I am delighted to take the reins of the Cabot Stock of the Week advisory and hope to keep the good times rolling in our portfolio! With the market finally showing signs of life, or at least resilience, much better days lie ahead, and there’s lots of money to be made during the next big thrust.

This week’s new recommendation is the rare stock that’s already having a very good year – and is still undervalued. It’s a stock that was in our Stock of the Week portfolio not long ago and has demonstrated enough strength of late to gain re-entry.



Details inside.

I’m going to keep the weekly commentary section rather short today. My hope is that everyone has had the opportunity to watch our latest subscriber-exclusive webinar from Wednesday as I covered a lot of ground, including closed trades, open trades and potential upcoming trades. We also discussed the ins and outs of bear call spreads and covered the importance of risk management.

Earnings season is finally upon us.

Next week offers up a few potential trading opportunities, particularly in some of the market stalwarts. Johnson and Johnson (JNJ), AT&T (T), Verizon (VZ) and American Express (AXP) are just a few of the names I’ll be focusing on. Tesla (TSLA) and Netflix (NLFX) are also due to report next week. While both stocks offer some incredibly healthy options premiums, I tend to stay away from the high-flyers even if the premiums are tempting. And if I do give in to temptation, I always pare back my position size.

I’m going to keep the weekly commentary section rather short today. My hope is that everyone has had the opportunity to watch our latest subscriber-exclusive webinar from Wednesday as I covered a lot of ground, including closed trades, open trades and potential upcoming trades. We also discussed the ins and outs of bear call spreads and covered the importance of risk management.

Despite the tedious action and truckload of bad news, we are seeing some things pop up that are often seen near lows, such as growth stocks starting to find their footing and breadth doing the same. We’ve even seen some minor positive divergences from our Two-Second Indicator. Those are reasons to keep your head out of the sand and to keep your watch list up to date, especially with earnings season potentially providing a catalyst in the weeks ahead. Details inside.

Interest rates are still rising, as the Federal Reserve boosted short-term rates by 75 basis points last month, to try to stem the growth of inflation. There are some signs that it may be working. The 30-year mortgage rate actually saw a couple of decreases early last week, but nudged a bit higher on Friday, to a 5.94% average national rate. And gas prices have declined nationwide to $4.66 per gallon, from $4.68 this time last week. I know that’s not much, but, hey, we’ll take what we can get!

It’s a bear market. And there is a good chance that stocks make new lows in the weeks and months ahead.
Bear markets create fantastic opportunities for longer-term investors. History shows that bear markets create ideal entry points ahead of the next bull market. Let’s not just weather the storm. Let’s take full advantage of the very possible further downside from here in the market.


In this issue, I highlight one of the very best stocks on the market with a targeted low, low price that may be reached in the panic selling of a market bottom. Specifically, we target a highly desirable stock at a dirt-cheap price with a good ‘til cancel (GTC) at the designated price.

Today, I’m recommending a U.K. natural gas company that is trading at a ridiculously cheap valuation and is run by capable operators who generated a 40x return on their last natural gas company.
Other key points:

• •It’s benefitting from the booming natural gas market in Europe.•It’s trading at 1.5x free cash flow.•It has high insider ownership (20% of the company).

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

Since last month’s issue, we’ve seen continued volatility in the U.S. equity markets.
Trading volume was among the slowest this year; according to Dow Jones Market Data Group, the typical daily volume in the New York Stock Exchange is close to 5 billion. However, this year, it has been around 4 billion.


The second-quarter earning session is just around the corner. Investors are eager to see how companies are contending with soaring inflation and other factors, including the U.S. labor market participation.

The old Wall Street bromide that says “bull markets climb a wall of worry” can be applied to lithium. The battery metal is facing new worries over the impacts of a proposed tax that many fear will keep supplies restricted. While potentially bad for the EV market, it has so far been good for prices.

Elsewhere, steelmaking coal is on the rebound while related stocks are looking good. Industrial metals, meanwhile, are coming off major lows but have rebound potential.



I continue to recommend that we remain mostly defensive until weakness subsides.

This week got off to a weaker start Monday ahead of important inflation data Wednesday and Thursday, which could set the tone for the market for the weeks to come. Buckle up!

We remain in a confirmed bear market, so caution is still appropriate. But the bear may end soon, and when it does, we’ll get back to more aggressive investing.
This week’s recommendation is a healthy company that pays a very large dividend and has a solid future serving one of our country’s strongest energy sectors.


As for the current portfolio, there are no changes.


Details in the issue.

Stick with the game plan of putting some money to work as opportunities arise. While the near-term path is a bit of a tossup, the major evidence remains bullish, and we’re seeing more and more leaders get moving in recent weeks.

As we move into the final weeks of 2020, I’m inclined to become a little more cautious with our buy ratings because, well, stocks have been en fuego! On that note, several stocks move from buy to hold today.

After having eclipsed the September high in mid November, the S&P 500 is continuing to make a series of new all time highs.

Over the past month or so, it seemed like stocks would continue their frenetic surge. This week, however, the market appears relatively lackluster with a lot less excitement. Some investors may yearn for more fireworks, but as a value investor, I find this calm to be more sane.

This week two companies reported: Signet Jewelers (SIG) and Duluth Holdings (DLTH).

The Explorer portfolio had another good week despite a sharp pullback by ElectraMeccanica (SOLO). We still have a big profit there, so I advise you to sell half your position and let the rest ride. As you review your stock portfolios going into 2021, I encourage you to take partial profits from your big winners.

November was quite a month in the market. It was one of the very best months for the market indexes in decades. The Dow was up 11.8%, the S&P 500 rose 10% and the Nasdaq gained another 11% in the month.

The final tally is in, and it was a November for the ages. The Dow Jones Industrial average was up 11.8% for November, making it the best month for the index since 1987. The S&P 500 climbed 10% while the Nasdaq gained another 11% for the month. History clearly shows that November was a spectacular month. What happened?

Investor sentiment is high these days. Just look at the Citi Panic/Euphoria Index

This note is a Monday edition, following the long Thanksgiving weekend last week. No companies reported earnings last week, and we review Adient’s (ADNT) earnings that were reported today.

For the third straight week the market has rallied on the news of another coronavirus vaccine with positive late stage trial results.

Other than price changes not much has happened with our stocks since I wrote last week. With our offices closed tomorrow and Friday we’ll all be taking a short break before gearing up for the last month of the year.

This gold miner is expected to grow at an annual rate of 43.05% over the next five years.

This social media company beat EPS estimates by $0.10 last quarter. It is forecasted to grow by l52.3% annually, over the next five years.

Undervalued, and ready to begin distributing dividends, this Spanish bank looks like a good bargain.

The expiration of our December covered calls is today, and I’m happy to report that four positions (GM, PINS, YETI, CGC) are closing for max profits

We’re starting off our 2021 Top Picks with this marijuana REIT that just raised its quarterly dividend to $1.24 per share.

The electric car boom is pushing this stock up, and the company is expected to post EPS growth of 25% annually over the next five years.

Marijuana stocks as a whole pulled back normally over the past week, but the correction may have ended yesterday, with most of the leaders still well above their 50-day moving averages—and the best have continued to hit new highs. Bottom line, the trend remains up and thus I’m keeping our portfolio fully invested.

This biopharma is forecasted to grow at an annual rate of 98% over the next five years.

While not yet profitable, this software company saw its revenues jump 38% last quarter, and its loss of $0.12 was much better than the Street’s estimate of -$0.21.

Selling Industrial & Technology

Selling Industrial & Technology

This communications company posted EPS of $0.27 last quarter, handily beating Wall Street’s estimates of $0.13.

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.