We are back in earnings season again. This season tells us more about our companies, but it also helps us get a read on sector trends.

Let’s start with a look at takeaways on key sector trends from the quarterly earnings call by executives at Organigram (OGI). This Toronto-based company serving Canada, Israel and Australia may be small, with a market cap of $300 million. But its executives know the space as well as anyone, and they offered the following insights.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the February 2023 issue.

While many initial public offerings (IPOs) have a quick price “pop” on their debut, most are speculative companies whose share performance is more accurately described as “pop and drop.” Our search for enduring post-IPO companies whose shares trade at attractive prices turned up four promising ideas.

We also take a look at our research process using an approaching opportunity in shares of Fidelity National Information Services (FIS).

Our feature recommendation this month is a European company that investors are avoiding due to its conglomerate structure and potentially large legal liabilities related to a disastrous acquisition several years ago. But shares of Bayer AG (BAYRY) trade at an excessive discount to the likely liabilities, while the core business is stable and resilient. Shareholders are beginning to press for major changes to unlock the company’s value.

Before we dive into this week’s idea, I wanted to clean up our SHLS and ASO positions from last Friday’s January expiration.

This year was always going to be better than last year. And it’s off to a great start. But it is unlikely that stocks muster a sustained rally out of this bear market until there is more clarity on the extent and timing of an economic bottom.

That said, the current market still offers opportunities. Cyclical stocks have rallied and, for the first time in a long time, there is an opportunity to sell a covered call on one of the portfolio’s cyclical stocks. In this issue, I highlight a covered call opportunity in Visa (V) after the stock has rallied.

I also highlight a fantastic income stock that has likely already made its own low even if the market turns south again. It sells at a dirt-cheap valuation with a high and safe dividend and has recently added momentum to the mix.

It was a down-and-up week for the market, with a round of selling hitting the major indexes and many stocks as they approached their December highs, but then a solid-looking snapback on Friday and today. Moreover, most of the nascent positives that we’ve written about are still in place, with the broad market in solid shape and the 2-to-1 Blastoff Indicator still in effect; now we want to see the intermediate-term trend kick into gear and some breakouts occur. We’re encouraged, though we still think going slow makes sense. We’ll leave our Market Monitor at a level 5.


This week’s list is again heavy on the cyclical- and turnaround-type names, and our Top Pick is a commodity name that’s near the top of an eight-month structure.

The market has been resilient through the first few weeks of 2023, giving hope that a much better year lies ahead for investors. Potential potholes abound (earnings season is underway, another Fed rate hike next week, a possible recession looming, etc.), but for now, there’s reason for optimism. With that in mind, we take another big swing today by adding a mid-cap technology stock that was just recommended by Cabot Early Opportunities Chief Analyst Tyler Laundon.

We currently have two open positions and, thankfully, both currently have a high probability of success. My hope is that we can start to look at taking off both trades for profits towards the latter part of the week, but we need a bit of cooperation from Mr. Market.

My goal this week is to start adding positions for the March expiration cycle. As always, I want to add, at minimum, a bear call, bull put and iron condor. If I can get all three off this week, I would be incredibly pleased, but, as always, I’m not going to force it.

The week I will add new trades in both BITO and KO.

We locked in some nice gains on both trades last week which brought our total premium return to 49.75%. My hope is that we are able to add several short-term trades to the mix, in addition to the new trades in BITO and KO.

Last week was a bit of a dud for earnings announcements.


While numerous companies announced earnings, only a few companies met our guideline of having high levels of options liquidity. But that all changes this week.



This week could be the busiest of the earnings season with upwards of seven potential trades. My guess is that we will make anywhere from 3 to 5 trades with most of the trading activity occurring during the latter half of the week.

It was hardly smooth sailing for traders last week, as the indexes got hit hard on Wednesday and Thursday, and then roared back to life on Friday.

It was hardly smooth sailing for traders last week, as the indexes got hit hard on Wednesday and Thursday, and then roared back to life on Friday.

Very impressively, the rally that started late in 2022 continued last week, as the S&P 500 gained 2.7%, the Dow rose 1.8%, and the Nasdaq tacked on another 4.5% of gains.

The market was steady this past week as the Federal Reserve completed its two-day meeting and announced plans to end its stimulus program but keep rates unchanged. Some highlights among Explorer stocks:

It was a glorious October. The S&P 500 was up about 7% for the month, more than making up for September’s 4.8% decline. Now what?

Halloween is one of my favorite holidays of the year. There is minimal preparation, no gifts to get, no travel – you just get to celebrate with friends & family and watch your kids have the time of their lives.

