After years of being either ignored or sold off, value stocks are finally having a moment on Wall Street. The Vanguard S&P 500 Value Index Fund (VOOV) is up 25% in the last five months and is actually outpacing growth titles over the last month. Still, it’s a bull market, and growth stocks are king. How to compete as value investors in a growth-minded market? By seeking growth stocks at value prices.

Today, we do just that, adding a household name that’s been rejuvenated thanks to a shift in industry trends. The stock is up 18% year to date, and yet its shares remain dirt cheap by virtually every measure.

Enjoy!

There is a growing mental health crisis going on out there.

But it’s starting to be addressed by a tiny, unknown (so far) company with a virtual care platform that’s beginning to make a difference across the U.S. And it’s doing so while growing both the top and bottom lines.

All the details are inside the April Issue of Cabot Small-Cap Confidential.

It seemed like the post-Fed action from two weeks ago may have paved the way for another leg up in the leadership. While that’s not off the table, we’re continuing to see a lot of crosscurrents out there as money sloshes around. What does it mean? Not much yet, as the major evidence remains positive.

It seemed like the post-Fed action from two weeks ago may have paved the way for another leg up in the leadership, but while that’s not off the table, we’re continuing to see a lot of crosscurrents out there as money sloshes around. What does it mean? Not much yet, as the major evidence remains positive, but it’s best to continue to raise and honor your stops, while for new buying, make sure you’re focusing on names that are generally earlier in their moves. We’ll leave our Market Monitor at a level 8, but more than ever, it really depends where you look.

This week’s list has many names that are either just coming into favor or have tightened up nicely after prior runs. For our Top Pick, we’ll go back to the commodity theme, with a stock that’s toying with new highs despite the fact that natural gas is still at very low levels. We’re OK starting small here and adding if the buying continues.

Stocks keep rolling into spring on the heels of an excellent first quarter. Can the next three months match the previous three (or five)? Probably not. But bull markets don’t normally die of old age, and there are plenty of reasons to believe stocks will be higher by the end of Q2. With that in mind, today we add another beneficiary of artificial intelligence, though a company that’s not entirely dependent on AI. Instead, it’s one that’s found new life thanks in part to AI – similar to Microsoft (MSFT) when we added it to the portfolio a year ago. It’s been in Carl Delfeld’s Cabot Explorer portfolio for months, and today we welcome it to Stock of the Week.

As I noted last week, this is a shortened version of the normal Monday Weekly Review as the Mintz family just got back home late last night from a short Spring Break trip. I am back at the trading desk today, and all Cabot Options-related services will run as normal this week.

As I noted last week, this is a shortened version of the normal Monday Weekly Review as the Mintz family just got back home late last night from a short Spring Break trip. I am back at the trading desk today, and all Cabot Options-related services will run as normal this week.

The bull market rages on, and technology stocks continue to garner most of the headlines, some of which we’ll examine today. But our new recommendation isn’t some go-go artificial intelligence play: it’s a small-cap U.S. titanium maker that’s off to a very fast start (+56%) in 2024 ... with plenty more runway ahead.

Our main Cabot Cannabis Investor portfolio has vastly outperformed this year, with a 38% gain as of the March 26 close. That was 15 percentage points better than the 22.8% gain for the New Cannabis Ventures Global Cannabis Stock Index. We’ve done 31 percentage points better than the 7.1% gains this year in the S&P 500.

Our Cabot Cannabis Plus Insider Portfolio is up 42.6% since I launched it on March 29 last year. That’s more than twice the 16.8% gain in the Russell 2000 index over the same time.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the April 2024 issue.

In this issue, we discuss the most effective and often the only way to reverse the fortunes of a struggling company: a change in leadership. We offer our views on four new CEO situations that are currently attractive and three that are not quite ready yet.

This month’s Buy recommendation, Barnes Group (B), is an aerospace and industrial components maker that is stepping up its efforts to become more valuable, helped by a new CEO and urged on by pressure from a credible activist investor that recently gained several board seats.

The title sounds counterintuitive. After all, the market has been terrific. And technology stocks, which rarely pay dividends, are leading the charge.

The S&P 500 has spent much of this year making new all-time highs. The index has rallied 27% since late October and 46% from the low in October of 2022. But most of those gains have been driven by the technology sector, which represents an outsized portion of the S&P. Returns for the rest of the market have been rather lame.

It was a strong week for the market following the Federal Reserve meeting. And while some talking heads may say the reason the indexes rallied was the Fed’s moves, or lack thereof, more likely the reason is we are in a bull market.

By week’s end, the S&P 500 gained 1.4%, the Dow rallied 1.6% and the Nasdaq advanced by 1.7%.

This week’s note includes our comments on Goodyear Tire (GT), Warner Bros Discovery (WBD) and Berkshire Hathaway (BRK/B), which reported late last week. It also includes comments on the 12 companies that reported earnings this week: Bayer AG (BAYRY), Brookfield Reinsurance Ltd (BNRE), Dril-Quip (DRQ), Elanco Animal Health (ELAN), Goodyear Tire & Rubber Company (GT), TreeHouse Foods (THS), Six Flags Entertainment (SIX), Viatris (VTRS), Toshiba (TOSYY), Volkswagen AG (VWAGY), Warner Bros Discovery (WBD) and Western Digital (WDC).

