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.

In the March Issue of Cabot Early Opportunities we talk honestly about the current state of the market and what to do now.
I also cover five opportunities that continue to pique my interest. I have a familiar software stock that’s been resilient lately, an alternative energy supplier that could help reduce Europe’s reliance on Russian energy, a pharma company set to make big moves over the coming years, an early-stage electric vehicle play, and an innovative MedTech company that’s growing like a fertilized weed in early spring.


Enjoy!

Global fossil fuel uncertainty is shining the spotlight back on renewables as the best way for most economies to be energy independent. This issue we feature one of America’s largest renewable generation portfolios, which offers an exceptional 4%-plus dividend yield. We also look at a young renewables-focused business finding its legs in wind, solar and infrastructure.

As always, we also highlight three technically strong ESG stocks to consider and give updates on our Greentech Timer and Real Money and Excelsior portfolios. Read on!

Today, I’m adding the world’s largest publicly traded uranium company Cameco (CCJ), which has held up spectacularly throughout this market meltdown. Though of note, this stock is volatile and we are going to play it super defensively, with an in-the-money call.

The situation remains the same as it has for the past week or so. When it comes to selling pressures, we’re seeing some signs that they’re starting to ease, but, on the buying side, there isn’t much evidence to suggest the bulls are flexing their muscles, as most indexes, sectors and growth funds are still in downtrends while rallies into resistance (whether for an index or stock) almost always attracts quick selling. Yes, there are still many old world stocks that are acting well (though we’ll see how today’s commodity-related selloff goes), so we’re not opposed to nibbling on these sorts of pullbacks. But overall, we think watchful waiting is the right course.



This week’s list is intriguing as there are a good number of fresh breakouts here, some from very long ranges. Our Top Pick is one of those, with the company’s massive step-up in earnings last year expected to persist for at least the next couple of years.

With the market still in a downtrend, defense continues to be important.
Cash is the simplest defensive asset, but low-risk stocks, undervalued stocks, dividend-paying stocks and stocks in sectors bucking the downtrend are all worth considering.



My recommendation this week is a well-known automaker with great prospects in the electric vehicle space whose stock is trading 38% off its recent high.



Details inside.

The market has spent the past six weeks etching a volatile, tedious bottom, with numerous secondary measures offering encouragement, the biggest of which is an ongoing positive divergence in the number of stocks hitting new lows, which tells us fewer stocks are participating in the downside. That’s good to see, but what we really need to see now is real, sustained buying pressure--so far, that hasn’t been the case, so we’re remaining generally defensive.

We’re mostly bullish, and are giving our winners room to keep running, but we’re also still looking for decent entry points in stocks that appear to be early-ish in their advances.

Regarding the here and now, we’re starting to see signals that we could have a market dip, which would be entirely normal given that it’s only had two small retreats since stocks began racing higher in September.

It is likely that a pullback in the market, as measured by the indexes, is increasingly likely in the near term. But that would be healthy and welcome. And it would set up things better for the rest of the year.

The coronavirus continues to make headlines, with this week’s victim being Apple Inc. (AAPL) which announced that 2020 revenues are going to take a hit from the work stoppages emanating from China.

Individual stocks continue to move around based on earnings reports and, for the most part, things appear to be quite good. Many management teams aren’t yet sticking their necks out and issuing rosy guidance for 2020, and that’s causing a few dips here and there.

The markets are demonstrating impressive resiliency in the face of the coronavirus. You can’t fight the market but I remain a bit more guarded since this disruption will have to hit profits down the road for some companies.

Here’s how I handle my personal stock portfolio when I’m expecting a market correction. When I sell a stock, I put part of the capital in the money market fund, and I reinvest part of the capital into an attractive stock opportunity.

Back to the market, there’s more good news than bad from my perspective. Employment and hiring are good, the lessening of tariffs on $75 billion worth of U.S exports to China is good, interest rates remain low (many economists see a rate cut coming too) and there are plenty of good earnings reports to get excited about.

Tyler updates six stocks in the Cabot Early Opportunities Portfolio

Coronavirus sent this high-quality grocer’s same store sales up more than 10%, providing a $0.24 earnings beat last quarter.

This Chinese AI/internet company beat analysts’ estimates by $0.68 last year, and Wall Street is forecasting 30.9% growth for 2020.

The first issue of Cabot Income Advisor just came out yesterday. The idea is to sell a covered call, meaning you already own or you just purchased IIPR on the buy recommendation.

Our second recommendation is a sale of a previous idea.

The top five holdings are listed in our first recommendation,

Analysts expect this cloud company to grow by 58.3% this year.

This avocado (plus other foods) grower is due to report earnings on June 8.

This consultancy firm beat analysts’ EPS estimates by $0.04 last quarter and is forecasted to grow at an annual rate of more than 12% over the next five years—one of the bright spots during this pandemic.

Shares of this portfolio stock have taken a hit lately on news of a secondary offering of around $170 million, followed by the pricing announcement

Crista updates three portfolio stocks and has one rating change.

This Virginia bank just reported a good quarter and raised its dividend.

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.