Today, I’m recommending a biotech company.

Key points:

· I expect a dividend within 15 months representing 126% of its market cap.
· Asymmetric upside potential beyond the upcoming dividend.
· High insider ownership and insider buying.

All the details are inside this month’s Issue. Enjoy!

Sure, it was a tough year for stocks. But 2022 was the worst year ever recorded for bonds.

The benchmark 10-year Treasury lost more than 15% in 2022, the worst calendar year performance ever recorded since it started being tracked in the 1920s. The 10-year + Treasury Bond Index lost 29.45% for the year, also the worst performance on record.

But the disastrous year creates an opportunity. Last year seems to have squeezed many years of poor performance into one. Now bonds actually pay decent interest again. And every negative year for bonds ever recorded has been followed by a year of positive returns.

In this issue, I highlight a long-term corporate bond fund. It allows access to some of the highest yielding investment grade bonds in the last 15 years while also providing a monthly income. The fund is very likely to have a positive total return for the year, and perhaps very positive, at a time when the stock market is highly uncertain.

The start of 2023 has been a positive for the bulls as the indexes are all higher by approximately 1.5%.

It was a solid week for the major indexes, and even better has been some notable improvement in the broad market—in late December, we saw a key positive divergence from a broad market measure for the Nasdaq, and now we’re starting to see some legit improvement elsewhere, too. Don’t get us wrong, at this point, the major trends are still pointed sideways-to-down, so we’re not going to make too much out of what we see, but it’s fair to say we’re approaching another key juncture: If the market and (importantly) individual stocks are able to build on their recent action, we could get a green light or two and have something to work with. For now, our Market Monitor remains a level 4, but our antennae are up.


This week’s list features a wide array of names, with some commodity and value names combined with a few turnaround and growth titles. Our Top Pick is a solid long-term grower that has some catalysts for this year—as usual, aim to enter on dips.

2023 has started with a bang, pushing a couple stocks in our portfolio to new all-time highs! Both of those high fliers have benefitted greatly from the return to relative normalcy in the wake of Covid, so today we add another stock that stands to get a direct bump from China’s reopening – or at least the loosening of its draconian “zero Covid” policies. The company was a pre-pandemic favorite of Cabot Top Ten Trader Chief Analyst Mike Cintolo and looks like a great value pick now as its business picks up in earnest. So, he’s recommending it again.

We sold some additional premium in Wells Fargo (WFC) late last week and I intend to sell even more as we begin 2023. Our PFE 49 puts are due to expire this week and if all goes well, I plan to buy back the puts for $0.05 and immediately sell more put premium going out to the February 17 expiration cycle.

The same goes for my GDX and KO positions. I intend to buy back our put positions in both underlying stocks and immediately sell more premium. And like PFE, I will be focusing on selling premium for the February 17 expiration cycle.

Earnings season officially starts this Friday with JPMorgan (JPM), Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC) kicking it off prior to the opening bell.


Other than the big banks it’s going to be a slow week for earnings, but hey, earnings season has finally arrived, and I expect that we will have one if not two trades heading into the latter part of the week.

We locked in our first profit of the year last week, a 19.0% return in our IWM January 20, 2023, iron condor. With two weeks remaining in the trade, and only $0.06 worth of premium left, the most prudent move was to take the profits and risk off the table and move on to the next opportunity.

Thankfully, we were given a few opportunities last week and decided to pounce on them by adding two new trades to the mix, another IWM iron condor and another SPY bear call spread. Now the focus will be to add a bull put spread to the mix to balance out the deltas.

Having just returned from vacation, in this morning’s Weekly Update I am going to focus my attention on where we stand with our positions. However, going forward, I/we are fully back to the normal schedule.

Having just returned from vacation, in this morning’s Weekly Update I am going to focus my attention on where we stand with our positions. However, going forward, I/we are fully back to the normal schedule.

This month we’re going with a small software company serving a resilient industry that has been slow to adopt to cloud technology, but which is coming on strong now.

Despite the tough macro environment this company has been beating expectations for many quarters. Management has been raising revenue guidance too, and a tweak to the business model is starting to pay dividends.

Enjoy!

2022 went out with a whimper for the market as the indexes posted one of their worst years on record.

Greentech held the support levels this past week we wanted and, yesterday and today, have rallied back over the sector’s 40-day moving average, a bullish sign.

