This week earnings season really gets in gear … buckle up, and be prepared to jump into some earnings season winners if the market can continue to show signs of strength.

Election season lurks just around the corner.

The looming midterm outcomes have huge implications for cannabis – since the group is so dependent on legal reform in the hands of politicians.

There are going to be plenty of (tradeable) election-related ups and downs. But for reasons I will explain, cannabis stocks might see some very bullish catalysts near term, no matter which party takes the Congressional elections.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the November 2022 issue.

At it most basic, investing is a mental game supplemented by a calculator. Our articles use one or both aspects to find attractive investing ideas.

Our first group covers enduring companies with out-of-favor stocks with theses well supported by a calculator. Our other articles discuss companies with deeper issues but whose shares have been so heavily sold that their risk/return trade-offs are highly attractive, even if their theses rely less on a calculator and more on pure contrarian instincts.

Our feature recommendation this month is a high-quality, well-capitalized bank that emphasizes credit card loans

The market has likely not bottomed yet. The current rally will unlikely be sufficient to drive us out of this bear market ahead of continued high inflation and likely recession in the months ahead.

However, while the market indexes may have further downside, one area of the market may well have already bottomed, namely interest rate-sensitive stocks.

Previously buoyant defensive stocks got clobbered as interest rates spiked to the highest levels in 15 years. But the evidence is overwhelming that the economy is likely headed toward recession in the months ahead. Recessions put downward pressure on interest rates. As the economy worsens and inflation declines, rates are likely to move lower, negating most of the damage done to conservative dividend payers.

There are powerful reasons to believe that interest rate-sensitive stocks may have already bottomed. In this issue, I highlight one of the very best utilities on the market. It’s near the 52-week low after an overdone selloff and should be highly resilient in a recession.

Maybe, just maybe, last week was the start of a fourth quarter market run, as the S&P 500 gained 4.75%, the Dow rose 4.9%, and the Nasdaq added 5.22%.

While gold remains under pressure from a strong dollar, producers of industrial metals like copper and steel are beginning to show signs of perking up. Booming demand from alternate energy applications is the big driver here.

Elsewhere, the global titanium supply crunch continues with no immediate relief in sight.

In the trading portfolio, two new positions are recommended, including a major steel producer and a titanium market player.

Stocks were up for a second straight week, which might as well be a full-on rally in 2022 terms. At the very least, it’s a good time to add a beaten-down growth stock with immense potential – in a sector that has brought us our biggest winner (by far) to date. It’s a stock that was recently recommended by Tyler Laundon in his Cabot Early Opportunities advisory.

Details inside.

It’s going to be a short report this week with our monthly call last week and the October expiration cycle finally behind us. We covered a ton of information in our call so please, if you have the chance, take a listen when it’s convenient for you.

We locked in a few more profits last week and will be doing the same this week, this time in PFE.

If you didn’t get a chance to attend last week’s subscriber-only event you can access the recording of the event here. It will be well worth your listen as we covered the ins and outs of our AXP trade and offered a detailed look at a few potential upcoming trades.

We locked in another profitable trade late last week, this time in American Express (AXP). I went over the trade in great detail in our subscriber-only event so if you have the time, take a listen as you will find the information discussed incredibly helpful going forward. Our one-day return in AXP was 5.3%, which brings us to a total of 12% for this earnings season.

The market and many stocks staged a nice bounce last week, and despite many ups and downs and news-driven moves, they’ve all stopped going down for the past three to four weeks—and that means a few good days could actually produce an intermediate-term green light. Still, as has been the case for weeks, we need to see it before taking any big action: Until proven otherwise, the onus remains on the buyers to show up for more than a day or two, which means keeping plenty of cash on the sideline. As has been the case for a while, our Market Monitor remains at a level 3, though we’ll let you know if that changes going forward.


This week’s list is heavier on commodities than it has been in a while, though there are a few nascent earnings winners in there, too. Our Top Pick fills both bills, as shares are picking up steam after their Q3 report following a 13 month period of no progress.

I’m going to keep it short today as we are coming off the end of the October expiration cycle. We locked in another winning trade last week to make it 12 out of 13 winning trades for a win ratio of 92.3%. Moreover, our three open trades are all in profitable territory and there is a good chance I will close out a few, if not all, over the coming days. If I do close out all three trades, expect to see a few opening trades going out roughly 30-45 days. Stay tuned!

It’s still a bear market, but there were some positive signs this past week, including the market’s surprisingly positive response to another disappointing inflation report last Thursday. With so many stocks and sectors down 20%, 30%, 40% or more, the odds favor a rebound at some point – it’s just a matter of when. Perhaps the most beaten-down subsector has been cannabis, so today we want to take the contrarian route and buy (very) low on a recommendation from new Sector Xpress Cannabis Advisor Chief Analyst Michael Brush. It’s a company that’s growing just fine but whose shares have been overly pummeled like most other marijuana stocks.

