As earnings season ramps up in the coming week, I wanted to note a couple items.

As earnings season ramps up in the coming week, I wanted to note a couple items.

The current market is giving investors headaches, but it’s not unusual in Greentech to find savvy investors looking past the near-term economic fears and focusing on companies that are tapping into what promises to be terrific growth from de-carbonizing the economy.

This issue, we highlight a small cap stock with amazing engineering savvy at a minor, but essential, feature of electric vehicles. Management expects it can grow revenue about 50% every year through the rest of the decade as automaker customers begin to churn out EVs. It’s in the early stages of growth and is seeing strong fund buying as well as exceptional technicals.



We also highlight three ESG stocks showing the best technicals in the group, as part of our recurring ESG Three, give the current sector outlook indicated by our Greentech Timer, and provide a detailed rundown of the stocks in our current portfolios. We have some ratings changes and refreshed sell-stop recommendations for many of our holdings.



Read through for more details.

In the October Issue of Cabot Early Opportunities, we try to interpret some of the latest commentary from Fed officials and look at the future cadence of expected interest rate hikes.

Then we dive into five stocks that seem poised for gains into the end of the year. On balance, we’re still optimistic the worst is behind us. But it’s not (yet) time to be overly aggressive. We try to balance the risks and possible rewards by managing position sizes and continuing to build up our Watch List.

In the October Issue of Cabot Early Opportunities, we try to interpret some of the latest commentary from Fed officials and look at the future cadence of expected interest rate hikes.

Then we dive into five stocks that seem poised for gains into the end of the year. On balance, we’re still optimistic the worst is behind us. But it’s not (yet) time to be overly aggressive. We try to balance the risks and possible rewards by managing position sizes and continuing to build up our Watch List.

The market has had many ups and downs in recent days, though stepping back, the indexes have been trending lower. Essentially, while there have been some strong days for the indexes, we are in a bear market until proven otherwise.

At the close of the August expiration cycle, back on the 19^th, the SPDR S&P 500 ETF (SPY) was trading for 422.14. Now it’s trading 3.7% lower at 406.60.

For the year the S&P 500 (SPY) is down 14.7%, while the tech-heavy Nasdaq 100 (QQQ) and small-cap Russell 2000 (IWM) indexes are lower by 22.8% and 15.7%, respectively.

Nothing has changed from last month’s issue. I still expect to see bouts of volatility going forward. I would like to say that most of the weakness is behind us, but unfortunately, I don’t have a crystal ball. Although, I will say that barring any real setbacks in inflation data or ongoing geopolitical concerns, I expect the market to hold the 2022 lows and potentially rally, particularly if inflation data subsides.

Last week was another doozy for the bulls, with the major indexes suffering a good-sized decline and many growth stocks taking it on the chin. With the major evidence still pointed down, we continue to advise holding plenty of cash and doing little on the buy side. That said, it’s also important to remain flexible, as there remains plenty of underlying potential positives, including another round of hugely pessimistic sentiment measures and a positive divergence in the broad market. As we’ve written before, if something actually goes right in the world, it’s possible the bulls could make a run at things, but we have to see it for more than a day or two to believe it. Our Market Monitor remains at a level 3.

This week’s list actually has a lot of names that look poised for intermediate-term moves … if the market can get out of its own way. Our Top Pick is an old friend in the medical device space that actually has four months of positive momentum on its chart.

The market roller coaster continued this past month, with inflation worries and rising interest rates leading the charge.

I believe this volatility will continue at least until the first quarter of next year. Consequently, I’m moving the portfolio in a more conservative direction at the moment.



Having said that, however, economic indicators continue to be positive. Motor vehicle sales are still strong, with 13.5 million units sold last month, better than expected. The ADP employment report also exceeded forecasts, with 208,000 new jobs coming online. And the unemployment rate fell to 3.5% from 3.7% the prior month.

A tough week for markets as concerns over recession, persistent inflation, and geopolitical tensions grow. Explorer stocks were not spared as they all pulled back with exception of Oracle (ORCL) and micro-cap Kraken Robotics (KRKNF). New restrictions on chip-related sales to China hit semiconductor stocks. An almost $8 billion deal by Brookfield Renewable Partners and uranium producer Cameco to buy nuclear services firm Westinghouse is the latest sign of revival in nuclear power after years of decline. The matchup would create something of a Western nuclear powerhouse, pairing a key nuclear power service provider with the largest publicly traded uranium company and one of the world’s biggest owners of wind and solar projects.

This week we sell two positions and go to Japan for a conservative, high quality play on an overlooked but critical part of the electric vehicle revolution.

