Issues
The timing is right for alternative energy.
Alternative energy (also referred to as clean or alternative energy) is by far the fastest growing energy source. The International Energy Agency (IEA) estimates that global renewable power supply will grow 50% in just the next 5 years.
While clean energy has been a story and knocking at the door for a while now, a certain critical mass in growth and development seems to be taking place recently. The market usually gets it. And it’s telling us something.
The iShares Global Clean Energy ETF (ICLN), which tracks 30 stocks in the Global Clean Energy Index, has taken off lately after going nowhere for more than a decade. ICLN soared 100% over the past year and 178% for the past two years, compared to S&P 500 returns of 22% and 44% respectively over the same period.
The market clearly sees big changes looming in the energy sector. It also helps that the Biden Administration will likely reward clean energy companies with more tax breaks and subsidies and other goodies. But more importantly, the focus will draw still more investor attention to the booming growth in alternative energy. And investor intrigue will only accelerate.
This month’s highlighted stock NextEra Energy (NEE) should clearly benefit going forward. It may not be the sexiest clean energy. But it provides a great way for more conservative, income oriented investors to play the trend.
Alternative energy (also referred to as clean or alternative energy) is by far the fastest growing energy source. The International Energy Agency (IEA) estimates that global renewable power supply will grow 50% in just the next 5 years.
While clean energy has been a story and knocking at the door for a while now, a certain critical mass in growth and development seems to be taking place recently. The market usually gets it. And it’s telling us something.
The iShares Global Clean Energy ETF (ICLN), which tracks 30 stocks in the Global Clean Energy Index, has taken off lately after going nowhere for more than a decade. ICLN soared 100% over the past year and 178% for the past two years, compared to S&P 500 returns of 22% and 44% respectively over the same period.
The market clearly sees big changes looming in the energy sector. It also helps that the Biden Administration will likely reward clean energy companies with more tax breaks and subsidies and other goodies. But more importantly, the focus will draw still more investor attention to the booming growth in alternative energy. And investor intrigue will only accelerate.
This month’s highlighted stock NextEra Energy (NEE) should clearly benefit going forward. It may not be the sexiest clean energy. But it provides a great way for more conservative, income oriented investors to play the trend.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the March 2021 issue.
This month we look at post-bankruptcy energy stocks. Companies that have emerged from bankruptcy are generally shunned by investors, as are energy stocks in general in the current market. Combined, these two traits offer some attractive investment opportunities. We discuss four of them.
We also look at tobacco stocks. Shares of these companies have fallen sharply in recent years due to an acceleration in the decline rate of cigarette volumes. However, that trend appears to be moderating, leaving the shares undervalued yet paying high dividend yields. Our feature recommendation, Altria Group (MO), is a stand-out value among the group.
We also include comments on recent price target and rating changes, including our recent Sell recommendations on Trinity Industries (TRN) and ViacomCBS (VIAC).
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.
This month we look at post-bankruptcy energy stocks. Companies that have emerged from bankruptcy are generally shunned by investors, as are energy stocks in general in the current market. Combined, these two traits offer some attractive investment opportunities. We discuss four of them.
We also look at tobacco stocks. Shares of these companies have fallen sharply in recent years due to an acceleration in the decline rate of cigarette volumes. However, that trend appears to be moderating, leaving the shares undervalued yet paying high dividend yields. Our feature recommendation, Altria Group (MO), is a stand-out value among the group.
We also include comments on recent price target and rating changes, including our recent Sell recommendations on Trinity Industries (TRN) and ViacomCBS (VIAC).
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.
Yesterday was a rough day for stocks in the marijuana sector. Today was better. But overall, I continue to hold the opinion that the sector peaked two weeks ago and that it needs a longer cooling-off phase—a real correction.
Such a correction can take many forms, and it’s hardly worth speculating about what form this one will take. Yet by managing your portfolio carefully, based in large part on the action of each stock, you can get through this correction with minimal pain and be well-positioned to add to your gains when the uptrend resumes—because in the long run, this remains a fantastic sector to be invested in.
