Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the June 2021 issue.

Many of our recommended names are at or approaching our price targets. The decision to keep or sell isn’t easy in a strong market. Our patience is being tested (in a good way).



Few people would attend the Indy 500 and think about investment horizons. But, such is the world that your chief analyst inhabits. The race itself was a thrill, as always. It was also a showcase of different investment horizons, featuring that of new track owner Roger Penske.



Earning season has concluded, so it has been a slow period for company-specific news, although Tyson (TSN) announced the surprise departure of its new CEO. Some companies, including Bristol-Myers (BMY), Cisco (CSCO) and Dow (DOW) are presenting at various investor conferences. These can be worthwhile to watch and are free to the public, with replays available in addition to the live presentations.



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.



I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.



Thanks!

This month we’re jumping into a little-known company that makes and sells pop culture products.

It’s sort of an odd duck, but when you dig below the surface you find compelling products and interesting market exposures, including to the nascent Non-Fungible Token (NFT) market, which has exploded in trading value over the last year.



Revenue growth is above 30%, and the chart is strong.



Enjoy!

The market has strengthened again, which is great for our three open covered call positions, all of which are trading above the strike price of the call we sold. That being said, a sideways market is also fine for our volatility selling strategy, that is focused on buying the strongest stocks, while keeping the portfolio diversified.

I hope you enjoyed the long weekend!

Investors in our stocks certainly did, as more and more of them have been hitting new highs. In fact, they’re doing so well that I’m selling none today.



As for today’s recommendation, it’s a young growth stock trading 50% off its recent high—a great opportunity for aggressive investors.



Details inside.

It’s been a good spring in the markets and the economy. Unemployment claims are declining, housing is staying steady, and consumer confidence—as well as consumer spending—are rising.

And as we begin to emerge from the pandemic, economic growth looks healthy, with the latest GDP quarterly estimates coming in at 8.2%.



Our Feature Recommendation this month is a Financial company that participates in both the insurance and asset management industries. It pays an attractive dividend, and is seeing healthy growth, especially in Asia.



Our portfolio is sailing along, and we think this addition to our holdings will be a profitable move.



We hope to see you on our June Platinum Club webinar; it’s scheduled for June 8 at 2pm. In the meantime, don’t hesitate to contact us with any questions or comments.



Happy Investing!



Nancy Zambell and Kate Stalter

Current Market Outlook


If you had told us three weeks ago that growth stocks would bounce decently, a collection of names would show some big-volume upmoves and other names would start to tighten up, we’d have taken it in a heartbeat. As we’ve written in recent days, the action is encouraging, though not decisive yet, and the next week or two will be key—many prior winners have pushed into resistance, while in recent months most good-looking names have quickly found sellers, so if the buying pressures can continue it would be a sign that the market’s character has changed. As it stands now, the evidence has improved, so you can start putting more money to work if you’ve been relatively defensive. But we think going slow and building as you develop profits is the way to go.

This week’s list has many interesting names, including a few more growth-y titles than we’ve seen recently. For our Top Pick, we’ll take another swing at Nvidia (NVDA)—it’s had two failed breakouts this year, but we think the 3rd time could be the charm.

Stock Name	Price	Buy Range	Loss Limit
Adient (ADNT)	53	51-53	45.5-47
Bentley Systems (BSY)	58	54.5-56.5	49.5-50.5
BioCryst Pharmaceuticals (BCRX)	16	14-15.2	12-12.7
CrowdStrike (CRWD)	222	215-224	190-195
Dicks’s Sporting Goods (DKS)	97	93.5-96.5	85-86.5
Ford Motor Co. (F)	15	13.6-14.3	12.2-12.6
NVIDIA Corporation (NVDA)	650	630-655	575-590
Range Resources (RRC)	15	13.7-14.5	12-12.5
Sea Limited (SE)	257	248-260	220-225
Toll Brothers Inc. (TOL)	65	63.5-66	58.5-59.5

The Dow Jones Industrial Average celebrated 125 Years yesterday as the index has increased an average of 7.7% each year. Markets continue to consolidate and churn with solid earnings offsetting concerns over inflation and valuations. This week Virgin Galactic (SPCE) took off while overall Explorer positions moved forward. Today’s new recommendation is a big data software stock that is in an uptrend on the back of some big government contracts. Enjoy!

