With the market down big today, it’s possible that the growth stock correction has done enough damage—but until we see real strength, it’s better to adjust to the trend—and that means going with a value stock today—an old technology name that you’ll recognize. As for our current holdings, there is only one change, a downgrade of one stock, Broadcom (AVGO), to hold.

Happy New Year! While COVID continued to wreak havoc in our personal and work lives in 2021, we cannot complain about the markets!

Last year, the Dow Jones Industrial Average rose 18.7%; the S&P 500 climbed 26.9%; and the Nasdaq rose 21.4%. Not bad for an economy that continued to recover from the early stages of the coronavirus.



And the economy continues to strengthen, supported by improvements in manufacturing, housing, and unemployment. The unemployment rate for December dropped to 3.2%, the lowest it has been since February 2020.



We are still living with COVID, and as I wrote in the latest Cabot Money Club magazine, inflation is a concern going forward. Just this past week, long-term mortgage rates rose to 3.4%. While any rise in those rates can cause homeowners some grief, the truth is that is still a pretty low mortgage rate. Consequently, I don’t think a steady rise will the derail housing market.



Keep reading to find out more.

While some major indexes are hanging in there and many cyclical areas look pretty good, growth stocks have suffered another sharp leg down, with many with crash-type declines last week. With that said, there are some rays of light, including a minor new lows divergence, continued buying bursts that usually portend solid long-term results and the fact that some cyclical areas are trying to get going from big consolidations. Monday’s panic selling might be a workable low, but still, we need to see more before putting much money back to work.

Today, we are recommending a special situation. The stock is a closed-end fund that is in the process of transitioning to a real estate investment trust (REIT). Once the transition is complete, the universe of investors that can buy the stock will double, driving indiscriminate buying pressure. Other key points:

• Trades at a 40% discount to NAV.
• High insider ownership (CEO owns 14% of company).
• Relentless insider buying.

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

The pandemic induced profound changes in the short term and will permanently alter things to at least some degree for a long time. Such change can create great investments.





One industry that is benefitting from the altered world is shipping. Seaborne shipping stocks have had their best year in well over a decade. Shipping rates have soared amidst the rapid recovery and pent-up consumer demand as well as supply chain disruptions that have limited the number of ships available.





These changes should be long lasting for one industry subsector, container shipping. The torrid rise of e-commerce and technological efficiency should permanently increase demand for container shipping at a time when supply is limited and will remain so for a while.





In this issue I highlight a container shipping company that is growing earnings at better than a 100% annual clip, sells at a still cheap valuation, and currently yield 6.7% with a dividend that should continue to rise in the years ahead. The stock could have a lot further to rise in the year ahead.

Does your ETF portfolio look the same this year as it did in 2021, or even for the past five or 10 years?

With this first issue of the Cabot ETF Strategist, you’ll get the essential portfolio allocations to get the year started right. Whether you’re an aggressive, moderate or conservative investor, theres’s a portfolio for you.



Both equities and fixed-income asset classes are getting a slow start to the year. That’s good news for anyone rebalancing or reinvesting their portfolio, as you can buy ETFs at potentially lower valuations.

This week I’m adding an energy stock engaged in hydrocarbon exploration, Marathon Oil (MRO).

Note: Because of the Martin Luther King, Jr., holiday, next week’s issue will be published on Tuesday, January 18.



While the S&P 500 hit a record high just last week, the market is being hit hard today, and thus I have two sell recommendations, AMBA and FND.



But I also have a new recommendation, which has the potential to be a big winner as the world increasingly values what this little company produces.



Details inside.

Happy New Year to everyone - I wish you and your families a healthy and prosperous New Year. As we turn the page to 2022, let’s review some trends before getting to a company with a new device to shake up and lower costs in healthcare at home and around the world.

The market is a bit of a mess, but the selloff has created opportunities to pick up shares in high-growth small- cap names at what seems like extremely attractive prices.