Full details in the issue.
Such a correction can take many forms, and it’s hardly worth speculating about what form this one will take. Yet by managing your portfolio carefully, based in large part on the action of each stock, you can get through this correction with minimal pain and be well-positioned to add to your gains when the uptrend resumes—because in the long run, this remains a fantastic sector to be invested in.
Full details in the issue.
Your Cabot Profit Booster portfolio closed out three more positions that were assigned at expiration last week. Those were Alcoa (AA) earning profits of $255 per contract for a yield of 13.8%; Kohl’s (KSS) earning profits of $400 per contract, or a yield of 11.1%; and Snap Inc. (SNAP) with $500 in profits earned for a yield of 10%.
Current Market OutlookAfter a very strong rally from the late-January lows, the major indexes are again in the midst of a pullback—during the past week and a half we’ve seen a few days of churning and distribution as worries over inflation (and a less-loose Federal Reserve) cause some profit taking, and today saw a big rotation out of growth stocks. Could this be the start of a “real” correction? It could be, as the intermediate-term advance is long in the tooth and sentiment remains giddy. That said, we never anticipate, and so far, we really haven’t seen much abnormal action yet—while a few stocks have fallen apart after earnings, most leaders are intact and even the weakest major index (Nasdaq) is near its 25-day line, which is acceptable. Given some of the yellow flags out there, our antennae are up, but with most of the evidence still positive, we’re keeping our Market Monitor at a level 7.
This week’s list has many recent earnings winners, including a few that are busting loose from good-sized bases (regular or post-IPO). Our Top Pick is Wix.com (WIX), which has a great story, accelerating growth and just staged a very powerful breakout.
| Stock Name | Price | ||
|---|---|---|---|
| The AZEK Company (AZEK) | 47 | ||
| Deere & Company (DE) | 338 | ||
| DraftKings Inc. (DKNG) | 60 | ||
| Magna International Inc. (MGA) | 87 | ||
| Mohawk Industries (MHK) | 174 | ||
| MongoDB (MDB) | 392 | ||
| SelectQuote (SLQT) | 30 | ||
| Sonos (SONO) | 38 | ||
| Teck Resources Limited (TECK) | 23 | ||
| Wix.com (WIX) | 335 |
The bull market is alive and well, and our holdings, in general, are delivering as expected, with the usual zigs and zags to keep us on our toes.
Today’s recommendation is a big solid technology company that should benefit for years from the ongoing 5G communications rollout—and it pays a nice dividend, too.
As for our current holdings, there are no changes. With the new addition, the portfolio is once again fully invested.
Details inside.
Today’s recommendation is a big solid technology company that should benefit for years from the ongoing 5G communications rollout—and it pays a nice dividend, too.
As for our current holdings, there are no changes. With the new addition, the portfolio is once again fully invested.
Details inside.
Stocks seemed to wobble a bit this week and yesterday there was a mild sell-off among some tech stocks. Still, of the 400 S&P 500 companies that have already reported earnings, 80% had beaten analysts’ expectations, according to FactSet. Overall, the Explorer portfolio has performed relatively well with Fisker (FSR) up 17% and Virgin Galactic (SPCE) doubling since the beginning of 2021. This week’s new recommendation is from a sector in an uptrend due to a combination of higher demand and tight supply.
Here is your February Wall Street’s Best Digest issue 838.
Now that we have the presidential inauguration and former president’s impeachment behind us, let’s hope we can get onto the business of business for 2022! Almost 45 million in the U.S. have now been vaccinated against COVID-19, and we can almost see past the pandemic to a time when we can all get back to some semblance of ‘normality.’
Although, some of the trends that surfaced during the pandemic are sure to be with us for many years to come, including more remote workers, Zoom meetings, and home remodeling. Fortunately, for us, those trends should continue to make us money!
