Note: Because of the Juneteenth Holiday, which will close all markets next Monday, next week’s issue of Cabot Stock of the Week will be published on Tuesday June, 21.
And I think the market will likely be higher then, because the selling has been so pervasive in recent days that a bounce is overdue.


In the meantime, in continuing to manage our portfolio, we are selling Intel (INTC) today, mainly because it’s our biggest loss and the trend looks bad.


As for today’s recommendation, it’s a Chinese stock in the EV space that has fallen 76% from its high of last year and is ripe for a rebound.


Details in the issue.

So far, so good. As of Friday, all three of our open positions are in the green, even though the overall market has pulled back rather significantly.

We still have a lot of trades to place as we begin to build out each one of the portfolios. So, that being said, I’m going to keep it rather short today as we are just in the early ramp-up phase of the five portfolios that reside in the Fundamentals service. This will no doubt be the shortest issue you will ever receive. Enjoy!

The market did a decent job during the prior three weeks of getting in position to flash an intermediate-term green light, but it was a case of close but no cigar, and now the sellers are back at it, with stocks essentially having a mini-crash since last Thursday. It’s vital to remain focused on the evidence, which obviously remains negative, and to honor your stops for things that are falling out of bed. Looking ahead, there’s certainly enough panic and some positives in the broad market to put in a low, but of course we have to see the buyers step up and take control before putting much capital in harm’s way.

This week’s list has a collection of decent-looking stocks—nothing is really great here, but these names are either in overall uptrends or have shown recent buying power. Our Top Pick is from the latter camp, with shares miles above their prior low and recently reacted well to earnings.

We are up to three positions in the Income Trader service. As I’ve stated in the past, my goal is to have 5 to 10 ongoing positions in both the Income Trades Portfolio and the Income Wheel Portfolio. That being said, I want to ramp up at a measured pace, especially given this market. So, expect to see 2-3 trades added each week over the next several weeks.

Okay, we have two trades in the books. Both bear call spreads due to expire on July 15, 2022. So, it’s no surprise to say we are leaning bearish at the moment. Our deltas reflect our current stance, and we’re OK with it. In fact, we might be leaning a bit bearish for a while.

There is a good chance I’ll be taking the SPY 440/445 bear call off the table for a nice profit early next week, if not prior to the publishing of this issue. We can lock in some early profits and it simply doesn’t make sense to hold any risk through expiration when we can lock in over 50% of the original premium sold back on June 2.

We are firmly entrenched in the doldrums between earnings cycles, but it doesn’t mean that opportunities won’t arise.

Plus, as I wrote last week, the downtime between cycles gives us some time to reflect on the prior earnings season and, more importantly, prepare for what is ahead.



There is one potential opportunity next week, which we will discuss below. Again, there is no doubt that opportunities are scarce as we are firmly between earnings cycles.

Aside from Sea (SE), which zoomed from 80 to 88 this past week, Explorer stocks were largely flat, which to some these days is a good week. This week we look at the history of market pullbacks and some encouraging analysis on bounce-backs and trade before getting to a new recommendation from Shanghai.

Are you tired of turning on your television first thing in the morning and getting heartburn over the market’s gyrations?

Yeah, me, too. So, I’m swearing it off. I’m only going to peek at it a couple of times a day, since it doesn’t seem to be finishing the day as it starts, and I just don’t need the angst.



Instead, I’m going to keep looking at the macro-economic figures and try to do my very best to find the right investments for you to weather these ups and downs.

It’s a raging bear market in technology.
But technology has been by far the best performing sector for well over a decade for good reasons. We are in fact in a technological revolution. Technological advances are accelerating. It feeds on itself and is transforming the world. Technology is where there is massive growth and excitement for the future.


Sure, the market might get cranky in the near term. Inflation and higher rates might be all the rage right now. But technology isn’t going away. It’s likely to grow even bigger in the future. The time to buy such stocks is when they are cheap and out of favor.


In this issue, I highlight three existing portfolio positions in the technology sector ready for purchase. All of these stocks sell at compelling valuations with strong growth likely ahead. They are victims of indiscriminate selling in the sector. At some point, hopefully sooner, investors will realize the value that has been created by this year’s market turmoil.

