The market remains in great shape, and even better, growth stocks have (mostly) avoided any further severe rotation in recent weeks, with more and more joining the party. There are a couple of bugaboos out there (especially sentiment, which has gotten giddy), but we continue to steadily put money to work as opportunities arise. Last week, we added a new half position in Halozyme (HALO), and tonight, we’re filling out our position in Uber (UBER), which looks like a fresh, early-stage leader to us.

Open up tonight’s issue for all our latest thoughts on the market, our stocks, some new ideas and the myriad longer-term breakouts we’re seeing across sectors and themes, which should bode well.

This month we’re jumping into a company that specializes in precision medicine for cancer.



It has developed a sequencing platform that is able to analyze over 20,000 genes, far more than most competitor solutions. Even better, this platform allows analysis of both tissue biopsies and liquid biopsies.



Ultimately, the company is going after a roughly $40 billion market. Yet its market cap is a mere $1 billion today.



This company is still unknown, but that’s likely to change as it brings new products to market and continues to transform the market for personalized cancer vaccines and next-gen cancer immunotherapies.



All the details are inside. Enjoy!

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the December 2020 issue.

We briefly share our thoughts on the surging stock market and run through some valuation math that looks out a few years. Our conclusion: the market’s earnings growth, even side-stepping the pandemic’s effects, doesn’t look that impressive, while the market’s valuation is on the high side of average. It is starting to look like a good time to be pickier about which stocks to own.



With this thought in mind, we are moving Broadcom (AVGO) from a Hold to a Sell, as the shares have essentially reached our price target.



It’s been a fairly active month for a value-oriented newsletter, adding three new names and selling six, including Broadcom. This leaves the holdings list at 12 names. We anticipate expanding this roster over the next month or two, as there are many interesting value ideas out there.



We also tweaked the descriptions under the portfolio titles to more accurately reflect what types of stocks we look for. This should also help add some clarity to the differences between the two categories.



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.

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

With the year-end approaching, investors often sell for reasons unrelated to a stock’s outlook. This month we describe some of these reasons, including tax-loss selling, window-dressing, performance bonus protection and the desire for a fresh start in the new year. We discuss seven stocks that look vulnerable to this type of selling yet seem likely to bounce once the selling pressure relents.



We also look at the airline industry – now in the throes of a near-term depression. We believe the outlook for a recovery is improving despite the recent “third wave” of rising Covid case counts. Clearly these stocks carry risks, most prominently that passengers don’t return to flying as much, even after a vaccine and other safety protocols should make flying safe again. Our discussion delves into some of the industry’s arcane metrics, as these help clarify (at least for those with a wonkish interest, like me) the drivers of the downturn and a likely recovery. We highlight five promising discount airline stocks.



Our feature recommendation is the office equipment company Xerox Holdings Corporation (XRX). The market tends to dismiss this company, but its robust cash flow, cash-heavy balance sheet, low valuation and 4.6% dividend yield offer strong value.



The letter also includes a summary of our recent sales of Peabody Energy (BTU), Weyerhaeuser (WY) and Barrick Gold (GOLD), our price target increase for Freeport-McMoran (FCX) and the full roster of our current recommendations.



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 past month has been the best of the year for our marijuana stocks, and while there’s a chance the sector could top out now (there’s so much good news out there), I learned long ago that it doesn’t pay to fight the trend.

The fact is, this sector strength could easily run to the end of the year as investors rush into this high-growth sector. So, we’ll now become fully invested, adding one new stock at the same time.



Full details in the issue.

The euphoric vaccine rally has driven the market indexes to all time highs. A vaccine likely means the end of the pandemic, sooner rather than later. The removal of the remaining lockdown restrictions should unshackle the economy and bring on a full and robust recovery.

A full recovery will lift those stocks and sectors that depend on the Main Street economy. It will lift cyclical sectors like energy, finance and hospitality that had not participated in the partial recovery. It’s already happening. The losers of the earlier stock market recovery are on fire.