WHAT TO DO NOW: It remains a mixed environment, with a few mega-cap names doing well but most of the broad market under pressure—and for potential leaders, there remain a good number acting OK but the repeated air pockets make it challenging to make progress. After this week’s sale of Axon (AXON), our cash position is a bit over two-thirds of the Model Portfolio; we could add a couple of small positions if names on our expanding watch list remain intact—but tonight, we’ll stand pat to see if more strength can develop.

Our portfolio companies wrapped up their reporting season this week, which means I have a chance to come up for air after an intense couple of weeks.

Somewhat as expected we had some nice winners, but also some losers too. It’s just that kind of market; and while I wish we could have had 100% of our stocks post terrific performance after reporting, that’s just not realistic.

Consumer prices in April showed inflation pressures remain high but backed off a bit. The consumer price index came in at 4.9%, slightly less than the 5% from March. Not a big deal but a step in the right direction as the below graph highlights.

Electric vehicle (EV) prices and profits are also going down for the most part. Tesla reported $2.5 billion of profits in the first quarter, down from $3.7 billion in the last three months of last year, and $3.3 billion in the first quarter of 2022.

Cannabis stocks rose sharply in early May on news that Congress is getting serious again about allowing banks to serve cannabis companies. The Senate banking committee will hold hearings on the favorable bank reform May 11.

The reform bill, called the Secure and Fair Enforcement (SAFE) Banking Act, was recently refiled by a bipartisan group of lawmakers in both branches of Congress. The co-sponsors were: Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT), and Reps. David Joyce (R-OH) and Earl Blumenauer (D-OR).

This past weekend I attended the company’s annual shareholder meeting in person in Omaha. While the online viewing of Warren and Charlie’s commentary produces many tangible take-aways (which can be found on a wide variety of media outlets), it was the intangibles – obtained only from being there in person – that provided the incremental value.

As I mentioned in the last update, last week was a big week for the market. Important earnings, the Fed meeting, and the jobs report all had implications for the near-term direction of the market. The market survived and came away about even for the week. Now what?

Earnings were generally positive. The Fed did what was expected by raising 0.25%, and the statements afterward were ambiguous. The employment report was solid as many more jobs were created. Also, the last two months of jobs figures were lowered. The readjustment quelled inflation fears while the current jobs report indicated no recession in sight.

We discuss earnings from Adient (ADNT), ESAB (ESAB), Frontier Group Holdings (ULCC), Gannett (GCI), Ironwood Pharmaceuticals (IRWD), Janus Henderson Group (JHG), Kaman Corporation (KAMN), Molson Coors (TAP) and Western Union (WU).

A big week in the market has started badly. The failure of First Republic Bank (FRC) and fears of further fallout have sent stocks reeling ahead of more news the market may not like later this week.


The market moved on from the banking crisis. But it is rearing its ugly head again. There is now worry of more bank failures and an escalating crisis. More small regional banks could fail. But the situation is still unlikely to devolve into a major crisis, at least at this point.

This week, I wanted to highlight two quick things before getting into our regular update.

First, I’ve talked a lot about the biotech bear market and how it’s lasted longer than most previous biotech bear markets.

I just stumbled upon the below chart on Twitter which shows the length of the current biotech bear market versus the previous three.

As you can see, the bear market is getting a little long in the tooth.

This is a very important week that should determine the near-term direction of the market.


While the market digests the JPMorgan (JPM) buyout of First Republic Bank (FRC), the largest bank failure since the financial crisis, it looks ahead to a packed week. There’s a Fed meeting on Wednesday, where the Central Bank is widely expected to raise the Fed Funds rate by 0.25%. But the Chairman’s comments afterward will probably have a bigger impact on the market.

We currently own the TIP January 19, 2024, 100 call LEAPS contract at $17.10. You must own LEAPS in order to use this strategy.

We currently own the DBC January 19, 2024, 22 call LEAPS contract at $10.50. You must own LEAPS in order to use this strategy.

It’s expiration week and we need to roll a few of our positions. Expect to see several trade alerts over the next few days as we buy back our short calls and immediately sell short calls (collecting premium) for the February expiration cycle.

The market has linked together a few decent days, helped by a better-than-feared jobs report last week (showed wage gains moderating), reopening in China (good for global growth) and greater recognition that higher-growth stocks reflect A LOT of bad news.

I’ve decided to hold on to my current LEAPS position, the January 19, 2024, 145 calls. Theta, or time decay, is still incredibly low so I’m going to hold on for another expiration cycle and reevaluate.

Tomorrow marks the earnings releases of several big banks, most notably JPMorgan Chase (JPM), Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC).

Tomorrow marks the earnings releases of several big banks, most notably JPMorgan Chase (JPM), Citigroup (C), Bank of America (BAC) and Wells Fargo (WFC).

Since initiating our Dogs of the Dow positions we’ve seen nothing but a higher market, which has been great for our inherently long delta (bullish) Dogs of the Dow portfolio. Of course, we are only a few days into 2023.

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.