It hasn’t been smooth, of course, but the market’s evidence has improved a bit during the past six or seven weeks. The way we look at this is that the market has put itself in a position to do something positive in the intermediate-term—but it still has to actually do it, meaning show enough strength to turn the trends up and see more stocks break out and follow through to higher prices. Right now we remain in watch and wait mode: We’re keeping our eyes open, but it’s best to remain defensive until the bulls show us more.



This week’s list is again heavy on biotech and Chinese names, though we’re also seeing some strength in a few new (but smaller and sometimes less liquid) growth names. Our Top Pick is a unique medical-related outfit whose stock is changing character for the better.

The close of the June expiration, back on the 17th, was witness to the low set in 2022. The SPDR S&P 500 ETF (SPY) hit an intraday low of 362.17 before rallying to close the expiration cycle at 365.86.

Since then, the market stalwart ETF has rallied 6.2%.



To put things into perspective, SPY was trading for over 410 when we first established positions back on June 3 before losing roughly 11% into the close of the June expiration cycle.



Thankfully, the bulls stepped back into the fray when the July expiration cycle began, prompting the 6% rally.

Back and forth we go as the bulls decided it was their turn to take charge this week.

The S&P 500 (SPY) pushed 2.0% since last week’s issue while the tech-heavy Nasdaq 100 (QQQ) gained an impressive 4.6%. Growth as seen through the Russell 2000 (IWM) saw an increase of 4.7%.



Nothing new here.



Volatility continues to define the market in 2022, and until fears subside on a potential recession, rising inflation and ongoing geopolitical turmoil, I don’t expect much to change.

All of the major indices pushed higher this week which helped the majority of our positions.

The S&P 500 (SPY) pushed 2.0% since last week’s issue while the tech-heavy Nasdaq 100 (QQQ) gained an impressive 4.6%. Growth as seen through the Russell 2000 (IWM) saw an increase of 4.7%.



Nothing new here.



Volatility continues to define the market in 2022, and until fears subside on a potential recession, rising inflation and ongoing geopolitical turmoil, I don’t expect much to change.

Earnings season is finally upon us.

Next week offers up a few potential trading opportunities, particularly in the big banks. JP Morgan (JPM), Morgan Stanley (MS), Citigroup (C), Wells Fargo (WFC) and US Bank (USB) are the big announcements on the docket and the companies I will be focusing on.

No question this is a challenging market but Explorer stocks held their ground. Cloudflare (NET) had a good week up five points, and Ford (F) remains my favorite pick on risk/reward basis. This week we move to a surprising trend that will benefit America, the climate, and your portfolio.

This month we go back to the MedTech well and pull out a small company with a potentially transformative technology that could shake up the organ transplant market.

With recent FDA approvals and a platform that appears to be head and shoulders above the standard of care, this company is enjoying rapid revenue growth now.



Enjoy!

The first half of 2022 came to a close last week, and the numbers weren’t pretty; the S&P 500 fell 20%, the Dow was lower by 15% and the Nasdaq declined by 30%. How the second half of the year will play out is anyone’s guess. However, until stocks show any real signs of sustained momentum, I will continue to keep the portfolio diversified, and will lean defensive with our options selling strategy

Thank you for subscribing to the Cabot Undervalued Stocks Advisor . We hope you enjoy reading the July 2022 issue.

Investors are facing two forecasts that wouldn’t seem to be possible at the same time: pending recession and stable/rising earnings estimates. We look at how our cyclical stocks have been beaten down even as their earnings estimates remain largely steady.



It has been a quiet month for new recommendations and ratings changes as we patiently wait for great opportunities.



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.



I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.



Thanks!

We’ve moved into the second half of the year, but the overall picture is still the same for the stock market—there are some positives out there, but we’re still stuck in a downtrend—all indexes and growth funds are below key intermediate- and longer-term moving averages, and the fact that we’re seeing lots of stocks still hitting 52-week lows every day (even on big up days) tells us the broad market remains on the outs. All in all, it’s important to keep your eyes open and to stay flexible; the market can turn up at any time given that it’s looking months into the future, but as we’ve been writing for months, we have to see strength develop first, so defense remains the name of the game.



This week’s list is a hodgepodge of ideas, from big, steady-Eddies to smaller up-and-comers that want to get moving if the market can stabilize. Our Top Pick is an off-the-bottom name whose RP line has turned strong and whose growth is rapid and should accelerate.

We remain in a confirmed bear market, so caution is still appropriate.
But there’s always something interesting to consider buying, and this week’s recommendation is a young stock with a good story, which involves helping the oil and gas industries use water more efficiently.