For now, the markets are holding up well; there are rumblings of an economic recovery on the way, and both investors and our investment pros remain bullish, as you’ll see in our Advisor Sentiment Barometer, as well as our Market Views.
This month, our Spotlight Stock is the largest commercial mortgage REIT, who managed to remain profitable during the pandemic. My Feature article further highlights that industry as well as some of the unique properties of the REIT.
We offer a host of Growth stocks this month, spread across the automobile, steel, infrastructure, marijuana, online dating, and airline industries. In Growth & Income, you’ll find opportunities in the music publishing, rental, retail, and homebuilding sectors.
Next, Financial stocks are finally beginning to gain ground, and here we include ideas from the insurance, investment, and commercial banking areas. Healthcare brings us two biotech stocks. And in technology—which is continuing to shine—our contributors like semiconductors, hardware, navigation tech, e-commerce, and telecom.
This month, while Utilities have not yet made their mark on 2021, we have one midwestern company that looks very interesting. We also offer you a couple of Low-Priced stocks to put some zing in your portfolio. And our REITs & Preferred Stocks section include companies from the commercial and data center sectors, as well as a preferred issue from an investment bank.
Lastly, our Funds & ETFs are well-diversified, with ideas in healthcare. Utilities, materials, yield, airlines, and small cap arenas.
I wish you a healthy and prosperous ‘rest of the winter’, and look forward to your feedback and questions. My address is nancy@financialfreedomfederation.com.
Happy Investing,
Nancy K. Zambell
Editor and Chief Analyst
Wall Street’s Best Digest
Now that we have the presidential inauguration and former president’s impeachment behind us, let’s hope we can get onto the business of business for 2022! Almost 45 million in the U.S. have now been vaccinated against COVID-19, and we can almost see past the pandemic to a time when we can all get back to some semblance of ‘normality.’
Although, some of the trends that surfaced during the pandemic are sure to be with us for many years to come, including more remote workers, Zoom meetings, and home remodeling. Fortunately, for us, those trends should continue to make us money!
For now, the markets are holding up well; there are rumblings of an economic recovery on the way, and both investors and our investment pros remain bullish, as you’ll see in our Advisor Sentiment Barometer, as well as our Market Views.
This month, our Spotlight Stock is the largest commercial mortgage REIT, who managed to remain profitable during the pandemic. My Feature article further highlights that industry as well as some of the unique properties of the REIT.
We offer a host of Growth stocks this month, spread across the automobile, steel, infrastructure, marijuana, online dating, and airline industries. In Growth & Income, you’ll find opportunities in the music publishing, rental, retail, and homebuilding sectors.
Next, Financial stocks are finally beginning to gain ground, and here we include ideas from the insurance, investment, and commercial banking areas. Healthcare brings us two biotech stocks. And in technology—which is continuing to shine—our contributors like semiconductors, hardware, navigation tech, e-commerce, and telecom.
This month, while Utilities have not yet made their mark on 2021, we have one midwestern company that looks very interesting. We also offer you a couple of Low-Priced stocks to put some zing in your portfolio. And our REITs & Preferred Stocks section include companies from the commercial and data center sectors, as well as a preferred issue from an investment bank.
Lastly, our Funds & ETFs are well-diversified, with ideas in healthcare. Utilities, materials, yield, airlines, and small cap arenas.
I wish you a healthy and prosperous ‘rest of the winter’, and look forward to your feedback and questions. My address is nancy@financialfreedomfederation.com.
Happy Investing,
Nancy K. Zambell
Editor and Chief Analyst
Wall Street’s Best Digest
In February’s Issue of Cabot Early Opportunities we dig into the red hot IPO market.
We take a closer look at five recent IPOs that have been on my shopping list. It is not an Issue for the faint of heart. Several of these stocks have made significant moves in their short history as public companies.
There are strategies to mitigate the risks, however. And as we scan the universe of attractive stories today it is not hard to envision several of these stocks trading significantly higher a year from now.
Sit back and enjoy.
