Led by the meltdown in the financial sector, the market had an awful week. The numbers weren’t pretty as the S&P 500 fell 4.76%, the Dow lost 4.45%, and the Nasdaq declined 4.16%.

The biggest story of the past few weeks has been the Fed’s renewed jawboning for higher-for-longer interest rates, with the Fed Chief even saying hikes could re-accelerate this month (0.5% instead of 0.25%, etc.) if economic data remains too hot. Indeed, since the start of February, Treasury rates have risen an average of three-quarters of a point or more, while futures are starting to price in another 1.25% of hikes this year, up from 0.5% expected just a month ago. Translation: A lot of rate-hike worry has been priced in during the past few weeks.

Market struggles resumed as Fed Chairman Jerome Powell continues to warn of interest rate hikes as inflation concerns linger. MP Materials (MP) was downgraded to sell last week as Elon Musk’s Investor Day comments raised questions about future demand for MP’s rare earths. Most Explorer stocks were steady as Polestar (PSNY) posted strong revenue growth and an ambitious sales target for 2023. This week’s recommendation is a smart way to play China’s emerging market rebound.

A new day, and maybe a new term for some of us. That is, “rolling recession.” After expectations of a hard landing, then soft landing, then pushing a possible recession further down the line, economists have now decided we may just be having a rolling recession, which affects just a few industries at a time.


So, I guess, currently, that could possibly mean that the following sectors which are negative so far in 2023 may be in a recession,

Inflation has come down. But in the past, when inflation stayed this high for this long, it took about a decade to get rid of it. That’s why the inflation rate averaged 7.25% in the decade of the 1970s and 5.82% in the 1980s.

Once that inflation genie gets out of the bottle, it has historically been a long ordeal to get it back in. Higher inflation and interest rates may persist for several years to come. That’s a different economic situation than we have faced in a long time. And it is changing the investment landscape.

As investors, we need to invest in a way that not only keeps pace with inflation but exceeds the rate of inflation in order to actually grow a nest egg in real terms. In this issue, I highlight two portfolio dividend stocks that have a unique ability to thrive during inflation beyond most dividend stocks.

Today, I’m recommending a micro-cap “thrift” (a type of bank) that is likely to get acquired within the next year or two.

Key points:
· Insiders are buying like crazy.
· The stock is buying back its own stock hand-over-fist.
· 70% of thrifts ultimately get acquired, and this thrift will be eligible to be acquired in 12 months.

All the details are inside this month’s Issue. Enjoy!

What started out as another troubling week for the bulls turned encouraging as the indexes rebound nicely on Thursday and Friday.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the March 2023 issue.

We discuss how the post-Cold War peace dividend is shifting to a war tax.

We provide updates on earnings and change our rating on Organon (OGN) from Buy to Sell. The company is spending more to generate sales growth even as that growth is becoming more difficult. Our thesis is broken, but fortunately, we exit with only a small (~6%) loss.

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.

We can’t say the market is out of the woods, as some major indexes still have work to do (small caps were very weak today) and a couple of bad days could be damaging. But just going with what we see, it’s hard not to be encouraged about last week’s action—after a month of pulling back, no primary indicator flipped to negative, and among individual stocks, the vast majority retreated grudgingly before many took off on the upside in recent days. We’re not going to overreact to a day or two of action, but the fact that our screens are turning up many more high-potential names has us nudging our Market Monitor back up to a level 7—though, as always, we’ll see how it goes during this week’s gauntlet of economic reports.

This week’s list is chock-full of solid growth ideas, with a smattering of cyclical exposure as well. Our Top Pick is a growth name that just broke out from a two-year base after earnings.

Stocks rebounded nicely last week, giving hope that the 2023 stock market may be far more resilient than the 2022 market – which could eventually get us out of this bear market malaise. That makes it a good time to buy one of the blue-chip tech stocks that were infamously beaten into submission by last year’s indiscriminate selloff in all things technology. Fortunately, Tyler Laundon is recommending just such a stock – a name this is familiar to all, and yet is embarking on some exciting new ventures that the general public might not be fully aware of. Today, we add this mega-cap technology giant to the Stock of the Week portfolio.

