Issues
There is no shortage of great stories in the medical technology field. Today we’re jumping in on one that’s been on my radar for some time.
The company has just begun to commercialize a revolutionary technology for treating BPH and prostate cancer, which affects millions of men around the world. Regulatory approval is in hand across three continents, and revenue growth is in the 80% to 100% range.
There are plenty of challenges ahead, but this company appears to be on the path to enormous success.
All the details are inside. Enjoy!
The company has just begun to commercialize a revolutionary technology for treating BPH and prostate cancer, which affects millions of men around the world. Regulatory approval is in hand across three continents, and revenue growth is in the 80% to 100% range.
There are plenty of challenges ahead, but this company appears to be on the path to enormous success.
All the details are inside. Enjoy!
Years from now, I wonder how historians will label this new decade. Will it be the “Terrific Twenties” or the “Turbulent Twenties”? It’s obviously too soon to tell, but we remain optimistic about the future today with a new idea at the fringe of the powerful clean energy trend that has moved past an inflection point. Meanwhile, the Explorer’s group of stocks had another good week as Virgin Galactic (SPCE) launched into space. I wonder if its take-off might be wrapped up in the Reddit revolution?
In January’s Issue of Cabot Early Opportunities we take a trip down memory lane to January 2020, and try to take some of our own advice that seems even more timely now.
We also dig into five stocks that cover a wide variety of end market exposures. We unpack a small stock that represents a play on infrastructure and clean energy, two rising stars in MedTech, a consumer name that just won’t quit and even a beaten down growth stock that should recover as people get back out there later in 2021.
As always, there should be something for everyone!
We also dig into five stocks that cover a wide variety of end market exposures. We unpack a small stock that represents a play on infrastructure and clean energy, two rising stars in MedTech, a consumer name that just won’t quit and even a beaten down growth stock that should recover as people get back out there later in 2021.
As always, there should be something for everyone!
Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the February 2021 issue.
We briefly comment on how the response by hedge funds to the Reddit trades may have led to last week’s sell-off and this week’s rebound in the stock market. Is there a bubble? Yes, and our note touches upon how all four ingredients of a bubble, outlined in a recent book on bubbles, are in place.
Earnings season is upon us. We review the reports from Dow (DOW) and JetBlue (JBLU), and look forward to six more reports in the coming week.
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.
We briefly comment on how the response by hedge funds to the Reddit trades may have led to last week’s sell-off and this week’s rebound in the stock market. Is there a bubble? Yes, and our note touches upon how all four ingredients of a bubble, outlined in a recent book on bubbles, are in place.
Earnings season is upon us. We review the reports from Dow (DOW) and JetBlue (JBLU), and look forward to six more reports in the coming week.
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.
Get this Investor Briefing now, Growth Investing Strategies that Will Make You Rich, and you’ll learn about strategies that will ensure your financial freedom and security. From the ten rules for making big profits with growth stocks to six ways to pick monster growth stocks … from nine tips for better investing to key indicators a bull market is ahead … and from stocks to buy when volatility sets in to stocks that thrive during a pandemic. Growth Investing Strategies that Will Make You Rich is your best guide to building a fortune so you can live a happy and stress-free life.
The stock market was under a bit more selling pressure last week as investors seem to be acting negative, even in response to positive earnings results. Unfortunately, the volatility shook us out of our Coeur Mining (CDE) covered call position. We won’t get every trade right, but that highlights the importance of risk management, especially in turbulent markets. This leads me to this week’s Cabot Profit Booster recommendation from a somewhat more defensive sector.
Welcome to Wall Street’s Best Stocks! We are thrilled that you have joined us on this journey to find undervalued growth stocks that offer great upside potential.
In this monthly newsletter, our goal is to add to your knowledge about the markets while helping you make money. We’ll do that by leveraging our combined years of market expertise to uncover stocks in a variety of industries to help you build a diverse portfolio of growing wealth. We’ll tell you how to buy the stocks, giving you both our target price, as well as a stop-loss strategy.
Each month, we’ll also give you our take on the markets and keep you up to date on our stocks, including any important news that may affect our view of the stocks, as well as price and rating changes. And should an event occur that requires immediate notification to you, in between issues, we will send you an email containing all the information you need to know.