Today, I’m recommending a company that has grown revenue at a 30% CAGR and EBITDA an 80% CAGR over the past 10 years. Despite this impressive growth, the company trades at just 5.3x EBITDA.
Other key points:

•Top 3 player in the U.S. paper shredding industry.•Massive opportunity for organic and acquired growth.•High insider ownership (over 30% of the company).

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

As has been the case for much of 2022, last week there were exciting rallies and nasty sell-offs. And while the S&P 500 fell 1.13%, the Dow lost 0.94%, and the Nasdaq declined 1%, big picture the market handled an avalanche of bad news last week very well. Maybe, just maybe, the market is in the digesting bad news stage.

While the market officially remains in a downtrend, various indicators in recent weeks, combined with terrible news and sentiment, tell us the market bottom may have passed. But until we see real strength, continued caution is advised.
Today’s recommendation may be too aggressive for some readers (it’s a semiconductor company, and we all know they can be volatile) but it has a good story and chart and I think it’s worth the risk.


As for the portfolio, there are no sales, just one downgrade to Hold.


Details in the issue.

The stock market had a decent week, gaining about 5% since our last letter. While market commentators have ascribed a range of reasons for the strength, including new hope for a federal stimulus package, a growing consensus about the outcome of the presidential election, and perhaps some modestly increased optimism in what had become a sense that the economic recovery was faltering.

This market looks like it wants to go higher. After selling off nearly 10% in September, the S&P 500 has resumed its uptrend and is not far from the all time high.

We are combining our regular Friday afternoon Members-Only Podcast with any earnings updates. By combining these, you will receive the same research, perspective and analysis as always yet in one easy-to-read email.

The consensus opinion right now is that the market is strong because it’s looking favorably on the prospects of a clear-cut winner in the upcoming presidential election and that the likelihood of another round of stimulus is going up.

The Explorer portfolio had another positive week, as the market is hostage to enacting another politically difficult stimulus package. Count me as skeptical. Stay-at-home stocks are leading the market while economic-recovery stocks struggle.

We just had a week that I believe is indicative of this market over the next month or so. There seems to be too much headline risk for stocks to make a substantial move higher.

In short, it looks like there will be a tug-o’-war with good news and bad news at least up until the election. I expect the market will continue to bounce around in that time frame. However, there could be great things for the market beyond the election and the pandemic. The forecast is choppiness now, and a bull run later.

In my Cabot Micro-Cap Insider Guide (which you can download on our members page), I describe the three buckets of my recommendations:

We are combining our regular Friday afternoon Members-Only Podcast with any earnings updates. By combining these, you will receive the same research, perspective and analysis as always yet in one easy-to-read email.

The market finished mixed today, with the Dow up 36 points while the Nasdaq was up 159 points and most growth stocks acted well.

The environment for writing calls has deteriorated of late as the market uptrend has been interrupted. A market moving higher increases investors’ willingness to speculate on higher stock prices, and call premiums rise. A choppy market reduces demand and call premiums.

The furious market uptrend since the lows of March has experienced its rudest interruption so far. The S&P 500 got to within a whisker of a correction, falling 9.6% from the high on a closing basis. But it has since recovered nearly half of the downside.

The market continues to react to the good news on the vaccine front, but growth stocks continue to suffer. Today we’re taking another incremental step to wind down some of our exposure.

This mega-tech company is preparing to spin-off a subdivision.

Bruce is selling three portfolio stocks.

We are getting closer to clearing two of the biggest hurdles of uncertainty out there. I am, of course, talking about the U.S. presidential election and the Pfizer and BioNTech vaccine news.

The U.S. and the world has cleared two of the biggest hurdles of uncertainty out there. I am, of course, talking about the U.S. presidential election and the Pfizer and BioNTech vaccine news.

We are moving Peabody Energy (BTU) and Weyerhaueser (WY) to Sell.

We are moving Barrick Gold (GOLD) to Sell.

This building products company posted earnings of $1.04 per share last quarter, compared to analysts’ estimates of $0.78.

Three of our portfolio stocks report earnings.

Three analysts have increased their EPS estimates for this pest control company in the past 30 days; they now forecast growth of 47.1% for the company next year.

Two of our portfolio stocks report earnings.

This midstream MLP (Master Limited Partnership) ETF has a current annual yield of 35.22%, paid monthly.

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.