Today’s recommendation is one of those names. It’s a marketplace company that is revolutionizing the outdated industrial manufacturing industry.





While the stock hasn’t been immune to bouts of market volatility it has been far more stable lately than most other high-growth names. It’s up over the last three weeks! And it offers investors exposure to an industry that is seen rebounding in 2022 and 2023.





Enjoy!

A new year brings a fresh perspective. Flows into U.S. ESG funds rose 20% in 2021 and doubled worldwide. Some $3.9 trillion is now dedicated to environmental, social and governance issues globally, primarily in equities. All that money sees the long-term trend of Greentech continuing upward, driven by the desire to combat climate change and the universe of innovation it has inspired.



This issue we feature two selections. For the Real Money Portfolio, we focus on an upcycler benefitting from strong construction activity. For the Excelsior portfolio, we offer a high-risk, high-reward player in hydrogen.

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



We comment on the abrupt shift in market sentiment that has boosted the prices of our undervalued stocks relative to expensive hyper-growth stocks. Several of our left-for-dead stocks, like Arcos Dorados (ARCO), which jumped 17% in the past two weeks, have suddenly been rediscovered by the market. Others, like Coca-Cola (KO) and Sensata Technologies (ST), are reaching new all-time highs as investors find that their healthy fundamentals haven’t been fully reflected in their share prices.



This shift may not last, and is only two weeks or so in the making. But it reinforces our view that, to quote Warren Buffett, “in the short run, the market is a voting mechanism, but in the long run it is a weighing mechanism.”



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.

Individual stocks continue to move around based on earnings reports and, for the most part, things appear to be quite good. Many management teams aren’t yet sticking their necks out and issuing rosy guidance for 2020, and that’s causing a few dips here and there.

The markets are demonstrating impressive resiliency in the face of the coronavirus. You can’t fight the market but I remain a bit more guarded since this disruption will have to hit profits down the road for some companies.

Here’s how I handle my personal stock portfolio when I’m expecting a market correction. When I sell a stock, I put part of the capital in the money market fund, and I reinvest part of the capital into an attractive stock opportunity.

Back to the market, there’s more good news than bad from my perspective. Employment and hiring are good, the lessening of tariffs on $75 billion worth of U.S exports to China is good, interest rates remain low (many economists see a rate cut coming too) and there are plenty of good earnings reports to get excited about.

The market’s snapback has been impressive, pushing our Cabot Tides back to a green light and pulling most stocks up after short, sharp pullbacks.

But the market is rising back faster than it fell. The solid economy and low interest rates are continuing to drive stocks higher, for now.

The coronavirus has hit this stock hard, but analysts see the company growing 12.6% next year.

The good news is that leading marijuana stocks have seen some heavy buying in recent days—so much, in fact, that the four leading U.S. marijuana stocks have all broken out above their May or June highs.

The market had a very rough day yesterday, with the Dow closing up 10 points (there was some rotation into lagging areas) but the Nasdaq reversed from huge gains to finish down 227 points.

Piper Sandler also likes this energy stock and just shifted its rating to ‘Overweight’.

This medical device company has been hit by COVID-19, so looks very buyable here for the long-term, and it pays a 1.45% dividend.

This midstream energy company has been clobbered by low oil prices.

The shares of this semiconductor company are about even with their recommended price in January, but our contributor is no longer sold on the stock.

The pandemic has hit this entertainment company hard, so it is no longer on the Buy list for our contributor.

This lab company’s stock was hit hard by an SEC investigation into its COVID product, but our contributor (as you’ll see below) remains very positive about the stock.

Our contributor is taking some major profits on his 2020 Top Pick—triple digits!

This electric car company is expected to grow by triple-digits next year.

The stocks in the marijuana sector have pretty much traded in sync with the broad market since the March bottom, climbing strongly to late-May or early-June peaks and consolidating those gains since, with many stocks pulling back to sensible support levels.

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.