It’s been fifteen weeks since the marijuana sector topped, sending the Marijuana Index down 55%. But as the picture of this correction gets clearer, every day I get a little more bullish about the possibility that the sector is ready to turn up again. Most of our stocks are exhibiting typical base-building behavior, though there’s no sign of real buying power yet.

But the fundamentals of the industry remain excellent, so there’s no question that eventually these stocks will get going again.



In the portfolio today there are only two small changes. IIPR moves to Hold, and TPB moves to Sell.



Full details in the issue.

It looks like this relentless bull market is finally stalling out. The market isn’t correcting, or really selling off in any substantial way. It has just stopped moving higher, for now. Given the returns in the past year and recent months, the market had to take a break. That pace couldn’t last.

Stock prices may be stuck in mud for the time being, but there are some fantastic income opportunities out there. Many high-dividend stocks are still well below pre-pandemic prices and offer some of the highest yields in a decade. In this month’s issue I highlight a phenomenal stock with a sky-high yield and a price that’s trending higher.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the June 2021 issue.

Good investing ideas can come from anywhere. One useful source is to borrow ideas from some of the best value-oriented investors. Their holdings can be found in the 13F and 13D regulatory filings which are required every quarter. In the letter, we briefly describe these filings, how we use them, and six stocks that look attractive from the many holdings we analyzed.



A slightly shocking source of turnaround ideas can come from the electric utility industry – about the last place that contrarians might look these days. We discuss three with interesting stories and strong upside potential.



Our feature Buy recommendation, Vistra Corporation (VST), comes from this illuminating search through the utility sector. Vistra is the nation’s largest independent power producer with an emerging retail business. Its shares were jolted by the winter storms yet look like an attractive turnaround situation.



We also mention our May 12th move from Buy to Sell on shares of Mohawk Industries (MHK).



Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.



I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.

The market looks a lot better less than three weeks into 2019.

The Emerging Markets Timer (EEM) has managed to maintain its positive stance this week as most of our positions moved forward. While this is a good sign, I remain somewhat cautious and awaiting a stronger signal to put more of our cash to work.

The market got a nice bounce off the Christmas Eve lows. It’s up about 10% since then. But the bounce back is leveling off. If the market continues to recover here, it will be in a guarded and cautious state for another year or two. Beyond that, there will be fantastic opportunities to get aggressive. But, for now, I will remain cautious but not fearful.

Crista is adding a new stock to the Growth Portfolio, it’s one of the world’s largest producers of nitrogen products, serving customers on six continents.

In the fourth quarter of 2018 it felt like we all finally succumbed to some festering illness that landed us in the intensive care unit. Thus far, the beginning of 2019 has the feeling of a trip home from the hospital and the beginning of the healing process.

It’s time to do a little buying. The market’s trends are still pointed down, so we still think going slow and stepping lightly makes sense. We are adding three new half positions to the portfolio tonight and keeping our cash position around 67%.

Don’t look now but the market is in rally mode and has been for a couple of weeks. We will continue to favor safer, more recession-resistant stocks and investments for the foreseeable future but the selloff may be over. One rating change as we move a position from buy to hold.

This will be a busy week for Wall Street as analysts speak with the companies within their stock purviews and write updated research reports. I expect to relay lots of changes in consensus earnings estimates in next week’s update.

This high-yield preferred stock is issued by a company that is making money off of storing and crunching Big Data.

While almost all of our Covered Call trades are working well, this stock fell through our stop yesterday afternoon.

This bio-pharma company is seeing fantastic results with its Alzheimer’s studies.

Most of our stocks have been heading north but two have diverged from the pack and are headed south.

This retailer presented at the January 13 ICR Conference 2020 and moves from Buy to Strong Buy.

This small regional bank looks undervalued, and has an annual current yield of 3.75%, paid quarterly.

This portfolio stock has gone vertical today after the company announced that management sees Q4 revenue near $69 million (+44%) versus expectations of $59 million and billings near $100 million versus previous guidance of $82 million to $88 million.

Trading at a P/E of just above 9, this annuity company looks like a good value play.

A portfolio stock is volatile in wake of preliminary Q4 earnings report.

The shares of this advertising company were recently upgraded at Needham to ‘Buy.’

The broad market remains strong, while the cannabis sector remains stuck in the mud—in general.

The Financial Times reported this morning that this portfolio stock was in talks, in late December, to possibly be acquired by AIG, Prudential Financial Group or Prudential Financial.

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.