Issues
Rumors of the global economy’s imminent demise have been greatly exaggerated – at least so far. Indeed, the IMF estimates that worldwide GDP will expand by more than 3% both this year and next, which is in line with the normal GDP growth rate since the Great Recession. And yet, certain stocks are being treated like it’s 2009 out there. That includes this month’s addition to our Growth & Income Portfolio. It’s a big-cap, big-name company whose shares are nearly 30% off their highs, but the firm is on track for its best year in terms of sales and earnings outside of a Covid-era anomaly. It’s a company that flourishes when the global economy is healthy. And the stock is on sale, having not fully recovered from the spring tariff worries.
Details inside.
Details inside.
Today we’ll take a half-sized position in a small-cap company that’s like the Amazon of manufacturing. Its marketplace is revolutionizing this outdated industry and bringing it into the digital age.
Despite several years of depressed manufacturing in the U.S., the company is growing. That’s a testament to its platform. And there’s also a potential growth kicker … Trump’s tariff policies and desire to kick off an onshoring boom.
All the details are inside the September Issue of Cabot Small Cap Confidential.
Despite several years of depressed manufacturing in the U.S., the company is growing. That’s a testament to its platform. And there’s also a potential growth kicker … Trump’s tariff policies and desire to kick off an onshoring boom.
All the details are inside the September Issue of Cabot Small Cap Confidential.
Despite two big potential market-moving events (NVDA earnings and PCE inflation data), the S&P 500, Dow and Nasdaq all finished the week mostly unchanged to marginally lower, while the Russell 2000 (IWM) rose marginally.
For the past two months, the market has been positive by most top-down indicators, but it’s gotten a lot trickier as time has gone on, with many growth areas cracking intermediate-term support, with repeated bouts of rotation and with upward progress slowing down. The good news is that even after today’s broad selling, the intermediate-term trend remains pointed up and many Top Ten stocks are holding their own, but just going with what we’ve seen, it’s getting tougher to make (and keep) much money. Right here, we’ll keep our Market Monitor at a level 7, but we think holding some cash and taking some profits on the way up remains a good strategy.
Despite the rotation, we did see some earnings winners last week among growth stocks, and this week’s list has a few alongside names from other areas of the market. Our Top Pick is a smaller name that broke out powerfully last month and has a solid story—shares are a bit thinly traded, so start small and aim for dips.
Despite the rotation, we did see some earnings winners last week among growth stocks, and this week’s list has a few alongside names from other areas of the market. Our Top Pick is a smaller name that broke out powerfully last month and has a solid story—shares are a bit thinly traded, so start small and aim for dips.
The market’s traditional “spooky season” is here, and stocks are dutifully selling off as they normally do the first week of September. The selling could last a few days or a few weeks. But on the other side of it, there will be big buying opportunities. Until then, let’s try and limit the damage, which we do in today’s issue by selling off one underperformer that’s taken a beating after an underwhelming earnings report and buying a deep value consumer staple that’s too oversold. It’s a stock Clif Droke recommended to his Cabot Turnaround Letter audience last week, and we follow suit here today.
Details inside.
Details inside.
Despite two big potential market-moving events (NVDA earnings and PCE inflation data) the S&P 500, Dow and Nasdaq all finished the week mostly unchanged to marginally lower, while the Russell 2000 (IWM) rose marginally.
Despite two big potential market-moving events (NVDA earnings and PCE inflation data) the S&P 500, Dow and Nasdaq all finished the week mostly unchanged to marginally lower, while the Russell 2000 (IWM) rose marginally.
“Only the paranoid survive.” -Andy Grove
Nvidia (NVDA) met high expectations yesterday for the July quarter, hitting $46.7 billion in revenue, up 56% from the year-earlier period. However, it cautioned that third-quarter revenue growth will not be as impressive, disappointing analysts and investors.
Explorer stocks did not disappoint this week, with many of our positions posting solid gains. Coeur Mining (CDE) shares continue to outperform for us, up 8.9% this week, and Dutch Bros (BROS) shares were up a stellar 16.3%.
Nvidia (NVDA) met high expectations yesterday for the July quarter, hitting $46.7 billion in revenue, up 56% from the year-earlier period. However, it cautioned that third-quarter revenue growth will not be as impressive, disappointing analysts and investors.