In this issue I highlight one of the best banks in the country. It is a highly desired stock that should be very quick to recover. The stock has strong momentum and is still priced well below the 52-week high. This issue also highlights two covered call opportunities to cash in on the market rally.

This is a short week, with my last update just a few days ago, but our Explorer portfolio is doing well. In the last few days, Sea (SE), NovoCure (NVCR) and Alibaba (BABA) are each up 10 points and ElectraMeccanica (SOLO) has increased 20%. As the clouds lift with the flurry of positive vaccine announcements and election uncertainty gone, markets will go into December with more confidence but with lingering doubts about the strength of the economy. Our new recommendation is a leader in critical cancer diagnostics highlighting the benefits of a sharp focus on one market.

Last Friday all three of our November covered calls expired for full profits.

There were again no significant movements among our stocks in the past week, but many of our stocks went up to their fair values.

Trading remained muted this week, with markets closed Monday for New Year’s Day. Wall Street began to return to work yesterday, and got the New Year off to a good start with solid gains in all the major indexes. On the flip side, some conservative high yield investments, like utilities and preferred shares, declined.

There has been very little going on in our portfolio this week. After last week’s 3.5% average gain, our stocks have moved only -0.5% this week, on average.

We did not see any significant price movement among our recommended stocks in the previous week.

The overall market remains in good shape, as our trend-following market timing indicators remain clearly bullish, and the Two-Second Indicator, while not positive, continues to show some improvement.

With only four low-volume trading days elapsed since our January issue was published, there’s not much new to report from the markets. The exception is the interest rate front.

This stock rose $6 in after-hours trading on December 22, subsequent to the company’s announcement that “in response to inquiries from interested parties, it has initiated a formal process to explore strategic alternatives for the Company focused on maximizing shareholder value.”

Small caps bounced off their 50-day line last week and are nearing all-time highs. It’s anybody’s guess what will happen in the days ahead as many people will have stepped away from the market, so don’t be surprised if there is some odd trading in some of our stocks. There’s usually some inefficient trading, especially with the microcap stocks, during these periods.

The iShares EM Fund (EEM) has popped back above its 50-day line, which is a plus, but the Emerging Markets Timer remains basically neutral, having made no net progress over the past two months.

This past week there was a 13% gain in one of our newer recommendations and I’m recommending the sale of another.

It’s quite common that a year’s top-performing stocks and industries can fade after the new year arrives as investors shift money into industries that have been long-ignored. “Buy low” doesn’t just refer to stock market corrections and random stocks that have fallen precipitous amounts. “Buy low” can also refer to unrecognized industry-wide opportunities.

As we march toward the end of Q4 and the beginning of 2018, most investors are, rightly, turning their attention to what’s likely to happen in the year ahead. Returns this year have been nothing short of outstanding. While we’ve had bouts of volatility, especially in individual stocks, there’s been astounding breadth of strength across almost all sectors.

Crista reports good earnings announcements in five portfolio stocks.

Analysts expect this semiconductor company to grow at a rate more than 29% this year.

Nine analysts have increased their earnings estimates for this consulting firm in the last 30 days.

The major indexes were mixed today, with the Dow up 29 points and the Nasdaq down 37 points.

This health insurer has also recently been recommended by Zacks, due to earnings and cash flow growth, as well as rising estimates.

This ETF is heavily weighted with tech stocks.

Thus far, the 11 portfolio companies that delivered second-quarter results have all met or exceeded Wall Street’s consensus earnings estimates.

Analysts expect this casino company to spurt annual growth of 33.27% over the next five years.

This vehicle supplier beat analysts’ estimates by $.09 last quarter, and Wall Street expects it to grow at a rate of 27.5% this year.

Analysts expect this Indian online travel company to grow at an annual rate of 56.9% over the next five years.

Today’s news: One stock is now Retired from the Growth & Income Portfolio; and one stock joins the Buy Low Opportunities Portfolio as a Strong Buy.

This homebuilder beat analysts’ estimates by $.07 last quarter.

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.