The long-awaited market correction has arrived, but whether it will be brief or long, shallow or deep, remains to be seen. The one thing I am sure of is that it won’t be like the previous one! In the meantime, it’s important to treat each stock on its own merits, and today that means selling our weakest, Chegg (CHGG).

As for today’s recommendation, it’s a small company thriving in the homebuilding sector, dominant in its own sub-sector. I think you’ll like it.

This month we’re jumping back into the pure-play software space with an up and coming SaaS company that has remained under the radar since going public in December, just a few months before the market tanked.

It specializes in social media management solutions, which are increasingly important as the trend toward digital transformation strategies gets stronger. Organizations increasingly recognize they must market to consumers through social networks.



Revenue growth is hovering around 30% and first profits are still a couple years away, meaning we’re still early to the table.



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

With the exception of another nice gain by NovoCure (NVCR), this was a quiet week for the Cabot Explorer portfolio as the Nasdaq continues its march, up almost 35% so far in 2020. Our Emerging Markets timer (EEM) stays positive as some of these markets bounce back against the backdrop of very weak economies. Perhaps the worst is India with its latest quarterly GDP falling 24%. This issue’s new recommendation is a high quality stock in a growth sector with a wonderful high margin, low risk business model.

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

With earnings season mostly completed, the markets have drifted upwards in the waning days of this otherwise unusual summer. Some splashy IPOs and stock splits have provided some excitement, but the bigger and more enduring news came from the Fed’s official change in its priorities. We discuss our thoughts on this shift in the letter.



We also introduce price targets for several recommended stocks. Over the next few weeks, we will provide targets for the remaining stocks and all newly recommended stocks. Price targets help stay the course when our stocks weaken on noise, and provide a tangible exit point. The assumptions behind the price targets provide a roadmap to gauge the company’s recovery process.



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.

Today’s recommendation had been in a slow, steady uptrend for years, though it got dented with everything else in March of this year.

The Turnaround Letter has been acquired by the Cabot Wealth Network, a family-owned business based in nearby Salem, Massachusetts. Founded in 1970 by Carlton Lutts, Cabot is celebrating its 50th year in business, having served hundreds of thousands of investors. The company focuses exclusively on publishing high-quality investment newsletters and currently has a portfolio of 20 advisory services.

In this issue you’ll read about an energy company and a powerful catalyst for turnarounds.

The market remains in fine health, with the major indexes regularly hitting new highs as investors look forward to a recovery from the intentional recession. At some point, that means we’ll have a top, but it’s hard to predict when.

In the meantime, the portfolio continues to recommend a well-diversified group of high-potential stocks, including this week’s—a well-known pharmaceutical giant that is coming off a normal correction.



As for our current stocks, most look great, but something’s got to be sold to keep the portfolio under 21 holdings, and the victim is our weakest stock, GFL Environmental (GFL).



Full details in the issue.

Current Market Outlook


We don’t want to repeat ourselves too much, but the environment has remained mostly the same during the past few weeks. First, overall, this is a bull market that’s likely to carry nicely higher when looking out a few months; there remains plenty of doubt and uncertainty, which is (contrarily) a good thing. Second, though, making money has become trickier—there are far more news-driven moves, buying pressures seem to come and go for many leading stocks (as opposed to the sustained upmoves seen earlier this year) and there’s no question most indexes are extended to the upside. That’s no reason to get overly worried (most stocks are still acting normally), and in fact, we’re nudging our Market Monitor up a notch this week as leading stocks have perked up a bit. But it remains important to look for good entry points, honor your stops and take some partial profits when the opportunity arises.

Encouragingly, this week’s list is very broad, with all different types of sectors, sizes and growth/value outlook represented. There are many good names to choose from, but our Top Pick is Horizon Pharmaceuticals (HZNP), which has huge earnings estimates and a tight chart.

