Hopefully, 2021 will remove some of the uncertainties that the virus has wrought, and the economy can begin to speed up its recovery. And while the markets have done very well this year, there are still pockets that are undervalued, many of which are represented in our pages this month.

In December’s Issue of Cabot Early Opportunities we look back at one of the strangest years in decades and discuss the seemingly counterintuitive strategy that drove huge portfolio gains.

Then we look at a fresh batch of names that seem ripe for the picking now and which could serve us well in the beginning of 2021. Our new stocks span clean energy, PC gaming, biotech, industrial supplies, and payment processing. As always, there should be something for everyone!

In this season of good cheer, we have a lot to be thankful for: 1) It looks like we can finally put this election to rest (thank goodness!); 2) the first coronavirus vaccine is being distributed across the country; and 3) hopefully, we’ll soon have another stimulus package.

Despite all the challenges, the markets have held up very well, and the Dow Jones Industrial Average has surpassed the big 30,000 mark several times in the last few weeks.

Unemployment continues to decline, with the rate dropping to 6.7% in November. Consumers are shopping for the holidays, with online Thanksgiving sales up 21.5%, to $5.1 billion. I know my finger is sure hitting the ‘buy’ button a lot more this year!

Hopefully, 2021 will remove some of the uncertainties that the virus has wrought, and the economy can begin to speed up its recovery. And while the markets have done very well this year, there are still pockets that are undervalued, many of which are represented in our pages this month.

We begin with our Spotlight Stock, the largest water company in Brazil, which is expanding to deliver services outside its borders. In my Feature article, I further explore that growth—as well as the rising need—for potable water in Latin America.

Moving on to Growth, our contributors have a number of ideas here, including companies in the e-commerce, ride sharing/food delivery, infrastructure, industrial equipment, and rent-to-own industries. Our Growth & Income picks include an alcoholic beverage manufacturer as well as a gas/chemical company.

In Healthcare, you’ll find stocks from the testing medial technology, biopharma, and cannabis sectors. Technology has been the big winner of 2021, and here we offer ideas in the printing equipment, audio & video, software, and electronics industries.

Our Resources & Utilities section has a couple of gold and utility companies. In High Yield and Preferred Stocks, you’ll find a host of companies offering better-than-market yields, from the banking, energy, franchising, shipping, and natural gas sectors.

This month, we include two Real Estate Investment Trusts, as well as a company offering a nice Special Dividend opportunity. Make sure you check the dates, so that you don’t miss out on this chance for extra cash flow.

Lastly, our Funds & ETFs are well-diversified, with ideas in the midcap value, emerging small caps, low-priced stocks, materials, and energy industries.

I hope you and your families enjoy a wonderful and safe holiday. I’m sticking close to home this year, but hope to enjoy some traveling in 2021. As always, please don’t hesitate to email me with your feedback and questions. My address is nancy@financialfreedomfederation.com.

This Friday is the expiration of our December covered calls, and I am happy to report that all five of our positions are in good/great shape. As is always the case, expect an email from me Friday morning breaking down where we stand with each position.

Market trends remain very positive as we head toward the end of the year, so I continue to recommend that you remain heavily invested—but with one eye on the exit door. The fact is, sentiment is very high, which means risk is growing—but I can’t argue with trends.

Today’s recommendation is a fast-growing cybersecurity stock with a special focus on the cloud, and great upside potential. Aggressive investors should like it.



But to fit it into the portfolio, I’ve got to sell something, and the victim is another hot growth stock, recommended just five weeks ago and now being sold for a quick 39% profit.



Full details in the issue.

Current Market Outlook


We could pretty much cut our intro from the past couple of weeks and paste it in this week—the primary evidence (trends and overall action of the market and leading stocks, fresh breakouts, blastoff-type green lights from mid November) remains very encouraging, with most of the major potholes seen lately coming from very speculative situations. The main worry is that few investors are worried (in stark contrast to earlier this year, when the market was kiting higher but few believed it), which tells us that risk is rising. Thus, we remain bullish and think putting money to work is the best course of action, but it’s also important to keep your feet on the ground and focus on the best-looking stocks while trailing stops higher and taking partial profits as things stretch higher.

This week’s list is relatively split between growth situations and those benefiting from cyclical/turnaround buying. Our Top Pick is Axon Enterprise (AAXN), which continues to gain sponsorship and has just tightened up nicely for five weeks.