September was lousy. October was glorious. What can we expect in November and beyond?

Gold continues its recent pattern of tantalizing investors, only to disappoint—a pattern that was on full display last week.

This week’s note includes comments on earnings reports from ten recommended companies as well as The Catalyst Report. Our podcast also includes our views on Facebook (FB) and the metaverse, and the secret of low expectations.

The major indexes are having another good day, and this time so are most leading growth titles. As of 2 p.m. ET, the Dow is up 180 points while the Nasdaq is in the green by 179 points.

This week has been all about earnings, even though we’ve only heard from one company in our portfolio. That company is Repligen (RGEN), which reported this morning (the stock is reacting well). Notes on that report are below.

New highs are good. Nine portfolio positions are at or near the 52-week high. Let’s be happy.

We’re watching with wonder how Tesla is now a $1 trillion company and that Elon Musk, by himself, is worth more than all of ExxonMobil. There is some poetic irony that the pioneer of electric vehicles and solar panels is outshining (no pun intended) the very icon he is working to replace. Tesla is a remarkably powerful one-trick pony that is only starting to develop its potential.

As we head into the end of 2021, the market seems poised for a strong end to the year.

This week’s update includes our comments on earnings from Baker Hughes (BKR) and Mattel (MAT) as well as commentary on several stocks.

Inspire (INSP) is soaring this morning as the company trounced Q2 estimates and management raised guidance. Revenue was up 335% to $55 million (beating by $9.1 million) while EPS of -$0.48 improved from -$0.88 in the year-ago quarter and beat by $0.14. Driving the results was the addition of 63 new U.S. centers (well above expectations for 35 to 40) and a jump in covered lives. Results were strong both in the U.S. (up 349% to $49.4 million) and Europe (up 201% to $3.6 million) with average prices of both $23.9K and $23.4K (U.S. flat, Europe up modestly).

Looking at the charts of our portfolio stocks today, there’s been no real change since last week, so I have no changes. But there have been a few relevant news items.

The shares of this car parts manufacturer are rated ‘Strong Buy’ by two analysts and ‘Buy’ by one analyst. Wall Street expects the company to earn $80,240,000 in 2021.

This morning, we received bad news from Medexus. Medexus announced that it has received a complete response letter from the FDA related to Treosulfan, its newly in-licensed drug that was expected to drive substantial revenue growth. What is a complete response letter?

Our buy recommendation today is expected to grow earnings by more than 26% this year. We are also selling two previous ideas.

This transaction service company is due to report earnings on August 3. Estimates call for EPS of $0.57 on $138.35M in revenues.

This biopharma has a new distribution agreement for its obesity drug, and is expected to grow by 47% this year, then 16.1% annually over the next five years.

While copper futures prices remain firm, copper ETFs have come under renewed selling pressure late this week, thanks in part to persistent strength in the U.S. dollar and in spite of widespread hopes of additional monetary easing measures in China.

In keeping with its investments in interesting properties, this REIT just agreed to provide a $79.5 million mezzanine loan investment related to the development of the more than $250 million Great Wolf Lodge Mid-Atlantic project in Perryville, MD. The shares have a current annual dividend yield of 4.18%, paid quarterly.

Coverage of the shares of this engineering and construction company has recently been initiated at Cowen & Co., with an ‘Outperform’ rating, and at Piper Sandler with an ‘Overweight’ ranking.

Repligen (RGEN) reported Q2 results before the bell today that surpassed expectations and has the stock up nicely (6% at mid-day) and bucking the broader market weakness. Revenue was up 86% to $163 million, beating by nearly $19 million, while adjusted EPS of $0.79 rose by 88% and beat by $0.27. Management raised full-year guidance to a range of $625 million to $645 million (up 71% to 76%), well above consensus estimates of $586 million. Adjusted EPS guidance goes to $2.71 - $2.78, way above consensus of $1.71. Gross margins are up a lot, from 57.9% in the year ago quarter to 62% in Q2.

Whether it was a meltdown in Chinese stocks due to regulatory actions, fears of renewed virus restrictions (and mask mandates) or inflation jitters, the market is getting hit sharply today, and growth stocks are going along for the ride—as of 1 p.m. ET, the Dow is off 195 points, while the Nasdaq is down 291 points and growth-y indexes are down 3%-plus. We’re not going to draw a massive conclusion from one day of trading, especially as it comes on the heels of what was a darn good few days for growth stocks following last Monday’s shakeout. But it is a sign that the endless choppy phase might not be in the rearview mirror.

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.