In this inaugural issue, you’ll see that we’ve already built a base portfolio, which will be augmented each month with a new stock. Right now, the market has risen so quickly that the stocks in the existing portfolio are too pricey to enter, but keep your eyes glued to your email, in case we see an opportunity to add shares. And, of course, in each monthly issue, we will update those ratings with either Buy, Hold, or Sell.
As for the markets right now, we are very bullish, but cautious. We believe these are markets that require judicious stock-picking, not the dartboard approach, and we will be very diligent in our selections.
The economy is beginning to gain strength, and as more of our population is vaccinated, we should see some great opportunities in industries and sectors that were hit pretty hard by COVID-19.
We are ready to roll, and are looking forward to bringing you some great investment opportunities.
Happy Investing!
Nancy Zambell and Kate Stalter
In this monthly newsletter, our goal is to add to your knowledge about the markets while helping you make money. We’ll do that by leveraging our combined years of market expertise to uncover stocks in a variety of industries to help you build a diverse portfolio of growing wealth. We’ll tell you how to buy the stocks, giving you both our target price, as well as a stop-loss strategy.
Each month, we’ll also give you our take on the markets and keep you up to date on our stocks, including any important news that may affect our view of the stocks, as well as price and rating changes. And should an event occur that requires immediate notification to you, in between issues, we will send you an email containing all the information you need to know.
In this inaugural issue, you’ll see that we’ve already built a base portfolio, which will be augmented each month with a new stock. Right now, the market has risen so quickly that the stocks in the existing portfolio are too pricey to enter, but keep your eyes glued to your email, in case we see an opportunity to add shares. And, of course, in each monthly issue, we will update those ratings with either Buy, Hold, or Sell.
As for the markets right now, we are very bullish, but cautious. We believe these are markets that require judicious stock-picking, not the dartboard approach, and we will be very diligent in our selections.
The economy is beginning to gain strength, and as more of our population is vaccinated, we should see some great opportunities in industries and sectors that were hit pretty hard by COVID-19.
We are ready to roll, and are looking forward to bringing you some great investment opportunities.
Happy Investing!
Nancy Zambell and Kate Stalter
Current Market OutlookAfter one of the wildest weeks in months, you’ve probably seen countless articles talking about the action and the reasons for it. To us, though, it’s what happens during the next few trading sessions that will count most—right now, the intermediate-term trend of the major indexes is up, though it’s more of a mixed bag for leading stocks (both growth and cyclical). In our view, there’s been enough iffy action to warrant some action; we’re moving our Market Monitor down to a level 6 in today’s issue and have a fair number of sells. But what comes next will count most, with a strong, broad rebound (including some positive earnings reactions) likely boding well, while an inability to bounce/further selling possibly putting a nail in the coffin of the post-November advance. For now, we’re paring back and tightening stops but still giving most of our winners a chance to hold support and resume their advances.
This week’s list has a surprising number of solid charts given the recent turmoil, though we generally still favor buying on dips or some tightening action. Our Top Pick is PagerDuty (PD), which is refusing to budge.
| Stock Name | Price | ||
|---|---|---|---|
| Affiliated Managers Group, Inc. (AMG) | 114 | ||
| Aphria Inc. (APHA) | 13 | ||
| Axon Enterprise, Inc. (AXON) | 166 | ||
| Marvell Technology Group (MRVL) | 53 | ||
| Matador Resources Company (MTDR) | 16 | ||
| The Michaels Companies (MIK) | 15 | ||
| Novavax, Inc. (NVAX) | 269 | ||
| PagerDuty (PD) | 51 | ||
| Penn National Gaming (PENN) | 104 | ||
| Redfin (RDFN) | 75 |
The market’s main trend remains up, and thus I continue to recommend that you be heavily invested.
However, last week’s GameStop affair has increased the risk of a well-deserved major correction and thus for the second week in a row, I’m recommending a slightly conservative stock with less downside potential—and a small dividend.
As for our current holdings, there are no obvious bad apples, but we must sell something to keep the portfolio a proper size and the victim today is our Brazilian Water company SABESP (SBS).
Details inside.
However, last week’s GameStop affair has increased the risk of a well-deserved major correction and thus for the second week in a row, I’m recommending a slightly conservative stock with less downside potential—and a small dividend.
As for our current holdings, there are no obvious bad apples, but we must sell something to keep the portfolio a proper size and the victim today is our Brazilian Water company SABESP (SBS).
Details inside.