We take a closer look at five recent IPOs that have been on my shopping list. It is not an Issue for the faint of heart. Several of these stocks have made significant moves in their short history as public companies.
There are strategies to mitigate the risks, however. And as we scan the universe of attractive stories today it is not hard to envision several of these stocks trading significantly higher a year from now.
Sit back and enjoy.
The stock market added to its gains last week up for a second straight week with the S&P 500 up 1.2% while the Nasdaq jumped 1.7%. Of note, February expiration is upon us this week. And all three of our February positions (Alcoa, Kohl’s and Snap) are in great shape, and likely to expire for full profits. But rest assured I will send you a full breakdown of these positions on Friday morning prior to expiration.
Updates
The major indexes have mostly moved sideways since our last update, but volatility remains high. The past week also brought a slew of earnings reports, and some big reactions, so I have three rating changes today.
With rapid adoption of cloud-based technologies, subscription software and online advertising, communication, commerce, etc., it’s apparent that technology companies play an increasingly important role in the global economy.
The iShares EM Fund (EEM) has been through a bad week, pulling it decisively below its 25- and 50-day moving averages. It’s a clear red light, and we’re taking action to reduce our exposure while we await both quarterly earnings reports from our holdings and a return of the buyers to emerging market stocks.
The stock market correction continues. It’s a normal correction that arrived after a 15-month bull run. As you hear newscasters attribute the market’s ups and downs to daily news stories, please know that the market bounces around, regardless of what topics are being highlighted en masse by the media.
I find myself shaking my head when I read the words Efficient Market Theory or Efficient Market Hypothesis (EMH), because my experience doesn’t jive with that concept.
Small caps have recovered nicely over the last three weeks and the S&P 600 Small Cap Index is bumping up against resistance at 980 for the third time in 2018.
In today’s portfolio one stock moves from Buy to Hold. Another rose to its target sale price of 14 and is now a sell, and one moves from Hold to Sell at 84.
Do a little buying, but continue to keep a good chunk of cash on the sideline. The market’s evidence has definitely improved recently, though our Cabot Tides have yet to turn positive—in essence, the overall trend is neutral, though many growth stocks are setting up well.
It’s been a constructive week for the market, and for our portfolio. After bouncing off its 200-day moving average two weeks ago, the S&P 500 turned positive for the year yesterday, its first return to the black in four weeks.
It’s earnings season, first featuring bank stocks, then oilfield service companies a week from today. Most of the other companies in our portfolio won’t report results until early May. Others operate on different fiscal cycles.
Small and large cap indices are up around 2.4% from Friday’s close and the portfolio is up almost 5%.
The iShares EM Fund (EEM) has firmed up over the last few days, but has yet to actually kick out to the upside. So, while it’s still in the vicinity of its moving averages, we still have a caution signal in force.
Alerts
This technology company focusing on energy and water beat analysts’ estimates by a whopping $0.40 last quarter, and eight analysts have recently increased their EPS forecasts for the company.
This specialty measurement company beat analysts’ estimates by $0.03 last quarter.
This time share company is forecasted to grow 27.4% this year.
Nine analysts have increased their earnings estimates for this royalty company in the past 30 days, and they forecast the company will grow by 21.9% annually over the next five years.
A Spanish news outlet, Intereconomia.com, is reporting that biotech company Amgen (AMGN) is in talks to buy Alexion Pharmaceuticals (ALXN) for close to $200 per share.
We provide the top five holdings of this cybersecurity ETF.
This equipment company is expected to report earnings tomorrow, and analysts expect EPS of $0.74 per share.
This fintech company beat analysts’ earnings estimates by a whopping $0.62 last quarter and four analysts have recently raised their EPS forecasts for the company.
This pharma beat earnings estimates by $1.62 last quarter and 29 analysts have raised their EPS forecasts for the company in the past 30 days.
This discount retailer beat analysts’ earnings estimates by $0.09 last quarter.
A diversified global manufacturing company of highly engineered products.
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.