Stock Name	Price	Buy Range	Loss Limit
Adient (ADNT)	34.99	32.5-34.5	28.5-30
Align Technology (ALGN)	504.11	485-515	430-445
Ambarella (AMBA)	90.94	84-88	74-76
AAXN (AAXN)	127.31	124-129	111-114
Baker Hughes Company (BKR)	21.72	20.8-21.8	18-18.7
fuboTV Inc. (FUBO)	27.15	24.5-26.5	20.5-21.5
The Michaels Companies (MIK)	11.68	10.9-11.8	9.4-9.8
Micron Technology, Inc. (MU)	71.54	66-69	60-62
PagerDuty (PD)	44.18	41.5-43.5	36.5-37.5
Stitch Fix (SFIX)	64.06	57-61	48-50

A stimulus bill looks like it is right around the corner but we need to get through this winter before vaccines are widely available. Facebook faces a real challenge to break it up and accept legal liability for content. An EU-China summit is cancelled after China tried to limit speakers critical of China’s clampdown of Hong Kong. On the Explorer front this past week, MP Materials (MP) and NovoCure (NVCR) were particularly strong as Sea Limited (SE) briefly made a new high at 200. As promised, our new idea this week hails from Brazil and is a monopoly play on the most essential of all resources.

Due to the holidays, the next issue of Cabot Global Stocks Explorer will be published on January 7, 2021.

Today, we are recommending a micro-cap stock in the virtual lease-to-own market.

I think this stock has ~100% upside over the next year or so.



This company’s characteristics include:

• Secular revenue growth
• Significant operating leverage
• Company insiders own over 20% of shares outstanding
• Recent insider buying

All the details are inside this month’s Issue. Enjoy!

The vaccine is changing everything. Stocks that had been left for dead by the market recovery are springing back to life and leading the market higher.

One area of opportunity ahead of the New Year is in banks stocks. As a cyclical sector, banks took it on the chin during the pandemic. They crashed during the bear market and have lagged the recovery. But they are rising fast and have great momentum ahead of what looks to be a promising year for the sector.



In this issue, I highlight one of the very best and most profitable banks in the country. It still sells at a great value, pays one of the highest dividends in the industry and now has solid upward momentum.

As 2020 winds to a close, and as the market races to all-time highs, our six open covered call positions are all doing very well ... especially our December positions set to expire next Friday, December 18.

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.

In the short-term, the market could be ready to rest and there’s some rotation going on, which could affect leadership. But, big picture, the intermediate- and longer-term trends are pointed up and even the broad market is returning to health.

The Dow and S&P 500 both closed at all-time highs yesterday, as the Dow notched its eighth straight day of gains. Financials were the week’s best-performing sector, as interest rates suddenly reversed direction to post big gains.

After two months of sideways trading, the three major U.S. stock market indices are rising and reaching new highs.

The market backdrop is much improved this week and small caps posted another week of encouraging action (up 2.1% over the last five sessions). The S&P 600 had that sketchy drop below the 200-day line (red line in chart) in mid-August, but the index has come back strong since.

The iShares EM Fund is holding up in fine style, holding well above its 25-day moving average, so our Buy signal remains in place. While our stocks are generally holding up well, there has been a slight increase in volatility.

The week has brought some impressive rebounds, and I’m putting two stocks back on Buy today. That brings our total number of Buy-rated positions to six (plus our bond ladder), a slightly more constructive stance than we’ve taken in recent weeks.

There’s a lot on my mind lately: hurricanes, child-rearing, college freshmen, human tragedy and Dollar Tree (DLTR).

The market didn’t change much over the past week but it feels like it’s on more solid ground. Perhaps that’s because it’s been three weeks since we were on the brink of a bigger leg down. Or because earnings-related volatility is calming down. Or because after two weeks of gains, a week of consolidation feels like the right next step.

In this Weekly Update, I summarize the latest news for one company. I also include pertinent questions from subscribers with my responses.

11 analysts have raised their EPS estimates for this investment banking firm in the last 30 days.

Two of the portfolio stocks each reported first quarter results that beat expectations.

One of our gold companies today is gaining cash from a mine sale; the other—post merger—is a previous recommendation that is now a hold.

A previous recommendation that is now a hold.

Two of the portfolio stocks each reported strong quarterly earnings beats.

The shares of this pharmaceutical stock is seeing new analyst coverage.

This engineering and consulting firm is eating up its competition.

This gene therapy company has been getting lots of good attention from analysts, with coverage of the shares being initiated at Evercore ISI Group, with an ‘Outperform’ rating.

The shares of this cosmetic company were recently upgraded by JP Morgan to ‘Overweight’.

This fast food giant beat earnings estimates by $0.04 last quarter, and three analysts recently raised their EPS forecasts for the company.

It’s not entirely unusual for a new CEO at a company to change the dividend policy due to having a different idea of how the company should be using its cash flow.

In the past 30 days, seven analysts have raised their earnings forecast for this restaurant company.

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 Momentum 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 Momentum Trader features.