Today, I’m recommending a real estate company that is 86% owned by insiders.
Key points:

• Stock is trading at 100% discount to fair value.•Company has 87% of its market cap in cash.•Majority shareholders will likely attempt to buy out minority shareholders at a premium shortly.

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

In an otherwise miserable year of nonstop inflation, recession, the Fed, and a bear market, an opportunity is emerging for opportunistic investors. Attractive rates on conservative fixed-rate investments have reemerged. There is a chance to lock in rates not seen since the decade before last.

In this issue, I highlight an investment grade rated fixed income security that currently yields nearly 6%, and the income offers tax advantages to boot.

The market continues to forge nowhere. The S&P 500 is still below the May 7th high, but it’s only less than 1% below the high. It stopped going up. But it isn’t going down.

More than any single factor, broad-based fear is keeping gold prices elevated (with silver benefiting by extension). As we talked about in the previous report, gold’s “fear factor” has returned with a vengeance as inflation concerns—combined with other economic worries and geopolitical unrest—have converged to give gold a strong supporting bid as we head closer to summer.

The market was mixed today with cyclical stocks outperforming—at day’s end, the Dow was up 139 points while the Nasdaq was down 2 points.

Well, it’s about time some buyers showed up. While we can’t yet characterize the move in higher growth small- and mid-cap stocks as a rally per se, it’s not premature to say that sentiment has turned up when it comes to these types of stocks.

Today’s note includes ratings changes, the podcast and the Catalyst Report. We publish the Catalyst Report on the Friday after each monthly issue of the Cabot Turnaround Letter.

The market is in nowheresville. The S&P 500 is at the same level it was in early April. But the index isn’t really down. It’s only 1% below the all-time high. It’s not that the market is going down. It just stopped going up.

We’ve written about inflation in the past two letters and promise that we’ll stop with this letter, unless some major news on this front emerges. Yet, what keeps us on the topic is commentary from brokerage firms and media outlets saying that the market is fully discounting the arrival of inflation. If inflation is here to stay, at perhaps a rate greater than, say, 3-4%, then the market is not discounting its arrival.

In the stock market (and in life), incentives matter. Charlie Munger summed it up well when he said, “Show me the incentive and I will show you the outcome. I think I’ve been in the top 5% of my age cohort all my life in understanding the power of incentives, and all my life I’ve underestimated it.” This is the reason why I’m so focused on insider ownership when evaluating micro-caps.

Today’s note includes earnings updates, ratings changes and the podcast.

While still very choppy, this past week has been much better than the two weeks prior as the selloff in growth stocks has cooled and more investors have begun to think longer term. While the risk of inflation is still an overhang on high-multiple stocks, the passage of time allows global supply chains to re-adjust and for people/companies/policy setters to get a better handle on what the legitimate inflation risk is.

Markets are a bit jittery despite strong earnings and expected strength as America opens up its post-pandemic economy. China is already at a 5% growth path while India, Japan, and other important economies struggle to get the pandemic under control.

A quick look through the major marijuana stocks leads to an unsurprising conclusion: the sector remains in a correction.

The stock of this semiconductor company was recently upgraded by Cowen & Co. to ‘Outperform.’

Our first recommendation is a cannabis company that just received a big investment from British American Tobacco. We are also taking profits in a previous idea.

This gold company’s fourth quarter earnings soared by 133%. Its current annual dividend yield is 3.51%, paid quarterly.

This alternative asset manager is forecasted to grow at an annual rate of 18.15% over the next five years.

Porch (PRCH) reported its first quarter as a public company this week. The numbers are a little messy due to divestments and acquisitions over the last year, but the bottom line is that the quarter was good and the company is well-positioned for the year ahead. Making all the necessary adjustments, revenue in Q4 was up 34% to $19.5 million and up 28% to $73.2 million for the full year 2020.

This company is the leading boat and yacht dealer in the U.S., and analysts expect it to grow its earnings by 30% annually over the next five years.

Analysts expect this online automotive marketplace company to grow its earnings by an annual rate of 25.2% over the next five years.

The market continues to be extremely challenging for growth-oriented stocks and many of our names are trading near support levels. It’s one of those environments where, with many stocks down 20% to 40% from their highs, it’s an entirely “normal,” albeit significant, correction. In other words, we expect these environments to come along every now and then, pass, and on we go. Maybe not to new highs straight away, but eventually.

Trading action continues to be sloppy as we move toward the end of the first quarter (ends Wednesday) and toward April. News of the Archegos Capital collapse (a hedge fund) has cast a bit of a shadow over parts of the market as well (financials, some China stocks) as forced liquidations drove huge volatility in stocks (DISCA, TME, SHOP, FTCH and more) late last week.

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.