Earnings season is officially behind us. However, there will still be some opportunities as we enter the earnings doldrums.


Looking back on the previous earnings season, our conservative approach led to a 100% win ratio, though we only made 6 trades. Obviously, this is on the lower side for the number of trades that we typically make. But going back to June, when I started all of my options services here at Cabot, I’ve stated on numerous occasions that I intend on taking a more conservative approach while we continue to endure the ongoing signs of a bear market. Remember, it’s always quality over quantity. That being said, when we see a sense of normalcy return to the market, which could be soon (crossing fingers), that number of trades per earnings season will certainly pick back up.

What started out as another troubling week for the bulls turned encouraging as the indexes rebound nicely on Thursday and Friday. By week’s end the S&P 500 gained 1%, the Dow rose 1.1%, and the Nasdaq rebounded 2%.

What started out as another troubling week for the bulls turned encouraging as the indexes rebound nicely on Thursday and Friday. By week’s end the S&P 500 gained 1%, the Dow rose 1.1%, and the Nasdaq rebounded 2%.

This month we are going with a small industrial company that is showing how consistent focus on operational improvement can pay dividends.

Once thought of as a highly cyclical company with management that tended to drop the ball, execution has improved dramatically. In 2022 revenue was up 14% and EPS was up 41%.

With exposure to megatrends like infrastructure and global electrification, I see more upside ahead.

Enjoy!

In an effort to keep the portfolio as diversified as possible, this week’s pick is a recent earnings winner whose products are used in the aerospace field.

Last week was the worst week of the market’s recent retreat, and it’s fair to say many pieces of evidence are now at or approaching key levels: Most major indexes closed in on their 50-day lines, many individual potential leaders are in a similar boat, and both the broad market and the growth-vs.-defense dynamic are healthy but showing a bit of wear and tear. Ideally, this three-week dip leads to a resumption of the January rally—but the next few days should tell the tale. Right now, given the late-Friday firmness and today’s bounce, we’ll leave our Market Monitor at a level 6, but we’re watching closely.

Despite the market action, we actually think this week’s list has a bit more juice than the prior couple of weeks. Our Top Pick looks like a fresh leader in the chip sector; it’s extended, so try to buy on a shakeout.

Stocks continued to retreat last week, ensuring a down February after a very promising January. Still, the latest pullback has been fairly modest, with the 200-day moving average now acting as a floor instead of a ceiling, as it did for most of 2022. With the market in a state of flux, we’re adding another dividend stock today – a household name that used to be part of the Stock of the Week portfolio before we sold it late last summer. That looks like a mistake, as the stock has risen 11% since, and seems to be gathering more steam of late. It’s a longtime recommendation of Cabot Dividend Investor Chief Analyst Tom Hutchinson.

We locked in an 11.86% return in our DIA March 17, 2023, 355/360 bear call spread last week. The return marks our second winning trade for the March expiration cycle for a total of 22.48%. Our average holding time for both trades was 12 days.

As it stands, we currently have two iron condor positions, and my hope is to add another position, preferably a bear call spread, early this week. If we see even a mild bounce in IWM we should be able to take off our IWM iron condor for another nice return, thereby building upon our current profits for the March expiration cycle. If our IWM trade works out we could see March expiration bring in close to, if not exceeding, 40% on a cumulative basis.

We added four new positions last week, which brings us to five open trades. Our PFE position is due to expire this week and the four (KO, BITO, WFC, GDX) we added last week are due to expire on March 31, 2023.

Our PFE calls are essentially worthless, so I plan on buying them back today or tomorrow and immediately selling more calls against our shares. Otherwise there really isn’t much to do with our existing open positions as we are early in the trades.

We had the good fortune to lock in a gain in Home Depot (HD) early last week. The win marked our sixth this earnings season for a cumulative total of 36.9%. That’s a healthy return for this earnings season, especially when you consider the S&P 500 is basically flat since our first trade in JPM back on January 12, 2023. Hopefully the market offers up a few more opportunities to increase our current totals.