Details inside.

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

This has been another tough week for most growth-oriented small cap stocks as the sellers have clearly taken control. There are easy targets to point to as driving the decline, namely fear of inflation. But the reality is it is mostly just a lot of uncertainty about the path of the recovery that’s likely driving the selling. And the fact that most stocks are still up very nicely over the last twelve months, meaning a lot of room for profit taking.

Remain defensive. Growth stocks remain under severe pressure, and today notwithstanding, that selling is starting to spread to the broad market (our Cabot Tides are on the fence).

It looks like the relentless bull market is finally running into trouble. The market indexes are down a lot for the third straight day.

We’ve seen signs of it everywhere. Retail prices for homes, apartments, food, gasoline, cars and everyday services are higher than they were a year or two ago and are going higher. Upstream from these consumer-facing prices, input prices for raw materials, semiconductors, crops, wages, energy and transportation are going up. Inflation is no longer around the corner – it is here.

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

Cloudflare (NET) earnings are out today as sector rotation and scrutiny of SPAC-acquired target company valuations continue. Electric vehicle (EVs) stocks are struggling a bit and could be presenting us with attractive entry points.

Things are still great. The market indexes are either making new all-time highs or within a whisker of them. The uptrend continues ahead of what is sure to be a booming economy in the months ahead.

We at Cabot Micro-cap Insider are long-term investors and try not to time the market. However, we are aware that there is seasonality to market returns. You have probably heard the term, “Sell in May and Go Away.” That’s because on average, the six months from May to October are the worst performing months for the S&P 500 Index.

It’s earnings season. And it’s a weird one.

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

Even though stocks have been wobbly today the last week has been very constructive for our portfolio. As of mid-day today, our portfolio is up an average of 4% from last Thursday’s close, and only two positions are down (neither by more than 2%).

Growth stocks continue to bleed today, with many down 4% to 10% even as money rotates into cyclical areas. Our trend-following indicators are still positive, so we’re not selling wholesale, but as growth investors, we are turning cautious—we came into this week with 41% in cash.

Arena Pharmaceuticals (ARNA) yesterday announced that olorinab failed to meet the primary endpoint in the Phase 2 CAPTIVATE study in IBS abdominal pain. This is disappointing but not remotely the reason to own (or sell) the stock. IBS is a difficult to treat condition and when we got into Arena the programs with olorinab didn’t even exist.

This insurance company just walloped earnings estimates, posting 4Q EPS of $2.55, compared to earnings forecasts of $1.32. The shares have a current dividend yield of 4.43%, paid quarterly.

Last night, Medexus Pharma (MEDXF) reported excellent results. Revenue increased 70% y/y to $31.5MM in the quarter. While that top-line number benefitted from ~$3MM of sales that slipped from last quarter to this quarter, it was nonetheless a very positive report. Adjusted EBITDA increased to $5.1MM from a mere $700,000 a year ago.

C3.ai (AI) reported Q4 results yesterday – its first as a public company – that came in ahead of expectations but didn’t offer enough about future growth to support the stock’s valuation. Revenue in the quarter was up 19% to $49.1 million while subscription revenue jumped 23% to $42.7 million. Billings were lower than expected (down 10% versus up 14% growth) due to invoice timing which could be shrugged off if not for this being a newly-public company with high expectations.

The stock of this oil company is seeing renewed momentum. The shares have a current annual dividend yield of 6.24%, paid quarterly.

Cardlytics (CDLX) reported Q4 2020 numbers this morning that surpassed revenue expectations by roughly 10% and missed modestly on earnings. Revenue was down 3.2% to $67.1 million (beating by $6.2 million) while adjusted EPS of -$0.05 missed by $0.02. Management gave 2021 guidance that called for revenue of $250 million to $275 million, which straddles consensus expectations of $260 million (up 40%).

This oil, natural gas, and mineral company recently announced its fourth quarter distribution of $0.242260 to unit holders. The shares have a current annual dividend yield of 8.60%, paid quarterly.

Arcosa (ACA) released an uninspiring report on Wednesday that was particularly ill-timed given yesterday’s market retreat. The company missed across the board. Revenue was up 2.7% to $459 million, missing by $4.7 million while adjusted EPS of $0.33 missed by $0.08. Guidance for 2021 also missed.

Personalis (PSNL) released preliminary Q4 results on January 11 and the official release after the close yesterday offered no surprises. Personalis (PSNL) Moves To SELL

This mining company sees bullish demand, and its shares were recently upgraded by Goldman Sachs to ‘Buy.’

A move to invest more than expected in its non-capital investment, created an earnings miss for this building products and equipment company, but it looks like the investment will pay off as six analysts have just increased their earnings forecast for the company.

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.