Issues
It’s been eleven weeks since the marijuana sector topped, sending the Marijuana Index down 50%. 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.
Two weeks ago, acting on this belief, I used half our cash to average up in the industry leaders and add one new small stock to the portfolio and today I’m doing just a little more buying, averaging up in another small operator.
After this buying, the portfolio will be roughly 29% in cash, and going forward, we’ll continue to take our cues from the market, always working to own the market’s leaders as we move closer and closer to full federal legalization.
Full details in the issue.
Two weeks ago, acting on this belief, I used half our cash to average up in the industry leaders and add one new small stock to the portfolio and today I’m doing just a little more buying, averaging up in another small operator.
After this buying, the portfolio will be roughly 29% in cash, and going forward, we’ll continue to take our cues from the market, always working to own the market’s leaders as we move closer and closer to full federal legalization.
Full details in the issue.
Not to sound like a broken record, but day-to-day sector rotation continues to be the story of the last week of trading, and almost all of 2021. The good news is that this is a fine situation for the Cabot Profit Booster portfolio as we are rotating with the market, buying the best stocks, and keeping the portfolio as diversified as possible.
Current Market OutlookEarnings season is always important, but it looks even more so this time—many growth stocks have been sitting around for the past two to three months (some even longer), while a decent number of cyclical names have been mostly up-and-down for the past four to five weeks. Thus, a collection of positive, powerful reactions to earnings could result in a bunch of good-looking buying opportunities … but, as always, we have to wait to see that happen before pouncing. Just going with what’s in front of us, nothing much has changed, with a lot of good setups but also a lot of selling in names that approach their old highs. Once that changes (due to earnings reports or anything else), it will be time to get more aggressive, but right now we’re sticking mostly with a buy-on-dips approach and waiting for buyers to really flex their muscle.
This week’s list has a broad mix of names, though most are more cyclical or turnaround plays. Our Top Pick is Steel Dynamics (STLD), which just leapt to new highs out of a tight area on huge volume. You can start a position here or (preferably) on weakness.
| Stock Name | Price | ||
|---|---|---|---|
| Burlington Stores (BURL) | 321 | ||
| Floor & Décor (FND) | 113 | ||
| Goldman Sachs Group, Inc. (GS) | 343 | ||
| Harley-Davidson Inc. (HOG) | 48 | ||
| The Middleby Corporation (MIDD) | 181 | ||
| Okta, Inc. (OKTA) | 285 | ||
| Qorvo (QRVO) | 199 | ||
| Seagate Technology (STX) | 93 | ||
| Steel Dynamics (STLD) | 55 | ||
| Tractor Supply Company (TSCO) | 191 |
The market’s main trend remains up and thus I continue to recommend that you be heavily invested, always working to “upgrade” your portfolio by selling weak stocks and buying healthier ones.
Today’s recommendation is a well-known big technology stock that’s spent the past eight months going sideways, despite the fact that revenue growth has been accelerating. To me, it’s a very attractive setup.
As for our current holdings, there are no changes. After selling two stocks last week, everything looks good today.
Details inside.
Today’s recommendation is a well-known big technology stock that’s spent the past eight months going sideways, despite the fact that revenue growth has been accelerating. To me, it’s a very attractive setup.
As for our current holdings, there are no changes. After selling two stocks last week, everything looks good today.
Details inside.
We continue to see more and more setups among growth stocks, but overall, the market remains in a spin cycle, with few stocks letting loose on the upside and incessant rotation among stocks and sectors. With the recent rally running into trouble, we cut bait with DraftKings (DKNG) earlier this week, but are willing to give the rest of our names some rope as we head into earnings season. Get all our latest thoughts on our stocks and our latest watch list in tonight’s issue.
In the April Issue of Cabot Early Opportunities we take a look at the red-hot real estate market and muse on the dramatic and lasting impacts from the Covid-19 pandemic.
We also take hints from the market’s action that it continues to be a time to focus on diversifying new buys across different markets. We take this evidence to heart and add five stocks that offer exposure to everything from resort travel to Afib surgical tools to digital transformation services.
Enjoy!
We also take hints from the market’s action that it continues to be a time to focus on diversifying new buys across different markets. We take this evidence to heart and add five stocks that offer exposure to everything from resort travel to Afib surgical tools to digital transformation services.
Enjoy!
April was another strong month for the Cabot Profit Booster portfolio as we locked in gains ranging from 3.7% to 7.9% on our six positions. Speaking of earnings, this week’s pick is a recent earnings season winner that busted out to a new high following reporting quarterly results.
Current Market OutlookGrowth stocks are still in mostly good shape, which is the good news. And while we see reasons for continued optimism, it’s also hard to be a raging bull right now. There’s quite a bit of rotation underway, and sentiment is still elevated. On top of that, the number of Nasdaq stocks making new lows is more than we’d like to see, which means cross-currents could become a factor in the near term. Still, the weight of evidence prevents us from being overly cautious; plus there are a fair number of nice-looking setups in individual stocks across several industries. With this in mind, we’re leaving our Market Monitor at level 6 for now.
This week’s list includes a mix of growth and cyclical themes, most of which have a solid story.