Following another week of hotter-than-expected inflation data and hawkish Fed speak, the leading indexes had their worst week of 2023. The S&P 500 fell 2.75%, the Dow lost 3%, and the Nasdaq declined by another 3.3%.

Following another week of hotter-than-expected inflation data and hawkish Fed speak, the leading indexes had their worst week of 2023. The S&P 500 fell 2.75%, the Dow lost 3%, and the Nasdaq declined by another 3.3%.

The U.S. stock market rebounded on Tuesday, following testimony from Chair Powell at his Senate confirmation hearing. Investors liked what he said, implying that the three anticipated quarter-point rate increases, which could start in March, would likely be enough to quell inflation (along with a hoped-for return to normal supply conditions).

So far, 2022 is playing out as expected. But of course, this is only the eighth trading day of the year.

In late December, prior to the holiday, we published the January edition of the Cabot Turnaround Letter. Our first article, “Top Five Stocks for 2022,” we highlighted Credit Suisse (CS), Dril-Quip (DRQ), Lamb Weston Holdings (LW), Nokia (NOK) and TreeHouse Foods (THS).

Stocks failed to even bounce today despite all the selling of late. At day’s end, the Dow was off 171 points and the Nasdaq dropped 19 points.

It’s a new year, and a new attitude. Investors tend to sober up after weeks of holiday slacking and refocus on the market. What are they saying?

The market finished the year strong, with the S&P 500 up 26.9%. And so far, 2022 is off to a good start.

In two days, the S&P 500 has set two new all-time highs. Last year’s momentum is spilling over so far. But will it last?

It’s a new year, and a new attitude. Investors tend to sober up after weeks of holiday slacking and refocus on the market. What are they saying?

It’s the worry that just won’t go away, and while it’s disconcerting to equity investors, gold is clearly benefiting from it.

As we approach the final trading day of 2021, we see a market in a period of relative calm after what felt like a very volatile November and December, especially for those invested in individual stocks.

It’s the end of remarkable year. With just two more full market days left, the S&P 500 is up 28% for 2021.

Another year has come and gone. I can’t believe it. They never used to go by this fast. Anyway, it was a terrific year for stocks. The market is up 28% for the year.

Today we’re stepping away from our remaining three-quarter position in long-term holding 10X Genomics (TXG), which we added in December 2019. The stock has been moving sideways since January, and this week management spoke at conferences and suggested it is seeing lower-than-expected lab activity during what’s already a seasonally slow period.

Today is the expiration of September options and three of our positions will likely expire for full profits, and one will likely be a small loss or gain come Monday. Overall, it’s been another great month for us.

In addition to being a COVID testing powerhouse, this healthcare company is diversified into other pharmaceutical, diagnostic, nutritional products, and medical devices. And in the past 30 days, two analysts have boosted their earnings prospects for the company.

Thursday was a tough day for gold as bullion prices dropped over 2%, stopping out our speculative position in our favorite gold tracking ETF.

Our first idea is a software company whose shares recently had a strong breakout. Our second is profit-taking on a previous recommendation.

As online gambling continues to accelerate, so does the fortune of this provider. The company is expected to grow by 30.30% next year.

We had a good run in steel and steel products manufacturer Nucor Corp. (NUE), America’s largest and most diverse steel maker. Unfortunately, however, that run has come to an end and I now recommend selling our remaining position in the stock.

Shares of CS Disco (LAW) are selling off today on what’s been a generally weak day for growth stocks (though getting better as we move into the early afternoon). The catalyst here is a secondary offering by selling shareholders (non-dilutive) that has not priced yet (probably tonight, or tomorrow).

Fundamentally, all is well in the marijuana sector as the industry’s leaders continue to grow, both organically and by acquisition. The average rate of revenue growth for the plant-touching companies in our portfolio in the most recent quarter was an amazing 132% from the previous year.

In the past 30 days, seven analysts have raised their EPS forecasts for this utility. The shares have a current annual dividend yield of 3.77%, paid quarterly.

These preferred shares are issued by a global financial company.

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.