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.

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.

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.

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.

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.

The market indexes continue to soar to new all time highs with no signs of stopping, despite the fact that the virus is still hanging around and economy is still beaten up.

Labor Day marks the start of a new year of sorts and a rebirth of seriousness in the collective psyche. The other side of Labor Day is a new ballgame, when investors shake off the apathy of summer and refocus with intensity.

One benefit of investing in micro-caps is that you can talk to management.

There isn’t any major news for any of our stocks.

The Cabot Global Stocks Explorer portfolio had another good week, with four stocks all making major moves.

These are the dog days of summer. It’s a rare time of year when a certain degree of slackery is not only tolerated, but expected. People tend to focus on enjoying the waning days of summer. More serious issues and considerations get postponed until after Labor Day.

Starting next Monday, August 31, before the market opens, the Dow Jones Industrial Average will have a new look.

This week, the main updates are from a stock that reported earnings and another portfolio stock that announced that it has sold its midstream business and will liquidate the company.

As far as the last week goes our stocks are up an average of 3%.

2020 has surely been one for the record books—the sharpest selloff in history from a record high to a bear market and then the sharpest rebound in history from a bear market to a new record high.

It has been an amazing market. The S&P 500 just made a new all time high. It has rallied a staggering 55% since the lows in less than five months. The market is forward looking and anticipates a rapidly growing economy, a friendly Fed and record low interest rates and a vaccine in the months ahead.

After a brief decline in early June, the market has resumed the uptrend that began on March 24th. It has been a spectacular 55% rally in less than five months.

This financial company is expected to grow by 11.9% in the next year.

On Friday, the September 78 call that we sold expired worthless.

In the past 30 days, 40 analysts have raised their price targets for this big-box retailer.

There are five holdings in this biotech fund.

Tomorrow is the expiration of five of our September covered call trades. It was another great month for the Cabot Profit Booster portfolio!

This shipping company just reported 60% growth in earnings and 13.5% increase in revenues, for the second quarter.

There hasn’t been any real news about our stocks in the past week, but I’ve been watching the charts carefully, trying to decide whether it’s time to put some of our 35% cash back into the market, or to take more out, or to simply stand pat.

This bank beat analysts’ earnings estimates by $0.09 last quarter.

Six analysts have increased their earnings estimates for this ore and nickel producer in the past 30 days.

This consumer products company walloped Wall Street’s earnings estimates, posting EPS of $.059, compared to the $0.23 forecast.

Every so often one of our stocks is the target of a short report that tries to make the case that a company is garbage, a fraud, and/or wildly overvalued.

Earnings estimates are rising, and analysts expect this fuel aggregator to grow by more than 60% next year.

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.