We are loaded up in the Income Wheel Portfolio, although I wouldn’t mind stepping into a few new positions. If I do decide to add a position or two to the portfolio, one will have a low IV and the other will be the exact opposite, with a high IV. The reason, as stated in the past, is that I like to diversify the overall beta of my positions so that our overall level of risk is balanced.



Moreover, nothing has changed over the past few weeks regarding new short-term positions; I still intend to add a jade lizard or two to the mix for the April expiration cycle.

We locked in a small 4.38% gain in our IWM iron condor last week. However, had we waited a few days we could have taken off the trade for a much greater gain. But hey, that’s investing/trading. We take profits when we can, given the information we have at our fingertips. The market was looking particularly weak at the time of our profit-taking, so we thought it was best to go ahead take some small profits and move on to the next opportunity.

The long-awaited infrastructure bill is putting more wind in our sails and, after eight months of working through a bear market turned range-bound slog, we’re enjoying a bull market in Greentech once more.

This week’s Friday Update includes our comments on earnings from eight companies.

The market was steady this past week as the Federal Reserve completed its two-day meeting and announced plans to end its stimulus program but keep rates unchanged. Some highlights among Explorer stocks:

It was a glorious October. The S&P 500 was up about 7% for the month, more than making up for September’s 4.8% decline. Now what?

Halloween is one of my favorite holidays of the year. There is minimal preparation, no gifts to get, no travel – you just get to celebrate with friends & family and watch your kids have the time of their lives.

September was lousy. October was glorious. What can we expect in November and beyond?

Gold continues its recent pattern of tantalizing investors, only to disappoint—a pattern that was on full display last week.

This week’s note includes comments on earnings reports from ten recommended companies as well as The Catalyst Report. Our podcast also includes our views on Facebook (FB) and the metaverse, and the secret of low expectations.

The major indexes are having another good day, and this time so are most leading growth titles. As of 2 p.m. ET, the Dow is up 180 points while the Nasdaq is in the green by 179 points.

This week has been all about earnings, even though we’ve only heard from one company in our portfolio. That company is Repligen (RGEN), which reported this morning (the stock is reacting well). Notes on that report are below.

New highs are good. Nine portfolio positions are at or near the 52-week high. Let’s be happy.

We’re watching with wonder how Tesla is now a $1 trillion company and that Elon Musk, by himself, is worth more than all of ExxonMobil. There is some poetic irony that the pioneer of electric vehicles and solar panels is outshining (no pun intended) the very icon he is working to replace. Tesla is a remarkably powerful one-trick pony that is only starting to develop its potential.

Today we’re going to part ways with two positions that we added in May and which we’ll make a little more than 10% on. Both positions were trading higher a couple weeks ago but have lost some momentum recently.

This penny stock is speculative, but has an impressive book of patents and collaborations.

This biotech is forecasted to grow at an annual rate of 35.6% over the next five years.

Now that it’s (almost) back to regular business for the airlines, our contributor booked some profits on his Top Pick.

This small cap EV charging equipment company just joined the Russell 2000 Index, which should give it even more momentum.

Aptevo filed an 8-K disclosing that Proposal 4 (Company Sale) passed. However, as you can see in the screenshot below, the company made a special point in the footnote that the majority of non-Tang shareholders voted against the immediate sale.

This biotech just received EUA approval from COFEPRIS (Comisión Federal para la Protección contra Riesgos Sanitarios) for COVI-STIX, a sensitive and rapid (approximately 15-minute) diagnostic test. Earnings for the company are expected to rise by 37% annually over the next five years.

This pharmacy chain just got lighter with a sale of a business, and earnings estimates are rising.

While this biotech could certainly go much higher, our contributor is recommending taking profits.

This tech company is being acquired by Microsoft. If you want to hold MSFT shares, keep holding; otherwise, cash in.

We recommended Cohen & Steers Infrastructure Fund, Inc (UTF) on February 3, 2021, at a price of 26.89. Today, it is trading at 27.70. Not much of a move up.

Gold and the precious metal mining stocks are rallying on short covering after reaching an extremely “oversold” market condition earlier this week. August gold is up just 0.80% from last week’s low as of this writing—admittedly nothing to write about—but what is worth mentioning is an article I came across which expands on a theme that was touched on in the last report.

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 Momentum 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 Momentum Trader features.