As for the current portfolio, which is 25% in cash, there’s one Sell.


Details in the issue.

We are up to five positions in our Income Wheel Portfolio and finally approaching a diversified mix of stocks. However, I wouldn’t mind adding at least one or two more to the portfolio over the coming weeks.

Now my focus is on finding a few shorter-term trades using a jade lizard and possibly selling a put or two. If all goes as planned and the market cooperates, expect to see at least one, if not two, shorter-term trades next week.

Remain optimistic but pick your stocks carefully. The overall market is in good shape, and there’s definitely more good than bad among individual stocks, though it’s also tricky, with plenty of rotation and news-driven moves.

Stocks showing strength and breadth like we haven’t seen in a long time, particularly with the broad market at a record high. Despite flattish returns from the formerly high-flying mega-cap tech stocks, the broad stock market is no longer grinding higher, it is surging higher, lifting the S&P 500 index to a month-to-date gain of 8.8% through Monday.

Given the news that we are likely to have several effective vaccines approved over the next couple of months, value stocks, which tend to be more cyclical and thus will benefit more sharply from an improving economy, have outperformed growth stocks.

This week, ten companies reported earnings, with Berkshire Hathaway (BRK.B) reporting tomorrow (Saturday): Barrick Gold (GOLD), Conduent (CNDT), Gannett (GCI), GCP Applied Technologies (GCP), General Motors (GM), Jeld-Wen Holdings (JELD), LaFargeHolcim (HCMLY), Meredith Corporation (MDP), Mosaic (MOS), and ViacomCBS (VIAC).

After an insane couple of weeks this one has felt relatively calm. There is still plenty of market-moving news around the election, vaccines, the pandemic’s frightening trajectory, etc. but I think we’ve all become somewhat accustomed enough to alarming headlines – within a certain range – that it’s harder to get shaken now than in the past.

Markets steadied this week as the political situation became clearer and prospects for Covid-19 vaccines becoming available in the first half of 2021 seem more promising. The Explorer portfolio performed well this week, with a couple of ideas breaking out to new highs.

The economy is already rebounding, and at a stronger pace than was expected. But it still has one arm tied behind its back with the remaining restrictions and lockdowns. Plus, with the indexes not far from all time highs, the market had likely risen as much as it was going to before the next phase of the recovery came into view.

This year continues to amaze. The market had another big rally this week on news of very positive late-stage trial results for a coronavirus vaccine from pharmaceutical company Moderna (MRNA). The S&P 500 soared to a new all-time high, the first since early September.

This was a busy week, with many of our companies reporting earnings.

While pulling back a bit from the sharp jump on Monday, November 9th, the market rebounded on additional encouraging Covid vaccine results this week.

This week only four companies reported earnings. As your chief analyst is traveling this week, there is no podcast.

Stay cautious for now as we wait to see whether growth stocks can find their footing (which they’ve done for a couple days in a row now).

Sell BGS February 19 $27.50 call at $2.40 or better

Icahn Capital just bought more of this technology company, bringing its stake to 14.5% of the outstanding shares.

This closed-end fund has a current annual dividend yield of 6.77%, paid quarterly.

The bull market is alive and well, and marijuana stocks remain among the leaders, as buyers continue to flood into this hot sector in the midst of a growing trend toward legalization.

This infrastructure company beat analysts’ EPS estimates by $0.03 last quarter, and just inked a $25 million deal to renovate a building at the Air Force Academy.

This oil company hammered Wall Street’s estimates ($0.38) last quarter. Its current annual dividend yield of 7.56%, paid monthly.

This ride-sharing and food delivery company just completed the acquisition of Postmates, Inc., making it the second in market share next to DoorDash.

This alcohol stock was just upgraded by Morgan Stanley to ‘overweight.’ The shares have a current dividend yield of 2.80%, paid semi-annually.

The top five holdings of this fund are: WEC Energy Group Inc (WEC, 1.38% of assets); Eversource Energy (ES, 1.30%); Carrier Global Corp Ordinary Shares (CARR, 1.26%); American Water Works Co Inc (AWK, 1.19%); and Motorola Solutions Inc (MSI, 1.17%). The fund has a current annual dividend yield of 2.85%, paid quarterly.

This e-commerce company was expected to lose $0.23 per share last quarter, but its EPS came in at $0.50.

This healthcare technology company is expected to grow by 28.7% next year.

Sometime between today and Friday, the U.S. House of Representatives will vote on the Marijuana Opportunity, Reinvestment and Expungement Act, otherwise known as the MORE Act.

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.