Explorer stocks did not disappoint this week, with many of our positions posting solid gains. Coeur Mining (CDE) shares continue to outperform for us, up 8.9% this week, and Dutch Bros (BROS) shares were up a stellar 16.3%.
Cannabis investors continue to await action by the Trump administration on rescheduling, the next potential major catalyst for the group.
In an August 11 news conference, President Donald Trump said that he’s still considering the change and he will have a decision within a few weeks.
I believe Trump will follow through on his promise to reschedule, but this is not a 100% certainty. The most likely outcome, in my view, is that the Department of Justice will cancel a planned rescheduling hearing and issue a final rule with a public comment period.
In an August 11 news conference, President Donald Trump said that he’s still considering the change and he will have a decision within a few weeks.
I believe Trump will follow through on his promise to reschedule, but this is not a 100% certainty. The most likely outcome, in my view, is that the Department of Justice will cancel a planned rescheduling hearing and issue a final rule with a public comment period.
As you’ve probably surmised by now, I’m not the world’s biggest fan of buying stocks that are coming off fresh 52-week lows, preferring instead those that have carved out a decent bottoming pattern—both in terms of price and sentiment. Nor, for that matter, do I tend to favor buying stocks that are so far out of favor with investors that continued selling pressure is still an ever-present possibility.
But sometimes a stock becomes so cheap, so out of favor and so “wound up” with short interest and capitulation that the temptation to do some bottom fishing is simply too great to pass up. This is especially the case when the turnaround story is so compelling that it practically writes itself. Such is the case with this month’s featured recommendation, Helen of Troy (HELE).
But sometimes a stock becomes so cheap, so out of favor and so “wound up” with short interest and capitulation that the temptation to do some bottom fishing is simply too great to pass up. This is especially the case when the turnaround story is so compelling that it practically writes itself. Such is the case with this month’s featured recommendation, Helen of Troy (HELE).
What will sobered-up investors see after Labor Day when they start really paying attention again?
Although a September rate cut is largely priced into stocks, upcoming inflation and economic reports could change things. September could be a month when the AI rally is renewed and the Fed starts cutting rates, or a month where tech stocks retreat and the rate cut promise is pulled back. It’s a precarious market for stocks priced near the high.
Fortunately, there are several good stocks that are already well off the high. One area is those companies exposed to homebuying. Stubbornly high mortgage rates have held company stock prices down. But the longer-term trajectory for the homebuying market is fabulous. There is huge pent-up demand for homebuying that will ignite at some point. If rates come down in the months ahead, that ignition could occur sooner rather than later.
Several homebuilding company stocks have already spiked higher on the prospect of falling interest rates. In this issue, I highlight a title insurance company stock that has a long history of market outperformance. It is still priced well off the high, while the longer-term prospects are stellar, and it might be on the cusp of a breakout in the short term.
Although a September rate cut is largely priced into stocks, upcoming inflation and economic reports could change things. September could be a month when the AI rally is renewed and the Fed starts cutting rates, or a month where tech stocks retreat and the rate cut promise is pulled back. It’s a precarious market for stocks priced near the high.
Fortunately, there are several good stocks that are already well off the high. One area is those companies exposed to homebuying. Stubbornly high mortgage rates have held company stock prices down. But the longer-term trajectory for the homebuying market is fabulous. There is huge pent-up demand for homebuying that will ignite at some point. If rates come down in the months ahead, that ignition could occur sooner rather than later.
Several homebuilding company stocks have already spiked higher on the prospect of falling interest rates. In this issue, I highlight a title insurance company stock that has a long history of market outperformance. It is still priced well off the high, while the longer-term prospects are stellar, and it might be on the cusp of a breakout in the short term.
*Note: Your next issue of Cabot Profit Booster will arrive next Wednesday, September 3, due to the market holiday next Monday, September 1, in observance of Labor Day.
While it was a highly volatile week that included the AI story coming under intense pressure, buoyed by the Fed Chairman’s dovish speech on Friday the S&P 500 closed the week at a new all-time high. By week’s end the S&P 500 had gained 0.3%, the Dow had rallied 1.5% and the Nasdaq had fallen 0.6%.
