The market took a deep breath last week on the cusp of an eventful upcoming stretch. This week alone we get the latest CPI and PPI numbers before a very pivotal earnings season kicks off on Friday. Potential catalysts – and potholes – abound, so chances are the coming weeks won’t be as calm as the first week of April was. With that in mind, in today’s issue, we’re adding a stock fit to weather any further storms. It’s a century-old company that pays a dividend, trades at a mere 12 times forward earnings, and yet is up 14% year to date – and has been a mainstay in the portfolio of Bruce Kaser’s Cabot Undervalued Stocks Advisor.

The message is consistent this week with all five of our open positions: All there is to do at the moment is allow time decay to work its magic. And that is exactly what we plan to do.

All five of our positions are in great shape at the moment, so our focus turns to adding a few positions to the mix, a topic of discussion for, well, weeks. Earnings season rears its head this week with several of the big banks due to announce Friday. As a result, I expect to see several short-term positions (30 to 60 days ‘til expiration) being added to the mix. I’ve been very conservative about adding new positions to the mix and I don’t necessarily think all is clear ahead, but I do think we have an opportunity during this earnings season to add a few selective positions to the portfolio.

Earnings season kicks off this week with several of the big banks due to announce towards the latter part of the week.

On Friday, prior to the opening bell, JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) are due to announce and will be the focus of our attention this week. I’ve discussed below a potential trade in JPM, but it wouldn’t surprise me if Citigroup and Wells Fargo enter the trading fray this week. That being said, we’ve had decent success with JPM since starting Earnings Trader, with 3 out of 3 winning trades for an average one-day return of 5.3%, so I will most likely stick to the script this week.

Nothing has changed from last week. We currently have two open positions, a bear call spread in DIA and an iron condor in IWM. Our deltas continue to be skewed towards the bearish side of things, so we will need to balance out our deltas by adding a bull put spread or some other bullish leaning strategy…potentially a bullish leaning iron condor? So, the focus this week, like last week, will be adding some positive deltas to the mix to bring the portfolio closer to a delta-neutral state. My focus will be on expiration cycles ranging from 35 to 60 days until expiration.

The holiday-shortened week was mostly a non-event as the S&P 500, Dow and Nasdaq were mostly mixed. And while the week was quiet, under the surface there was selling pressure in growth stocks and materials that raised some yellow flags.

The holiday-shortened week was mostly a non-event as the S&P 500, Dow and Nasdaq were mostly mixed. And while the week was quiet, under the surface there was selling pressure in growth stocks and materials that raised some yellow flags.

This week’s action has been a disappointment, with growth stocks suffering selling while defensive names have picked up steam. Still, nothing much has changed--the top-down evidence is mixed, and growth stocks, while taking on water, haven’t suffered anything abnormal to this point. Thus, given that we’re about half in cash, we’re mostly standing pat in the Model Portfolio tonight.

More than $15 trillion in assets are linked to the performance of the S&P 500 index in some way, according to S&P Dow Jones.

Apple, at about $2.4 trillion, and Microsoft, at $2.1 trillion, are so large that, taken together, the two companies would be the third-largest sector of the index, behind tech and health care. This share is trending lower as other companies rise.

We’re digging into another compelling MedTech story this month.

The company in focus is a spine specialist. It’s been grabbing market share from larger players by growing a portfolio that covers the full spectrum of spine care, from imaging and surgery planning to surgical tools and implants.

It’s a great example of how intense focus on a specific market can set one player apart from the big boys. Enjoy!

Despite the banking worries of last month, the S&P 500, Dow and Nasdaq have strung together three straight weeks of gains.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the April 2023 issue.

We comment on the price of gold and what we see as its primary drivers. Gold is now trading above $2,000/ounce. We also provide updates on our recommended stocks.

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.

The market put on a constructive show last week, though today was a bit sloppy, as the surprise OPEC supply cut hiked oil prices brought some rotation ... and provided a reminder we’re still in a very news-driven environment. All in all the story remains mostly the same: There are positives, especially among growth titles, but the market is bifurcated and tricky, with a lot of stocks still in the doghouse. At this point we think playing things mostly halfway (good amount of cash, some nibbling on strong names) is still the best stance. We’ll leave our Market Monitor at a level 5 tonight.

This week’s list is a bit more mixed than in recent weeks, with less growth and more cyclical and cheap situations. Our Top Pick is an old friend in the cybersecurity space that has a few months of positive momentum as Wall Street anticipates big profit growth ahead.

In today’s ETF Strategist update, I’ll answer two questions that came in this week. Here is a summary, and I go into further detail in the short podcast that accompanies this update.

The last few months have been a tale of two markets for the metals. Base metals like copper, tin and aluminum have outperformed, while steel and precious metals like gold, silver and platinum have underperformed.

We comment on earnings from several recommended companies. Also, we raise our price targets for three stocks that have moved above our existing price targets. And, rooting for the turnaround Cincinnati Bengals.

The S&P 600 SmallCap index continues to firm up and even make some progress moving off support near the 102 level (the IJR ETF is at 107 now).

Explorer stocks were all up this past week with the exception of Ford (F) as inflation numbers out this morning are expected to show consumer-price inflation picked up again in January, to an annual pace of 7.2%.

After a rough start to the year, the market has stabilized and recovered somewhat.

Earnings are terrific again. About 80% of S&P 500 companies have reported, with average earnings growth of around 23%. Earnings have saved and revitalized the market throughout the pandemic recovery. And this is another stellar quarter for corporate profits.

Greentech is still bearish, but a 12% rebound from the lows of last week gives us the feeling that things are stabilizing. Our sector is being helped by very good earnings results in solar and renewable-energy related semiconductors, which clearly are easing various investor fears.

Earnings reports from two recommended companies were mildly encouraging. There was very little news on other recommended companies. We note our recent Sell recommendation that produced a 41% return since our September 2021 Buy recommendation. We also comment on an emerging macro concept useful for value investors.

We comment on earnings from our recommended companies, a new buyback at a recommended company, trapdoor tech stocks, the possibility of a massive economy-wide inventory downcycle, and thoughts on energy stocks.

Stocks are deep in the red today following some high-profile earnings duds—as of 1 pm ET, the Dow is down 334 points, and the Nasdaq is off 387 points.

January was the worst month for the market since March of 2020. The S&P 500 was down 5.38% and the technology-heavy Nasdaq fell 10% for the month. But stocks are recovering so far in the first week of February as earnings come to the rescue.

The first month of 2022 is in the books. And it wasn’t good. It was the worst month since March of 2020.

For its third quarter, this midwestern utility beat analysts’ EPS estimates by $0.02. The shares have a current dividend yield of 4.10%, paid quarterly.

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.

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 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.