s near-term outlook has gotten muddied a bit.

The big recent developments since I wrote last Thursday are the rise in Covid cases in Europe, and that Jerome Powell got the nod for another term leading the Fed.

For growth stocks and indexes, there’s clearly been a lot of damage this week. Funds like ARK Innovation (ARKK) have hit new six-month lows, while broader indexes like the Next Generation Nasdaq (QQQJ) and Russell 2000 Growth (IWM) have slid all the way to their 50-day lines and given up big chunks of their October rallies.

This week’s Friday Update includes our comments on earnings from Macy’s (M), Toshiba (TOSYY), and Vodafone (VOD).

There is one topic that brings together Wall Street, Hollywood and Silicon Valley – the metaverse. While “metaverse” definitions are varied, the idea of bringing people together in a virtual interactive world is, as they used to say, the talk of the town.

On to the market. It was a funkier week than last week, though big picture nothing has changed. We are moving into the tail end of earnings season so we may see a more moderate amount of investor interest over the next two weeks.

It’s earnings season. That 3-to-4-week period where most public companies report their results. I find earnings season to be a great time to check in on your holdings. Many think that the market is too short-term oriented and that quarterly earnings don’t really matter—what matters is annual progress.

We continue to watch in amazement the values that the market puts on electric vehicle makers, with the most recent example of Rivian Automotive (RIVN). Since its IPO at $78/share, RIVN shares have doubled, making the EV company’s roughly 900 million shares worth a total of about $144 billion. This makes it the #3 most valuable car company in the world.

What inflation? What supply-chain issues? Headlines be damned. This market is on the cusp of yet another new all-time high.

Whether it was a meltdown in Chinese stocks due to regulatory actions, fears of renewed virus restrictions (and mask mandates) or inflation jitters, the market is getting hit sharply today, and growth stocks are going along for the ride—as of 1 p.m. ET, the Dow is off 195 points, while the Nasdaq is down 291 points and growth-y indexes are down 3%-plus. We’re not going to draw a massive conclusion from one day of trading, especially as it comes on the heels of what was a darn good few days for growth stocks following last Monday’s shakeout. But it is a sign that the endless choppy phase might not be in the rearview mirror.

The top five holders of this fund are Fort Pitt Capital Group, LLC, 2.12%; Morgan Stanley, 1.85%; Wells Fargo & Company, 1.39%; and Invesco Ltd., 1.35%; and 1607 Capital Partners, LLC, 1.19%. The fund has a current annual dividend yield of 5.22%, paid monthly.

Due to escalating regulatory risk by Chinese authorities, please sell Pinduoduo stock. I will have more in this Thursday’s update but, in short, the Chinese are exerting their authority on Chinese companies that have used offshore entities to list on U.S. markets. China wants these companies to list in Hong Kong or Shanghai. There may be some trading and arbitrage opportunities developing, but the risk for Pinduoduo is now too high.

Bank of America just raised its price target to $194 for this used car dealer.

This ETF utilizes a covered call strategy, in which investors sell call options while owning an equivalent amount of the underlying security.

Our first idea is a utility that is growing its renewable energy sources and has a current annual dividend yield of 3.94%, paid quarterly. And we are selling an insurance company with a great dividend but mediocre performance.

Last week there was no Cabot Marijuana Investor update, and I apologize to those readers who expected one and were disappointed. Officially, there is no update schedule; my goal is to give you whatever’s needed whenever it’s needed. But I’ve got into the habit of doing updates on Wednesdays, and a lot of readers have got into the habit of expecting them. Last week, however, there was no news and no change in my advice, so no update.

Although this stock has steadily climbed, its focus on higher margin products should keep its momentum going.

This flooring retailer is due to announce earnings on August 5. Current estimates are for an EPS of $0.61 on revenues of $836.85M.

Today is a wild day in the market, with supposed fears over the Delta variant of the virus causing weakness in the major indexes. As of 2:45 pm EST, the Dow is off 919 points while the Nasdaq is down 212 points. Of course, today’s move comes after a growing amount of worrisome evidence, including a narrowing of the advance (most stocks below their 50-day lines even as the big-cap indexes were near new highs) and severe selling in many growth areas last week, and now we have our Cabot Tides turning red.

On Friday our MRO and SGMS call positions expired worthless, leaving us with only our stock positions. And while I debated selling new calls to lower our cost basis, the market is weak, and these stocks have fallen below our initial stop levels.

Investing in silver is reaching a six-year high. This company is seeing a rise in hedge fund interest, and recent selling of its shares after the Roxgold acquisition, looks overdone.

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.