While it was a highly volatile week that included the AI story coming under intense pressure, buoyed by the Fed Chairman’s dovish speech on Friday the S&P 500 closed the week at a new all-time high. By week’s end the S&P 500 had gained 0.3%, the Dow had rallied 1.5% and the Nasdaq had fallen 0.6%.
Updates
After hitting multi-month highs last Thursday, the S&P 600 SmallCap Index has since pulled back modestly.
Given all the talk of tariffs and Trump firing Powell, and the beginning of earnings season (so far so good), I’d say a modest pullback is a win.
Given all the talk of tariffs and Trump firing Powell, and the beginning of earnings season (so far so good), I’d say a modest pullback is a win.
Summer stasis has taken hold of the market as it often does this time of year, with the S&P 500 virtually unchanged (+0.3%) since the calendar flipped to July. Considering stocks entered the month at all-time highs despite a slew of existential threats (tariffs, high interest rates, two major overseas wars, etc.), holding the line counts as a victory.
Will it last? I’m guessing we’ll get a pullback of some kind – probably at least 5% – sometime in the next couple months, perhaps not until just after Labor Day, when institutional investors and hedge funder types return from their summer getaways in the Hamptons and Martha’s Vineyard and start selling out of their long-neglected weakest positions (a major reason why September is by far the worst month for stocks, historically).
Will it last? I’m guessing we’ll get a pullback of some kind – probably at least 5% – sometime in the next couple months, perhaps not until just after Labor Day, when institutional investors and hedge funder types return from their summer getaways in the Hamptons and Martha’s Vineyard and start selling out of their long-neglected weakest positions (a major reason why September is by far the worst month for stocks, historically).
The market is stuck in the mud. But that might be a good thing, considering that tariff uncertainty is back. This time, tariff fears are just keeping stocks from going higher and not crushing the market, so far.
The administration is currently threatening to enforce 30% tariffs on Mexico and the European Union (EU) starting on August 1. However, investors perceive a strong chance that President Trump will either back off the threat or make deals.
The administration is currently threatening to enforce 30% tariffs on Mexico and the European Union (EU) starting on August 1. However, investors perceive a strong chance that President Trump will either back off the threat or make deals.
Tariff uncertainty is back. But this time it’s just keeping stocks from going higher, not dragging the market lower.
The administration is currently threatening to enforce 30% tariffs on Mexico and the European Union (EU) starting on August 1. However, investors perceive a strong chance that President Trump will either back off the threat or make deals. Meanwhile, the S&P 500 continues to hover right near the high.
The administration is currently threatening to enforce 30% tariffs on Mexico and the European Union (EU) starting on August 1. However, investors perceive a strong chance that President Trump will either back off the threat or make deals. Meanwhile, the S&P 500 continues to hover right near the high.
In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), Centuri Holdings (CTRI), Dollar Tree (DLTR), GE Aerospace (GE), Intel (INTC) and Paramount Global (PARA).
Note: Due to a technical issue, publication of your Cabot Cannabis Investor update has been delayed by one day. We apologize for any inconvenience; future updates and issues will be delivered per the normal publishing schedule.
If you have been steadily averaging down in cannabis stocks during the sector’s dark days all year, well done.
You are finally being rewarded.
If you have been steadily averaging down in cannabis stocks during the sector’s dark days all year, well done.
You are finally being rewarded.
Action in the small-cap indices continues to be very encouraging.
Since the beginning of June, both the S&P 600 SmallCap Index and Russell 2000 have outperformed the S&P 500 and the Nasdaq.
Since the beginning of June, both the S&P 600 SmallCap Index and Russell 2000 have outperformed the S&P 500 and the Nasdaq.
Corporate America is weathering trade uncertainty remarkably well. The S&P 500 index has recovered more than 20% since bottoming out in April but is up only 6% this year.
You may have noticed that the stagflation scenario (inflation and slow growth) is a theme being promoted by the financial media with comparisons to the 1970s. But even if this becomes a reality, stocks are still your best option to protect and grow your wealth. In the 1970s, large-cap value outperformed growth stocks and long-term Treasury bonds. Dividend-paying stocks also outperformed. Our strategy will remain the same regardless of the pundits, value, quality, and momentum.
