Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the April 2022 issue.



All companies are collections of assets. When companies are struggling, a new CEO can redirect how those assets are utilized – a valuable catalyst for a turnaround. We highlight three recent CEO changes and how they might help drive up the value of their companies.



While we have been slow and perhaps reluctant to consider cannabis companies, we find that the time has arrived to look more closely. We summarize our deep-dive into this emerging industry and its major participants, and suggest six companies with impressive growth yet trade at surprisingly low valuations.



Our featured recommendation this month is ZimVie (ZIMV), a company that was recently spun off from medical technology giant Zimmer Biomet. Its shares have been summarily sold by the market, creating what we believe is an attractive turnaround situation.



We note our second price target increase for Marathon Oil (MRO) and our move to sell shares of Baker Hughes (BKR).

It’s been a challenging year for investors in cannabis stocks, but the good news today is that the stock market as a whole is stronger, and cannabis stocks are trending higher as well, especially in Canada, where the stocks were thoroughly oversold.

So I’m adding two new Canadian stocks to the portfolio.



Full details in the issue.

Today, I’m adding an American petroleum contract drilling company, Helmerich & Payne, Inc. (HP).

In our view, the market still has a good amount of work to do, including when it comes to the intermediate-term trend of the major indexes, the trend of growth funds and for individual stocks, where breakouts to this point remain few and far between. Still, there’s also no question that, after weeks of bottom building, the evidence has certainly improved, with very solid action during the past two weeks among a variety of issues. We’re encouraged, but from here, it’s simply a matter of believing what we see. For now, we continue to favor holding some cash, buying on dips and keeping positions on the small side.


This week’s list is a mix of strong commodity names and some chip and growth titles that have perked up. Our Top Pick is a mid-cap energy name that should thrive in the quarters to come.

With the market continuing to improve, and chip stocks increasingly in demand, we add another chip stock (a very established one) to the portfolio today.
But we’re selling one stock too (VECO), taking profits and looking to reinvest them in something with greater potential.


Details inside.

The market’s evidence continues to improve, with more bullish breadcrumbs being dropped--last week, it came via a rare, blastoff-type indicator that triggered for just the fifth time since 1970. To be fair, our primary indicators are still iffy, so you shouldn’t throw caution to the wind, but we’re doing a bit more nibbling tonight, and aim to continue buying if the market can prove itself on the upside going forward.

Sure, the rally in the overall market may not last, but this unusual environment is still creating great opportunities in certain pockets if you know where to look. One such opportunity exists in the new and rapidly growing marijuana industry.
The growth in marijuana is undeniable.


While most companies have struggled to make a profit in the young industry, one company has been making money like crazy. It’s a marijuana farm REIT with a superior business plan that has managed to grow profits 600% over the last four years. The stock has been a phenomenal performer. But it sold off recently and appears to have just begun moving higher.


This month I also highlight a call on Global Ship Leasing (GSL), a stock that has bucked the trend and returned 28% YTD.


There are three portfolio stocks that have been upgraded to a BUY this week: U.S. Bancorp (USB), Visa Inc. (V) and One Liberty Properties (OLP). All the stocks have some momentum and strong reasons why the rally may continue.

Today, I’m adding an American company that develops all-flash data storage hardware and software products, Pure Storage (PSTG).

As discussed in the last report, heightened volatility relating to the war between Russia and Ukraine—or more specifically, the prospects of a ceasefire between the two—is the key driver for the broad metals market right now.

Yes, there are other fundamental factors behind the latest rallies in the major industrial metals, but everything else is dwarfed in comparison to the Russia factor. On that score, uranium is the latest metal to fall victim to sanctions against that country.



In the portfolio, we just added a new position in a dual steel and aluminum play that looks set to pop.

After a multi-week bottoming process, the buyers showed up last week in a big way, producing a rare show of strength that, historically, has always preceded great gains when looking out six to 12 months. That said, the next few weeks are more of a toss-up, as the intermediate-term trends of most indexes and stocks are still iffy and news-driven action (like today’s commodity move) is still the norm. We’re bumping up our Market Monitor a notch and think it’s OK to extend your line a bit, but we still think it’s best to start small, aim for pullbacks and to go slow.

With the market bouncing strongly last week, we leave our previously cautious stance behind and jump on a fast-growing, young chipmaker today.
And we’re not selling a thing, because after the February weakness, which saw a lot of irrational panic selling, the buyers are now back in charge and stocks are moving higher.


Details inside.

Happy St. Patrick’s Day! After the Fed for the first time since 2018 raised benchmark rates, stocks surged yesterday. The question remains whether the Fed can get a handle on inflation without tipping the economy into a recession. Rock-bottom Chinese stocks also got a lift yesterday as a Chinese regulatory agency indicated its support of U.S.-listed Chinese stocks. Emerging markets and fintech remain out of favor but we go there today for a Warren Buffett-backed, aggressive idea that is a play on both of these themes.

The market continues to remain strong in the face of economic data that’s anything but. As we’ve already discussed at great length, this is because the market is forward looking and there’s been enough potential positive news around treatments and the timeline to a vaccine that the path of least resistance has been higher.

After falling 34% in record time, the S&P 500 has recouped more than half of the losses. As of this writing, the market is down just 15% from the February highs. The S&P 500 is now back to the same level it was at this past October. Clearly the market is optimistic about the speed and strength of the economic restart. And the market usually gets it right.

I’ve been receiving questions recently that essentially ask, “Why did this stock go up when the company reported bad news?” and “Why did this other stock go down when the company reported good news?”

We provide the top five holdings in this fund.

This online educator’s price target was just raised by Morgan Stanley, to $83.

With China beginning to ease restrictions and sports betting rising, this casino operator has excellent potential.

This REIT will announce quarterly earnings on July 30; analysts are forecasting $0.48 per share.

Volatility is coming back into the market.

Our second recommendation is profit-taking on a previous pick.

Our first idea today is a global construction materials company that is expected to grow by 109% next year, and has the makings of a good turnaround.

Analysts expect this mega-tech company to grow by 20.4% this year, and five companies have recently increased their EPS forecasts for the company.

With our portfolio having swelled to 29 positions it’s time to trim a little around the edges to keep things manageable. As in the past, many of these decisions are based on lackluster recent performance and uncertainty regarding the near-term.

The strength in marijuana stocks that began two weeks ago with breakouts by the stocks of the four leading U.S. providers has continued this week, so now I’m going to take the portfolio to a fully invested position.

This global engineering and construction company is forecasted to grow by 16.1% next year.

Here is a Top Picks update we missed, on our fourth-place winner, a company that is making great progress with an Alzheimer’s drug.

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.