Last week, we wrote about how lower quality, in both home appliances and tangible money, debases value and is a form of inflation. Today’s note includes some of our current views on inflation and capital markets, and what investors can do to help mitigate inflation’s effects on their portfolios. The goal, of course, is to protect the long-term purchasing power of investment assets.

This week’s update includes our comments on LambWeston’s (LW) earnings as well as commentary on several stocks. We had no ratings changes this week.

U.S. crude oil hit a seven-year high as stocks, especially tech stocks, face headwinds. Today I am moving dominator Taiwan Semiconductor (TSM) to a Sell as Taiwan, America, China and Japan play a dangerous game. China sent 52 warplanes into the islands air buffer zone after the U.S. and allies held exercises nearby.

So far, October has been volatile. There have been strong rallies that quickly become undone in the following days. The market is still even for the month, but it looks very unsteady.

Last week, I made the case that we may be amid a commodity bull market and that it makes sense to have a percentage of your portfolio allocated to commodity companies. Many commodities are breaking out to the upside, yet many commodity companies continue to trade incredibly cheaply.

September lived up to its bad reputation. The S&P 500 fell 4.8% for the month. But September is over. Now it’s October, which is historically only the second-worst month of the year. What now?

This week’s note includes The Catalyst Report. We encourage you to take a look at this – it is popular among many of our subscribers and unique on Wall Street.

We’re sticking with a cautious stance—selling stocks that crack, holding plenty of cash and focusing more on capital preservation until the buyers reappear.

After a delayed rection to last week’s Fed commentary Treasury yields have shot up (though they are still very low). To put it in mortgage rate terms a 30-yr. refi has gone from around 2.875% to 3.0% over the last week.

The top five holdings of this fund are ASML Holding NV (ASML, 6.82% of assets), Tencent Holdings Ltd (00700, 5.38%), MercadoLibre Inc (MELI.SA, 4.09%), Tesla Inc (TSLA, 3.49%), and Alibaba Group Holding Ltd Ordinary Shares (09988, 3.32%).

I will keep this update short and sweet.

Investors are being challenged with some of the strangest stretches in market history. On the surface, the market looks to be in great position. Stock indexes are hitting or are near record highs, but there is a lot of commotion below the surface. As it stands, roughly 40% of all stocks within the S&P 500 are below their 200-day moving average, which typically indicates bear market action. However, technology has been incredibly strong, especially the mega-cap stocks like AAPL, MSFT, AMZN, etc. And 40% of the S&P 500 is comprised of technology stocks, hence the current 17.6% return in 2021.

As the Cabot Micro-cap Insider recommendation list has swelled in size, I’m realizing that I have too much capital allocated to previously disclosed ideas.

This venerable retailer is going big in the ecommerce and automation arenas. The company has just partnered with robotics company Symbiotic to automate 25 regional distribution centers with upgrades including the addition of “high-speed mobile bots” and “high-speed palletizing robotics.”

The major indexes were fine today, with the Dow up 45 points and the Nasdaq down 33 points. But that masked a horror show under the surface—the average stock we follow was off more than 2%, similar to growth-oriented indexes like the Russell 2000 Growth Index (IWO, down 2%) or the Ark Innovation Fund (ARKK, off 3.3%).

The one thing that has held back gold from gaining any meaningful traction in recent weeks has been the utter lack of a fear catalyst. But that has now changed as gold has a new “fear factor,” as discussed in this week’s report.

In the past 30 days, 14 analysts have increased their EPS estimates for this energy company.

This eyecare company is forecasted to grow its earnings by 19.2% next year.

The top five holdings of this ETF are Saia Inc (SAIA, 3.06% of assets), Chart Industries Inc (GTLS, 2.89%), Exponent Inc (EXPO, 2.58%), UFP Industries Inc (UFPI, 2.55%) and John Bean Technologies Corp (JBT, 2.51%).

The most dominant theme in the metals sector right now is the leadership of lithium in an otherwise dull (short-term) market environment.

Accolade (ACCD) reported Q1 fiscal 2022 results after the bell yesterday that beat on the top line and missed on the bottom line. Revenue was up 66% to $59.5 million (beating by $3.7 million) while adjusted EPS of -$0.87 missed by $0.47. Management raised full-year guidance to $300 million - $305 million (from $260 million - $265 million) due to positive momentum and benefits from acquisitions.

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.