In the September issue of Cabot Early Opportunities, we continue to try and thread the needle of this bear market, selecting a few potential opportunities to buy while adding others to our Watch List.
This month’s issue features a couple of old friends that are shaping up again, plucks one healthy stock off the Watch List and digs into two fresh names that seem to have the wind at their backs.


Enjoy!

Before we dive into this week’s idea, let’s clean up a couple of positions that expired last week. Because of the general market weakness, today we are going to sell our stock positions in Qualcomm (QCOM), Oak Street Health (OSH), and Global Foundries (GFS). Once these sales are made, we will no longer own a stock or option position in these stocks.

Sparked by a “hotter”-than-expected inflation report on Tuesday, the market had its worst week since June. The numbers were not pretty as the S&P 500 fell 5.15%, the Dow lost 4.13%, and the Nasdaq declined by another 5.5%.

Sparked by a “hotter”-than-expected inflation report on Tuesday, the market had its worst week since June. The numbers were not pretty as the S&P 500 fell 5.15%, the Dow lost 4.13%, and the Nasdaq declined by another 5.5%.

We added another position to the mix, an iron condor in IWM, last week. And shortly after we added our range-bound iron condor, we decided to lock in profits on our SPY bear call spread, marking 10 out of 11 profitable trades since we initiated Quant Trader. Moreover, our holding period is only 17 days, far less (roughly 66% less) than if we were holding our trades through expiration.

My goal this week, if the market allows, is to add another bear call spread and bull put spread to the portfolio. My hope is that we can squeeze a bit more premium out of the October 21 expiration cycle, but we will have to see what is being offered.

The market continues to retrace its steps back toward mid-summer lows, but not all stocks are suffering. Renewable energy names, including several in the Stock of the Week portfolio, are holding up quite well thanks in large part to lingering good vibes from the passage of the Inflation Reduction Act. So we’re not fighting the tape – today, we’re adding another clean energy stock to the portfolio, recommended by our Greentech expert, Brendan Coffey.

Details inside.

Not much has changed with our trades since last week’s issue. As a result, I’m simply going to reiterate what I stated last week.

The portfolio continues to perform well in what has been a very difficult market for most traders and their respective portfolios. While I would love to have more trades on, I’m perfectly fine keeping our level at five open trades per expiration cycle with the understanding that as opportunities arise, I will add more. But with a widely vacillating market and a host of bearish crosscurrents I plan on maintaining a fairly conservative approach.

Earnings season is inching closer, but we are still several weeks away (mid-October) from the big banks kicking the earnings season off.

That being said, the next two weeks should offer some potential trades as FedEx (FDX) and Costco (COST) are due to announce later this week and Micron (MU) and Nike (NKE) announce the latter part of the following week. All four offer potential trades.



If I decide to make a trade, as always, I will send out a trade alert with all the details.

The market has continued its volatility since mid-August, rising above 34,000 on the DJIA, then contracting, just to bolt upward again at the end of last week. Economic uncertainty and fears of a recession, although recently economists have been decreasing their likelihood for a 2022 recession, effectively pushing that into 2023.

The unemployment rate for August unexpectedly rose to 3.7%, but unemployment claims in the past week were less than forecast. It’s still a great market for folks looking for jobs.



We’ll have new housing stats next week, but anecdotally, I can tell you that prices are still being reduced in my region, but sales activity has increased, after about a six-week lull.

Explorer stocks held up pretty well during this turbulent week as almost all were steady or up, with Chile’s SQM up five points. Stocks stabilized yesterday after a sharp pullback on Tuesday. While prices of gasoline are down, prices of most of other things like food, rent, and medical care are still rising. This week we dive into semiconductor stocks with a return to Taiwan for a new recommendation.

It’s been a rough year for stocks. And things may get worse before they get better. Meanwhile, money markets pay barely anything, and you never know when the market will turn.
Dividends are a great answer for a market like this.


They provide an income and lower volatility in turbulent markets and make it easier to stay invested ahead of the next bull market. Dividends account for most of the market returns during flat and down markets and excel during times of inflation.


In this issue, I highlight a company in one of the most defensive and recession-resistant industries on the market that currently pays a massive 8% yield. The stock is already cheap and likely near the trough of its own bear market with far more upside than downside over time to complement the high dividend.

Today, I’m recommending a company that’s benefiting from “green” initiatives.
Key points:

• •27% revenue growth last year, and 17% expected growth for the next 5 years.•256% EPS growth last year.•A strong balance sheet with net cash.•High insider ownership.

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

In this issue I highlight two timely stocks for purchase now.

Most stocks on the Cabot Undervalued Stocks Advisor recommended list had strong performance this past week. Part of the strength was perhaps due to money managers’ general optimism that seems to brighten with turn of the calendar. With last year’s bonuses firmly in the bag, professional investors often view January as the start of a new clock. This translates into a higher tolerance for risk-taking, as there are nearly 12 months ahead to make up for any mistakes. Cyclical and value stocks tend to be major beneficiaries of this optimism.

This week we had one company reporting earnings - Lamb Weston Holdings (LW). We are raising our price target on Signet Jewelers (SIG) to 42 from 35. DuPont (DD) shares are under review as they trade above our 75 price target.

The indexes are having another good day today, led by growth stocks this time—as of 3:30pm, the Dow is up 253 points and the Nasdaq is up a big 322 points.

The New Year is a wild one so far in the market with big up and down swings. The Dow was down big Monday and it’s up big today as bank stocks have caught fire.

As I think about the market in 2021, I’m conflicted. While I see signs of market excess, I have high conviction in our list of open recommendations and continue to find a bunch of additional companies that look attractive.

The major indexes had a down day on the first trading day of the year.

This month saw several major mergers/acquisitions and changes in CEOs and at least two high-profile activist campaigns.

As we head into a new year, I would like to thank all of you for your support and wish you all both good health and profits in 2021. But today, we have a piece of unfinished business that needs to be dealt with - Alibaba (BABA).

I’m sending this week’s update out a day early because I have a window to work now with the kids somewhat entertained with Christmas presents. And it’s always nice not to load up our team with communications the day before a holiday (Cabot is closed Friday).

The New Year looks promising for dividend stocks. With prices in many growth sectors at high levels ahead of a very promising economic year, the relative performance of dividend stocks in general should be much better this year than in 2020.

With the turn of the calendar only a few days ahead, just about every investor is mapping out their market views for the coming year. Some do this formally, like Wall Street brokerage firms who publish their opinions on where the S&P 500 and interest rates will finish next year and their outlooks for all sorts of economic and financial indicators. Others will informally develop their views and expectations for the coming year.

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.

Several of our stocks have reached/exceeded our price targets, so we are making changes to several of our ratings:

A new CEO has given new life to this gold producer. In its latest quarter, it posted EPS of $0.41 versus the forecast of $0.32.

Late last week, P10 Holdings (PIOE) announced another transformative acquisition.

This company is making waves with a fast turnaround COVID-19 test; its shares were added to the S&P SmallCap 600 in September, increasing investor attention.

Eight analysts have raised their earnings projections for this bank.

This Latin American e-commerce company beat analysts’ estimates by $0.11 last quarter.

A wave of quarterly reports in recent days means most of our companies have reported.

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 Momentum 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 Momentum Trader features.