You may have noticed that the stagflation scenario (inflation and slow growth) is a theme being promoted by the financial media with comparisons to the 1970s. But even if this becomes a reality, stocks are still your best option to protect and grow your wealth. In the 1970s, large-cap value outperformed growth stocks and long-term Treasury bonds. Dividend-paying stocks also outperformed. Our strategy will remain the same regardless of the pundits, value, quality, and momentum.
Uncertainty is growing in a market perched near the high.
Tariffs are front and center again. The July 9 deadline, which began the market rally from the low when the administration issued a 90-day extension, is rapidly approaching. The deadline raises many of the issues the market hated back in April. Stocks started the week on a down note in anticipation.
Tariffs are front and center again. The July 9 deadline, which began the market rally from the low when the administration issued a 90-day extension, is rapidly approaching. The deadline raises many of the issues the market hated back in April. Stocks started the week on a down note in anticipation.
*Note: Your weekly Cabot Turnaround Letter update is arriving a day early, on Thursday, July 3, due to the market holiday on Friday, July 4, in observance of Independence Day.
In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), Bloomin’ Brands (BLMN), GE Aerospace (GE), Intel (INTC), Paramount Global (PARA) and Toast (TOST).
GE Aerospace (GE) strength driven by record backlogs in its commercial aerospace segment.
In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), Bloomin’ Brands (BLMN), GE Aerospace (GE), Intel (INTC), Paramount Global (PARA) and Toast (TOST).
GE Aerospace (GE) strength driven by record backlogs in its commercial aerospace segment.
The S&P 500 reached a new all-time high. Now what?
It’s been a tremendous recovery since the “tariff Armageddon” days of early April. Stocks went from the precipice of a bear market to a brand new high in just a couple of months.
It’s been a tremendous recovery since the “tariff Armageddon” days of early April. Stocks went from the precipice of a bear market to a brand new high in just a couple of months.
NOTE: A couple of things. First, we’re sending this update a day early, as the Friday holiday is pushing up our publishing schedule by a day. And second, I’m actually out of town on vacation, so while we’re sending this update this morning, we’ll follow up with a bulletin tomorrow morning if need be. If we’re not in touch, have a great holiday weekend!
WHAT TO DO NOW: Remain bullish but take things on a stock-by-stock basis. The overall market is in fine shape, but Tuesday saw a lot of selling in growth stocks as investors rotated into stodgy areas (Dow Industrials and defensive stocks). For now, the action is broadly acceptable, but the next few days will be key. Today, we are making some small changes: We’ll place Axon (AXON) and Rubrik (RBRK) on Hold and we’re going to sell one-third of our remaining position of Palantir (PLTR), leaving us with around 23% in cash.
WHAT TO DO NOW: Remain bullish but take things on a stock-by-stock basis. The overall market is in fine shape, but Tuesday saw a lot of selling in growth stocks as investors rotated into stodgy areas (Dow Industrials and defensive stocks). For now, the action is broadly acceptable, but the next few days will be key. Today, we are making some small changes: We’ll place Axon (AXON) and Rubrik (RBRK) on Hold and we’re going to sell one-third of our remaining position of Palantir (PLTR), leaving us with around 23% in cash.
Alerts
Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.
The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.
The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.
WHAT TO DO NOW: The market remains in good shape, but leadership is still developing, with many resilient stocks getting hit while buying moves elsewhere. Today we’re cutting bait with our small position in Penumbra (PEN), which is slicing through support, and replacing it with Rubrik (RBRK), which looks like a new leader in the strong cybersecurity group. Details below.
WHAT TO DO NOW: The news this past weekend that the U.S. and China have slashed tariffs sent the market soaring yesterday. Of course, there are still headwinds out there (Cabot Trend Lines not yet positive, relatively few new highs among growth stocks), and we wouldn’t be surprised to see a pullback now that the “good” news is out.
The broad market indices are up nicely today on news of significant de-escalation of U.S.-China trade tensions following weekend talks in Switzerland.
Natural Grocers (NGVC) should have a decent day (+20% in early hours trading) after Q2 earnings beat expectations. Revenue grew 9.0% to $335.8 million (a $6.1 million beat) while GAAP EPS of $0.56 grew by 60%. Daily average comparable store sales grew by 8.9%. This was a very strong quarter.
Portfolios
Strategy
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.