With the election just around the corner, there’s a lot of uncertainty in the air. Nevertheless, the bull market is alive and well, as both of Cabot’s trend-following market-timing indicators remain positive, so I continue to recommend that you be heavily invested.

Today’s recommendation is an old friend that is back in the limelight as the online world is increasingly hungry for software that enables machines to understand human voices. It’s a good story, and the stock is on a good pullback now.



As for the current portfolio, there’s just one sell (for a small profit), to make room for the new recommendation.

The overall evidence continues to lean bullish, but growth stocks are on a wild ride, first selling off in August/early September, then rallying for a few weeks before backing off again in recent days. We remain optimistic, but are still taking things on a stock-by-stock basis, pulling the plug on laggards while aiming to put money to work in potential new leaders. This week, we let go of Wingstop on Monday, leaving us with around one-quarter of the portfolio in cash.

In tonight’s issue, we write more about our thoughts on the market and our stocks, talk about one recent sell we wish we had back and dive into two secondary indicators we’re watching closely to tell us when the market (and growth stocks) will decisively break out.

In October’s Issue of Cabot Early Opportunities we zero in on four software and internet companies that are benefiting from a variety of tailwinds, including two that are finding success after years of less-than-stellar performance. We also revisit an old MedTech friend that helps deliver drugs and vaccines around the world.

Enjoy!

This week’s idea is a stock in a hot sector, though can be volatile day-to-day.

Current Market Outlook


We like to go with the evidence that’s in front of us at any given time, and if you do that today, you’ll see that most of the key evidence continues to look solid—the intermediate-term trend of the major indexes is tilted higher (though there’s still some resistance at the early-September highs to chew through), while more and more leading stocks are acting constructively; most have pulled back reasonably (so far) after heady runs during the prior three-plus weeks. Of course, we’re not leaving our brains at the door either, as earnings season (which ramps up this week in a big way) and the upcoming U.S. elections certainly have the potential to carve out a few potholes, while sentiment has picked back up after the August/September dip. Thus, we remain flexible and think picking buy points is vital, but overall, we remain mostly bullish.

This week’s list has a ton of potential pullback buys, though you have to be aware of earnings dates. Our Top Pick is Beyond Meat (BYND), which is enjoying a normal breather and looks to be approaching a good risk-reward entry point.

Stock Name	Price	Buy Range	Loss Limit
Avalara (AVLR)	153.44	147-152	132-135
Beyond Meat (BYND)	183.98	178-185	153-156
Bill.com Holdings (BILL)	116.15	110-114	97-100
Carvana (CVNA)	213.52	207-220	180-187
Deckers Outdoor Corp. (DECK)	253.08	238-246	218-222
Invitae (NVTA)	48.38	47-49.5	41-42.5
Monolithic Power (MPWR)	312.85	300-310	270-275
Paycom Software (PAYC)	383.11	360-375	320-327
Plug Power (PLUG)	16.39	15.6-16.8	13.5-14.0
SunPower (SPWR)	17.62	16.5-17.5	13.5-14.5

The bull market is alive and well, as both of Cabot’s trend-following market-timing indicators are now positive, so I continue to recommend that you be heavily invested.

Today’s recommendation is a fast-growing company helping businesses in the cloud, one of today’s major growth themes. Aggressive investors should love it.



However, the addition of this stock means I need to sell one, and the unfortunate victim is the stock that’s our biggest loser (not that we have many).



Full details in the issue.

Market volatility has eased a bit this past month, with the Dow Jones Industrial Average gaining almost 1,000 points. The service industry, according to ISM, improved, and the unemployment rate dropped to 7.9% for September.

As you’ll see in our Advisor Sentiment Barometer and Market Views, sentiment remains about the same. It seems investors are awaiting the election results before they make any big moves.



Nonetheless, our contributors have been very busy selecting ideas that look interesting—no matter how the election turns out.



We begin this issue with our Spotlight Stock, a specialty chemical company that is growing its global market share. In my Feature article, I explore the catalysts that are driving industry growth, as well as the unique properties that should keep our Spotlight Stock in an industry-leading position.



Moving on, our Growth ideas include companies in the retail, electronics, and e-commerce sectors. In Growth & Income, you’ll find a transportation stock and a restaurant business. Value stocks are still lagging, and remain heavily discounted, and here, we offer two food producers.



We include one Financial stock, operating in the pawn store sector, and in Healthcare, our contributors recommend companies in the medical equipment, therapeutics, diagnostic monitoring, and pharmaceutical sectors.



Technology companies continue to be the market darlings, and this month, we feature ideas from the enterprise software, cloud database, big data, and e-commerce industries. In Energy & Resources, we offer a gas company, a utility, and a gold miner.