Our Top Pick is Nvidia (NVDA), an established semiconductor name with a growing presence in the soaring high-performance computing (HPC) market, and which has just broken out to new highs on strong volume.
| Stock Name | Price | ||
|---|---|---|---|
| ArcelorMittal (MT) | 30 | ||
| Brooks Automation, Inc. (BRKS) | 98 | ||
| Jabil Inc. (JBL) | 54 | ||
| JetBlue Airways Corporation (JBLU) | 20 | ||
| KBR Inc. (KBR) | 40 | ||
| Levi Strauss & Co. (LEVI) | 28 | ||
| NVIDIA Corporation (NVDA) | 614 | ||
| Snap-On Inc. (SNA) | 236 | ||
| Square, Inc. (SQ) | 245 | ||
| Vale S.A. (VALE) | 19 |
Recent crosscurrents in the market have seen changes among sector leadership, and today we have a broad selloff, but overall, the main trend of the market is up and thus I continue to recommend that you be heavily invested.
Today’s recommendation is an attempt to benefit from sector rotation, by targeting a sector that’s still down; if the sector turns up soon, today’s buyers should profit handsomely.
As for our current holdings, two stocks are upgraded to buy today, while two are downgraded to sell as we cut our losses short. The adage that applies: There’s nothing wrong with being wrong; what’s wrong is staying wrong.
Details inside.
Today’s recommendation is an attempt to benefit from sector rotation, by targeting a sector that’s still down; if the sector turns up soon, today’s buyers should profit handsomely.
As for our current holdings, two stocks are upgraded to buy today, while two are downgraded to sell as we cut our losses short. The adage that applies: There’s nothing wrong with being wrong; what’s wrong is staying wrong.
Details inside.
Updates
Investors who subscribe to Cabot Undervalued Stocks Advisor run the gamut from speculative investors who are looking for very short-term profits to buy-and-hold investors who want to build a portfolio full of good, market-leading companies like FedEx (FDX) and Amazon (AMZN).
There continues to be a lot of noise out there regarding Donald Trump, his legal team, trade, tariffs and security threats/manipulation on social media platforms in advance of the upcoming mid-term elections
Stay bullish. We’ve seen an improvement in the evidence during the past week, with growth stocks acting well and more names hitting new highs. We’re moving one of our positions back to buy and our cash position stands at 27%.
The broad market looks healthy. The S&P 500 is close to breaking out to new highs, and the Dow is at its highest level since February, propelled by strong performances from industrial and consumer staples stocks. Energy stocks are still lagging a bit, but everything else looks healthy. We are putting four stocks back on Buy today.
It’s fairly easy to find stock market prognosticators who will tell you to head for the hills, and buy gold along the way. As for me, the market is doing everything that I expected this year, despite the harrowing headlines. Stick with your investment plan.
It’s been a relatively quiet week in our portfolio so there aren’t many stock-specific updates to cover.
Our Buy signal from the Cabot Emerging Markets Timer has turned decidedly negative and most of our stocks are under selling pressure.
We continue to see an unusual amount of rotation in the market, with crosscurrents sending sectors up one day and down the next. However, our portfolio looks healthy. We have a two rating changes today, but overall we are in good shape.
Many investors are aware that over the short-term, a stock share price can bounce all over the place, often with no apparent correlation to a company’s successes.
Even though there was some crazy action in the market last week the bulls remain in charge and many stocks are breaking out to fresh highs.
In recent months, I’ve helped investors unwind some of their Benjamin Graham Value stocks, while keeping those with sound fundamentals and good earnings growth prospects.
The overall market and most growth stocks have stabilized in recent days but there are still some yellow flags. Our 50%-plus cash position is a bit too high so we’re going to change that tonight by adding one new position and buying a bit more of another.
Alerts
Wells Fargo recently initiated coverage on this luxury consignment website stock with an ‘Outperform’ rating.
One portfolio stock is up on news of a successful drug trial and another reported a strong earnings beat.
Coverage of the shares of this alcoholic beverage producer was recently initiated at MKM Partners with a ‘Buy’ rating, and 10 analysts have increased their EPS estimates for the company in the past 30 days.
Four analysts have increased their EPS forecasts for this financial firm in the past 30 days.
As we’ve seen in recent days, the major indexes are a bit soft this morning, with the Dow down 73 points and the Nasdaq down 15 points.
Baker Hughes changes their corporate name and stock symbol. And, two stocks report third-quarter earnings beats.
This master limited partnership is benefiting from the growth in natural gas exports, but is trading at a discount.
There are a couple quick things to cover today. First, the introduction in the email that went out introducing yesterday’s Issue was placeholder text from a past update. I apologize for the error and hope it didn’t seem too random. Second, I’ve received questions about the stocks in the Special Reports that you have access to as subscribers to Cabot Early Opportunities.
Two stocks report earnings and two more are rising again.
The top five holdings in this ETF are: Abbott Laboratories (ABT, 13.40% of assets); Medtronic PLC (MDT, 13.21%); Thermo Fisher Scientific Inc (TMO, 10.57%); Danaher Corp (DHR, 7.91%); and Intuitive Surgical Inc (ISRG, 4.66%).
It’s been a tough few months for cannabis investors, but no downtrend lasts forever, and yesterday’s blast-off by Aphria (APHA), which sparked buying across the sector, is a sign that the worst has almost certainly passed.
Tyler is selling one stock.
Portfolios
Strategy
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.