As discussed in the last report, heightened volatility relating to the war between Russia and Ukraine—or more specifically, the prospects of a ceasefire between the two—is the key driver for the broad metals market right now.

Yes, there are other fundamental factors behind the latest rallies in the major industrial metals, but everything else is dwarfed in comparison to the Russia factor. On that score, uranium is the latest metal to fall victim to sanctions against that country.



In the portfolio, we just added a new position in a dual steel and aluminum play that looks set to pop.

With the market bouncing strongly last week, we leave our previously cautious stance behind and jump on a fast-growing, young chipmaker today.
And we’re not selling a thing, because after the February weakness, which saw a lot of irrational panic selling, the buyers are now back in charge and stocks are moving higher.


Details inside.

After a multi-week bottoming process, the buyers showed up last week in a big way, producing a rare show of strength that, historically, has always preceded great gains when looking out six to 12 months. That said, the next few weeks are more of a toss-up, as the intermediate-term trends of most indexes and stocks are still iffy and news-driven action (like today’s commodity move) is still the norm. We’re bumping up our Market Monitor a notch and think it’s OK to extend your line a bit, but we still think it’s best to start small, aim for pullbacks and to go slow.

Happy St. Patrick’s Day! After the Fed for the first time since 2018 raised benchmark rates, stocks surged yesterday. The question remains whether the Fed can get a handle on inflation without tipping the economy into a recession. Rock-bottom Chinese stocks also got a lift yesterday as a Chinese regulatory agency indicated its support of U.S.-listed Chinese stocks. Emerging markets and fintech remain out of favor but we go there today for a Warren Buffett-backed, aggressive idea that is a play on both of these themes.

In the March Issue of Cabot Early Opportunities we talk honestly about the current state of the market and what to do now.
I also cover five opportunities that continue to pique my interest. I have a familiar software stock that’s been resilient lately, an alternative energy supplier that could help reduce Europe’s reliance on Russian energy, a pharma company set to make big moves over the coming years, an early-stage electric vehicle play, and an innovative MedTech company that’s growing like a fertilized weed in early spring.


Enjoy!

Global fossil fuel uncertainty is shining the spotlight back on renewables as the best way for most economies to be energy independent. This issue we feature one of America’s largest renewable generation portfolios, which offers an exceptional 4%-plus dividend yield. We also look at a young renewables-focused business finding its legs in wind, solar and infrastructure.

As always, we also highlight three technically strong ESG stocks to consider and give updates on our Greentech Timer and Real Money and Excelsior portfolios. Read on!

Today, I’m adding the world’s largest publicly traded uranium company Cameco (CCJ), which has held up spectacularly throughout this market meltdown. Though of note, this stock is volatile and we are going to play it super defensively, with an in-the-money call.

The situation remains the same as it has for the past week or so. When it comes to selling pressures, we’re seeing some signs that they’re starting to ease, but, on the buying side, there isn’t much evidence to suggest the bulls are flexing their muscles, as most indexes, sectors and growth funds are still in downtrends while rallies into resistance (whether for an index or stock) almost always attracts quick selling. Yes, there are still many old world stocks that are acting well (though we’ll see how today’s commodity-related selloff goes), so we’re not opposed to nibbling on these sorts of pullbacks. But overall, we think watchful waiting is the right course.



This week’s list is intriguing as there are a good number of fresh breakouts here, some from very long ranges. Our Top Pick is one of those, with the company’s massive step-up in earnings last year expected to persist for at least the next couple of years.

With the market still in a downtrend, defense continues to be important.
Cash is the simplest defensive asset, but low-risk stocks, undervalued stocks, dividend-paying stocks and stocks in sectors bucking the downtrend are all worth considering.



My recommendation this week is a well-known automaker with great prospects in the electric vehicle space whose stock is trading 38% off its recent high.



Details inside.

The market has spent the past six weeks etching a volatile, tedious bottom, with numerous secondary measures offering encouragement, the biggest of which is an ongoing positive divergence in the number of stocks hitting new lows, which tells us fewer stocks are participating in the downside. That’s good to see, but what we really need to see now is real, sustained buying pressure--so far, that hasn’t been the case, so we’re remaining generally defensive.

The world has clearly changed in the past two weeks. We see an exceptionally wide range of possible outcomes, which makes predictions about the future (already a low success rate endeavor) basically futile. We offer our timeless investing advice that can be readily applied in such situations.

In the letter, we also provide updates on all of our Recommended Stocks.

Today, I’m recommending an app developer that I previously recommended (we exited for a 114% gain last year). The business is growing like crazy yet trades at a dirt-cheap valuation.
Other key points:

• High insider ownership (19% of the company).
• 25%+ revenue growth this year.
• 34% of its market cap in cash and no debt.

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

From an investor’s point of view, I will be cautious about owning P&C insurance stocks. We won’t know the cost of all the damage until second and third quarter earnings reports, but you can be sure that profits will suffer.

Why are markets continuing to move upward in the midst of economic and political upheaval? The short answer is don’t fight the Fed, which has made it abundantly clear that it will do anything necessary to keep this economy and market moving.

The S&P 500 is now up over 40% from the bottom in March and less than 10% from the all time high. Forget about a bear market. It’s not even a correction any more.

Remain optimistic. Growth stocks have had a tough week, but the selling hasn’t been abnormal, few (if any) have broken down and today’s stabilization for many is a good sign.

In the market, there seems to be some rotation going on. Or at least that was my sense of things over the first two and a half trading days of the week.

The stock market rally is now more than two months old. The S&P 500 has rallied 35% since March 23 and is now just about 10% below the all-time high.

The S&P 500 Index and the Dow Jones Industrial Average began new run-ups yesterday, while the NASDAQ Composite Index continues its uptrend. I’m glad that investors are continuing to make money during this market rebound.

Enjoy the current strength but be aware of the environment we’re in, and why. Accept that we could see a significant retreat in the prices of many of our stocks in the near term, but that the fundamental reasons behind their current strength should persist despite a retreat, and drive them higher over the coming years.

Despite a Chinese economy that has grown three times faster than America’s every year over the past three decades, it has been a bit of a challenge to consistently make money in Chinese stocks.

We are in the midst of a rally that has continued for about two months. This market seems to want to go higher. While the rally has slowed significantly from the initial bounce off the lows in March, the overall market is still in an uptrend.

In keeping with last week’s comments, the stock market continues to show a willingness to rise in the near term. More than any other industry, oil refining stocks offer strong upside, including two within our portfolios.

This deeply-discounted beverage company’s latest quarterly earnings were more than double the analysts’ estimates.

Growth stocks remain under severe pressure, with more unraveling today.

This Tennessee bank is forecasted to grow at double-digit rates next year.

We all know this market has been overdue for a pullback, if not a larger correction, especially for many tech stocks.

Growth stocks are being taken to the woodshed today, and this comes after some climactic upside action in the indexes and key leaders in recent days/weeks. Moreover, we’re starting to see some growth leaders crack support for the first time during this rally.

This REIT’s price has not recovered from the March market rout, so it looks pretty undervalued.

The environment has been crazy, and today is seeing another huge rotation out of extended growth leaders and into the rest of the market.

Three weeks ago, when the marijuana sector seemed extremely extended to the upside, we sold 25% of each of the positions in our four U.S. multi-state operators

Our second recommendation is a sale of an aerospace/defense company whose shares are not moving.

Our first pick is a home goods retailer whose online sales during this pandemic, have increased 46%.

This auto parts company beat analysts’ estimates by $0.09 last quarter.

This stock just IPO’d last month and will report earnings tomorrow.

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.