The market is at a crossroad.

It is possible that we could get through this cycle soon and without a recession. The market could rally to new highs without much more trouble. On the other hand, a more hawkish Fed or deeper economic downturn than currently anticipated could cause another market plunge.

You could just bet on one scenario and hope for the best. But there might be a better way to navigate these waters. Instead of gambling on a certain outcome, we can buy stocks that should thrive in both bull and bear markets.

In this month’s issue, I highlight four current portfolio positions that are “all-weather” stocks. These stocks should do just fine if the market takes off and doesn’t look back in a soft landing. But they should also perform relatively well in case a more ugly scenario unfolds. They should be solid in almost any kind of market environment and pay you a great income in the meantime.

Today, I’m recommending a tech company that is growing like crazy yet trades at a “value” price.

Key points:

· High insider ownership.
· Hidden assets that will eventually be monetized.
· Buying back stock (over 20% of shares already retired).

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

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the February 7, 2023, issue.

We continue our mini-series on the Tech Hype Cycle and Value Investing with a look at what happens to companies after they tumble into the “Trough of Disillusionment.” We also include our perspective on the favorable earnings update from Sensata Technologies (ST).

This week, we changed our rating on State Street Corp. (STT) from Hold to Sell, and our rating on Dow (DOW) from Buy to Sell. Both are quality companies, but their shares have reached our price targets and we see no compelling reason to raise these targets.

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.

Following a monster week of earnings, a Federal Reserve interest rate hike, and the January Jobs report, “risk on” continues to be the theme in early 2023 as the Nasdaq once again led the indexes higher.

After a very strong first few weeks of the year, stocks have begun the much-called-for pullback, which sets up a “good” test for the nascent uptrend—if the sellers swarm, that would be a sign the bulls aren’t yet ready to take control, but for the first time in a while, the burden of proof is on the bears as the majority of evidence is positive. If something changes, we’ll pare back, but to this point we like what we see. Our Market Monitor now stands at a level 7.

This week’s list has something for everyone, including a few more earnings winners as more firms report. Our Top Pick is a software name that has a long-lasting growth story and a chart with a big bottom—and a big breakout last week. Aim for weakness if you want in.

The stock-market picture continues to improve, and it’s possible the current rally is more than yet another head fake; it could be the start of a new bull market. While we’re not there yet, there’s reason for optimism. So today, we take another big swing by adding a fast-emerging electric vehicle maker that has struggled since its IPO last June but is showing signs of life lately. It’s a recent recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

We took a few losses last week, which at the moment looks a bit premature.

At the time I wrote, “Well, I think we all knew the time would eventually come. We are going to close out our February IWM iron condor as it has reached our stop-loss. This marks our first loss since August 11 and only our second since initiating the Quant Trader service back in early June.”

The market was in a short-term overbought state, so while I was hesitant to take off the two trades, mechanically it made sense and it’s the mechanics that keep us out of trouble and give us the opportunity for long-term successful results.

The probabilities continue to lead to the way!

Last week, we placed an earnings trade in Starbucks (SBUX). Per usual, we used an iron condor, but went with a slightly more conservative approach by increasing our probabilities of success on both sides of the trade to just over 90%.

Thankfully, SBUX opened up well within our chosen range after earnings and as a result we were able to immediately take off the trade for a one-day profit of just under 6%. For those who waited a little longer to take off the trade, a 9.5% return was easily attainable.

We continue to be in great shape as we approach the February 17, 2023 expiration cycle.

My only hope is that we can add a few more trades to the mix this week. Earnings are coming in fast and furious and, as a result, I have my eyes on a few potential stocks that reside on our weekly watch list. Starbucks (SBUX), Citigroup (C), Cisco Systems (CSCO) and several others are just a few of the names I’ll be looking to sell puts on this week.

Following a monster week of earnings, a Federal Reserve interest rate hike, and the January Jobs report, “risk on” continues to be the theme in early 2023 as the Nasdaq once again led the indexes higher.

Following a monster week of earnings, a Federal Reserve interest rate hike, and the January Jobs report, “risk on” continues to be the theme in early 2023 as the Nasdaq once again led the indexes higher.

This month we are dialing up the risk a little with a small software company that has a potentially disruptive platform that streamlines back-office processes for small and mid-sized businesses.

There are risks. The economy isn’t super strong, and this is a competitive market. But this company has a truly innovative set of solutions, is in one of the market’s most beat-up sectors and has new products and a low-cost customer acquisition strategy.

It’s also profitable and generates positive free cash flow, two attributes that make it an attractive acquisition target.

Enjoy!

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.

As we move closer to earnings season for our portfolio holdings (really gets underway the week after next) we see many small-cap growth names (and growth stocks in general) recovering nicely from the drawdowns in late September.

In a person, company, country, or stock, resiliency matters. For example, with disruptions related to the pandemic and supply-chain chaos all around us, some will navigate better than others. U.S. stocks have been rising despite coping with the effects of inflation, a slowing Chinese economy and supply-chain disruptions on the technology industry. Stocks have gained in recent days on strong earnings reports. Labor shortages, higher prices for raw materials and supply-chain issues haven’t substantially impacted profits.

Forget the virus. Forget about the Fed tightening. It’s all about earnings now.

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.

Some of this REIT’s household name tenants are: Whole Foods, Kroger, Petco, U.S. Bank, Chase, and Five Guys. The REIT has a current annual dividend yield of 5.38%, paid monthly.

The top five holdings in this fund are Facebook Inc A (FB, 9.83% of assets), Amazon.com Inc (AMZN, 8.92%), Berkshire Hathaway Inc Class A (BRK.A, 5.68%), Microsoft Corp (MSFT, 5.33%), and Apple Inc (AAPL, 3.18%).

The brightest star in the metals sector of late has unquestionably been lithium. Recent favorable developments pertaining to the electric vehicle (EV) industry have boosted lithium’s profile since the white metal is a critical component for EV batteries.

Back in early 2000, when the Internet stock bubble was preparing for its long deflationary period, the charting service we used categorized Internet stocks into four groups: ISP/Content, E-Commerce, Software and Security/Solutions. At the time, these groups included 470 stocks.

This penny stock is speculative, but has an impressive book of patents and collaborations.

Today we’re going to part ways with two positions that we added in May and which we’ll make a little more than 10% on. Both positions were trading higher a couple weeks ago but have lost some momentum recently.

This penny stock is speculative, but has an impressive book of patents and collaborations.

This biotech is forecasted to grow at an annual rate of 35.6% over the next five years.

Now that it’s (almost) back to regular business for the airlines, our contributor booked some profits on his Top Pick.

This small cap EV charging equipment company just joined the Russell 2000 Index, which should give it even more momentum.

Aptevo filed an 8-K disclosing that Proposal 4 (Company Sale) passed. However, as you can see in the screenshot below, the company made a special point in the footnote that the majority of non-Tang shareholders voted against the immediate sale.

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.