Get this Investor Briefing now, How to Become a Master Stock Investor for Life, and you’ll learn all the investing essentials you need to ensure your own financial freedom and security. From the basics about investing styles and sectors to stock-market seasonality and cycles … from protecting your portfolio to key investing resources for you … and from knowing when to buy, sell, and hold stocks to getting specific stock recommendations. How to Become a Master Stock Investor for Life is your best guide to a good foundation for achieving and maintaining your financial freedom.
Updates
I noted last week that the outperformance in growth stocks was contributing to some underperformance in our portfolio. That situation has now been flipped on its head. Growth stocks started lagging in the middle of last week, and for the week, the S&P 500 lost 1.24%, the Dow dropped 1.54% and the Nasdaq fell by 1.04%. Utilities and REITs—year-to-date laggards—were the week’s best-performing sectors.
The market’s slide this week has put our Cabot Tides back on the fence. That said, most leading growth stocks continue to act very well. All together, we’re holding our strong, profitable stocks and looking at new buys, while honoring our stops and keeping a bit of cash on the sideline.
2018 banking regulatory reform will lead to 2019 earnings boosts, benefiting four of our stocks.
This week’s update is more of a review of the most notable news, which is Arena Pharmaceuticals’ (ARNA) quarterly results.
The iShares EM Fund (EEM) bounced strongly in early March, which returns the Emerging Markets Timer to a positive reading. Granted, it’s not the strongest signal we’ve ever seen, but it counts. Quarterly reports are winding up, and we’ll take the Timer’s advice and return one stock to a Buy rating.
Crista Huff begins transitioning Cabot Benjamin Graham Value Investor holdings to her undervalued investing strategy with updates on all stocks and several ratings changes.
Good news. The U.S. economy is delivering Goldilocks-like growth—strong but not too strong—and the stock market is back in a good mood. Inflation rose 0.2% in February, meeting expectations but down a notch from last month’s 0.5% rate. And Friday’s jobs report showed that job creation remains robust, but wages are still increasing slowly (up 0.1% in February). The report pushed the yield on the 10-year treasury to within 0.06 percentage points of 3%, but it stopped just shy of breaking through.
Many of our stocks appear to be advancing this week. There are a few that I’ll be selling soon due to either valuation or upside price resistance, yet they remain excellent longer-term investments, including Alphabet (GOOGL).
This feels like one of those markets that you’re not sure you should trust given how volatile it was in February. But the combination of revenue growth, earnings growth and decent charts, especially among growth stocks, suggests it’s best not to try to predict too far into the future. For now, the evidence in front of us favors the bulls.
Given the mixed evidence, we think the Model Portfolio is in a proper stance, with about one-third in cash, but also holding onto a bunch of attractive stocks that could be leaders of the next upturn.
Volatility continues on Wall Street. Every time stocks seem to be building sustainable momentum, they run into a brick wall. The CBOE Volatility Index (VIX), a.k.a. the investor “fear gauge,” remains well above its 52-week average, showing that there are still some concerned investors out there.
he iShares EM Fund (EEM) has dropped decisively below its 25- and 50-day moving averages, which returns the Emerging Markets Timer to a negative reading. We take the Timer’s advice seriously, so we are shifting a couple of stocks to Hold ratings, but because the damage to the portfolio thus far has been minimal, we don’t have any sells tonight.
Alerts
Our other two recommendations are to sell two previous ideas whose quarterly earnings disappointed.
Our first idea today, an aviation services company, beat analysts’ earnings estimates by $0.02 last quarter, and is forecasted to grow at an annual rate of 16.61% over the next five years.
Three portfolio stocks report earnings.
This tech company beat earnings estimates by $0.07 last quarter.
The Dow imploded 767 points today, while the Nasdaq plunged 278 points.
This is a very short message—the point of which is essentially to say we’re not making any dramatic changes in the portfolio right now.
The cannabis sector is still in correction mode ... looking for a bottom somewhere.
The top three sectors in this Growth fund are: Financial Services (25.93% of assets), Consumer Cyclical (20.77%), and Technology (18.58%).
This stock took a beating on earnings disappointment, but analysts forecast a 17.5% growth rate for this year.
While long-term prospects for the cannabis industry remain excellent, the sector as a whole remains in correction mode today, with the big Canadian stocks under the greatest pressure—and no one knows where the bottom is, though history tells us it will come when the last holdout capitulates.
Crista is changing the rating on two stocks and retiring another.
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.