Our Low-Priced stocks include a coal producer, biotech, and a maker of CBD products. We offer banking, asset management, food producers, and a refiner in our Preferred & High Yield section. And we also include a Short-Sale candidate from the restaurant/entertainment sector.



Lastly, in Funds & ETFs, our offerings this month focus on biotech, health sciences, and blue chips.



There’s a lot of uncertainty today—with a fiercely fought presidential election, and especially, with the COVID-19 pandemic. Fortunately, the markets seem to be holding up well, and I think they’ll continue to do so post-election results. In the meantime, it is my hope that you and your families stay healthy.



As always, please don’t hesitate to email me with your feedback and questions. My address is nancy@cabotwealth.com.



The next Wall Street’s Best Investments issue will be published on November 19, 2020.

Market volatility has eased a bit this past month, with the Dow Jones Industrial Average gaining almost 1,000 points. The service industry, according to ISM, improved, and the unemployment rate dropped to 7.9% for September.

As you’ll see in our Advisor Sentiment Barometer and Market Views, sentiment remains about the same. It seems investors are awaiting the election results before they make any big moves.



Nonetheless, our contributors have been very busy selecting ideas that look interesting—no matter how the election turns out.

The iShares EM Fund (EEM) has been trending up, keeping the Cabot Emerging Markets Timer a bright green. Our stocks are generally doing well, and we have no changes to the portfolio tonight.

The stock market’s advance slowed a little this week, but the major indexes are still at all-time highs. Strangely enough, after declining for most of September, utilities have been one of the best-performing sectors over the past five days. Technology and real estate are also outperforming.

Notice that the S&P 500 has a very specific pattern this year: advance-rest-pullback-recover, then repeat the cycle, continuing to rise as months pass. The market just completed another advance. Therefore, odds are strong that the market’s now ready for some sideways trading.

After weeks of consultation with Roy Ward, I’ve decided to make the following changes to the Cabot Benjamin Graham Value Investor. I also include updates on two of our stocks.

The general market picture continues to look bright. All three of our key market timing indicators remain bullish—both the market’s intermediate- and longer-term trends are pointed up, and the broad market is in great shape, with the Two-Second Indicator continuing to record fewer than 20 new lows day after day.

The rotation into the year’s underperformers that started last week has continued, while taking on some aspects of a generic risk-on trade. Financial stocks have outperformed all others since our last update, and tech stocks are up again this week. Materials and industrials also continue to do well.

What a week! I’ve been asked a few times by friends and family members (but no subscribers, c’mon guys!) why small caps have suddenly sprung to life. Check out the one-year chart below of the S&P 600 Small Cap Index.

This is my last Weekly Update. I am retiring today after 50 years in the investment business, including 15 years writing the Cabot Benjamin Graham Value Investor.

The iShares EM Fund (EEM) has been in a downtrend since September 22, turning the Cabot Emerging Markets Timer neutral. We will continue to manage our stocks individually, but will curtail new buying and keep stocks on a shorter leash until momentum improves.

Delegates from OPEC and Russia decided last week that they will not make any decisions regarding a possible extension of oil production cuts until January. Some people expect oil production to beginning rising again in March 2018. Conversely, Iraq and Ecuador are leaning toward further production cuts.

Over the past week, small caps looked particularly good as most sectors outperformed their large-cap peers. Our asset class is now up 4% year-to-date, a vast improvement after being flat a week and a half ago.

In this Weekly Update, I summarize the latest news for the only one of our companies to report quarterly results during the past two weeks.

The market is indicated to open slightly higher this morning as stocks continue to work to officially come out of their correction. Our Cabot Trend Lines remains positive and the Real Money Index tells us many weak hands have already bailed out, both good signs. But we’re waiting on the Cabot Tides to give a green light before doing any major new buying from here.

This database platform company is expected to grow by 33% next year.

This Chinese internet company is expected to grow at an annual rate of 26.9% over the next five years.

There are five large holdings in this capital appreciation fund.

Six analysts have increased their EPS estimates for this childcare company in the past 30 days.

The market has been up for six straight days, marijuana stocks look good, overall, and while we don’t quite have a buy signal from our intermediate-term trend-following indicator, we are very close. Today we are averaging up in three stocks.

This industrial company is forecasted to grow at an annual rate of 20% over the next five years.

This solar business is forecasted to grow by 51% annually over the next five years, and the company just beat earnings estimates by a whopping $0.80!

This stock gets crushed on earnings.

This bank recently split its stock 2-fo-1, and is seeing its EPS forecasts on the rise.

The broad market has advanced nicely since mid-day Monday when news that the Fed might lower interest rates sparked a wave of buying. Long-term, the future is bright. But short-term, the portfolio is happy holding a cash level of 23%, deferring new buying.

This recent IPO stock was just named and IBD (Investor’s Business Daily) Breakout Stock, which highlights stocks in or near a buy zone.

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.