Stock Name	Price	Buy Range	Loss Limit
Anaplan (PLAN)	61.25	59.5-62.5	53-55
Enphase Energy (ENPH)	77.23	72-76	64-66
FedEx (FDX)	219.84	206-213	184-188
Futu Holdings (FUTU)	32.17	30-32	26-27
Horizon Therapeutics (HZNP)	75.12	72-76	65-67
Lithia Motors Inc. (LAD)	248.96	238-250	215-220
Roku, Inc. (ROKU)	173.48	167-174	147-150
Salesforce.com (CRM)	272.65	263-273	233-239
Trupanion (TRUP)	62.73	60.5-63	53-55
Tupperware Brands (TUP)	16.29	14.5-15.5	12-12.5

This Weekly Update includes summaries for four Cabot Benjamin Graham Value Investor companies which reported quarterly financial results or other important news during the past week. I have also included questions from subscribers along with my answers.

The Emerging Markets Timer is in fine shape after Wednesday’s big rally. We have no changes to the portfolio today.

The stock market’s pullback resumed yesterday, but this still looks like a normal retreat following a breakneck four-month rally. One warning light is decreasing breadth, which suggests that when the rally gets going again, it could be driven by a smaller group of stocks.

All the major U.S. stock market indexes are experiencing orderly pullbacks right now. (This is good news because the farther the market climbs without resting, the bigger the pullback when it finally arrives.)

The market’s attention has been squarely focused on jobs this week as updates on that front are likely to influence the Fed’s upcoming decision on interest rates next week. If it hikes (which is likely), it will mark just the third increase since the financial crisis.

This Weekly Update includes one summary of a company that reported quarterly financial results during the past week. I also include questions from subscribers along with my answers.

Remain bullish, but keep your eyes open. For the first time in months, we’re seeing some yellow flags, including from our Two-Second Indicator. That said, the trends of the market and most stocks are still positive, and pullbacks have been normal thus far.

After shooting to new all-time highs last Wednesday, the major indexes are taking a well-deserved breather this week. The pullback looks orderly and normal so far, and investors with money to put to work can use it as a buying opportunity.

This Weekly Update includes summaries for the 10 Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or other noteworthy news during the past week and were not reported in my March 3 Weekly Update.

This Weekly Update includes summaries for six Cabot Benjamin Graham Value Investor companies that reported quarterly financial results. On Monday, March 6, I’ll update the remaining stocks.

The Emerging Markets Timer continues to flash a buy signal, although the iShares Emerging Markets Fund (EEM) has weakened somewhat. We have one change in the portfolio today.

A few wobbles finally appeared in the stock market last week, as overextended growth and momentum stocks took a well-deserved rest. Most other names remain healthy though, and most of our portfolio holdings are in consolidation mode at or near their highs.

Shares of this apparel company were recently upgraded to ‘Buy’ at Stifel Nicolaus.

Crista is making several rating changes today.

Coverage of the shares of this cloud company was recently initiated by Atlantic Equities with an ‘Overweight’ rating.

This medical device company is due to report earnings on January 24, and recently reported that its revenue would be up about 17%, which is higher than analysts expected.

One of the stocks in our Growth Portfolio issued new quarterly adjusted earnings guidance this morning, pleasing investors and sending the stock up 6% upon the market’s open.

This housing provider is expected to grow at a rate of 45.5% next year.

Two of the stocks in the portfolio report earnings beats.

This entertainment company beat analysts’ earnings forecasts by $0.35 last quarter.

This biopharma is forecasted to grown at an annual rate of 17.58% over the next five years.

Crista is retiring a stock from the Buy Low Opportunities Portfolio.

The top five holdings in this high-tech ETF are: Intuitive Surgical Inc (ISRG, 8.74% of assets); ABB Ltd (ABBN, 7.61%); Keyence Corp (6861, 7.60%); Mitsubishi Electric Corp (6503, 7.54%); and Fanuc Corp (6954, 6.67%).

The stock which just joined the Buy Low Opportunities Portfolio on January 8, reported fourth quarter results after yesterday’s market close (November year-end). Revenue and earnings per share (EPS) came in higher than analysts had expected, and higher than the company had recently projected in December.

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.