This week I’m adding a recent earnings season winner, an American developer of all-flash data storage hardware and software products, Pure Storage (PSTG).

It’s been an interesting month in the markets. Since last month’s issue, the Dow Jones Industrial Average lost about 1,200 points, mostly due to the new COVID variant, Omicron, which has now hit the United States. The jury is still out as to whether or not the variant is more contagious, more dangerous, etc. Also, there remains some market uncertainty due to the polarization in Washington, D.C. And, lastly, Fed Chairman Powell’s remarks about speeding up tapering also affected investors.

But overall, we’ve had some pretty good days, in addition to the declines. After all, the economy is still chugging right along. Housing remains very strong, with price rises seeming to moderate for the moment. There is still a huge dearth of inventory, and now the slow real estate season is upon us. Perhaps that will give homebuilders an opportunity to play catch-up, as builders in my area tell me that they are now more than two years out. And some are not taking any more folks on their waiting lists! I have myself on such a list, and I’m looking at about 2 ½ years until I can be in my new home.

While the market is up today, the correction that began a month ago remains in force, making it tough for stocks (growth stocks in particular) to make real headway. Thus we have four Sell recommendations today, as well as one upgrade to Buy.

As for the new recommendation, it’s a solid growth company that dominates a totally unexciting industry in the U.S., and long-term prospects are great.



Details inside.

You can analyze omicron’s spike protein, slice and dice the words of the Fed chairman or do a deep dive into last week’s jobs report all you want. But at the end of the day, all that matters now is that the sellers are in control. To be fair, some short-term measures are stretched, so some type of bounce is possible. Thus, if you’re already defensive, we wouldn’t be in a rush to sell a ton of stuff here, but there’s no question the onus remains on the bulls to begin repairing the damage. We’ll keep our Market Monitor at a level 5.

This week’s list is a hodgepodge of strong names, be it due to company-specific moves, earnings or sector resilience. Our Top Pick is a direct beneficiary of all things construction and infrastructure, and its stock is holding up well.

The market was in a normal, shake-the-tree correction for most of November, but the past two weeks have seen a massive wave of selling that’s cracked our Cabot Tides and scores of individual stocks. Yes, there’s a chance this could be a big news-driven shakeout (virus and Fed tapering worries, etc.), so we’re not sticking our head in the sand, but there’s no question the sellers are in control and many stocks are going to need a ton of repair work.

We’ve sold a bunch of names from the Model Portfolio in the past two weeks, and while we’re not opposed to adding a half position or two if the market finds its footing, we’re sitting tight with a large cash position tonight.

Today’s new addition is a semiconductor company. It designs products that are the heartbeat of digital technologies. Its content is found in electric vehicles, datacenters, IoT devices, airplanes, mobile devices and more. It is benefitting from surging demand from Apple (AAPL) products, from which it generated 40% of revenue in 2020. While the market cap is a little larger than we typically look for, the opportunity warrants the exception at this time.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the December 2021 issue.

For most of the year, we have an intense focus on long-term business fundamentals and underlying valuations. However, as year-end approaches, artificial selling pressure can create large enough short-term bargains that even we find worthwhile. We discuss several sources of selling pressure that can turn others’ losses into your gains, and list six stocks that look most promising.



Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your 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.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the December 2021 issue.

The emergence of the Covid Omicron variant has temporarily upended the market’s emerging post-Covid view of the economy. We share our thoughts on this, as well as on Fed Chair Powell’s testimony this week about accelerating the bond-buying taper. We also comment on how artificial selling pressure as the calendar year-end approaches can drive already-weak stocks to steeply undervalued levels.

Fears over the omicron variant and inflation have markets on edge. That has Greentech pulling back a bit from its recent bull move. We need to be a bit more cautious in the near term as a result, but the outlook for the sector remains excellent – and there remain attractive Greentech stocks to buy even in these conditions.

This issue we add a new stock to our Real Money Portfolio – a company resulting from two mergers less than three months ago. It’s already quite profitable and on a strong growth trajectory. Its shares are at an attractive price today.

This week I’m adding American supplier of camping supplies, recreational vehicles, parts and service, Camping World Holdings (CWH).

While growth stocks had a rough time last week, the broad market remains strong, and thus I continue to think you should remain heavily invested as we head into the last month of the year.

Today’s stock has the potential to be a huge winner as it occupies a central position in a world-changing trend, but risk is high—as it should be when potential is high.



On the sell side, Coupa Software (COUP) gets the ax today, as it is going the wrong way.



Details inside.

The news of a new virus variant came out of left field late last week, whacking the major indexes on Friday … though today brought a so-so rally as some think the economic impact of omicron won’t be as bad as feared. We’re not in our storm cellar, but we’re not ignoring the action, either—on the buy side, we advise going slow and starting small, while for names you own, you want to honor your stops and make sure bad situations (losses, etc.) don’t get much worse.

That said, there remain many stocks that are pulling back or consolidating normally despite all the hectic action. Our Top Pick is one of those that already went through the wringer this year, broke out recently and is holding up well

We are so accustomed to looking at stocks and markets day by day that we sometimes miss the big trends as well as opportunities.

Two stocks depart from the Special Situation Portfolio and the Growth Portfolio today, respectively, while another joins the Growth & Income Portfolio.

The upward trajectory for growth stocks that was smooth sailing in November has turned far bumpier in December.

Remain bullish, while keep your eyes open as some stocks have hit potholes. The market itself is in good shape, though we continue to think some news-driven ups and downs are likely in the near term.

Here we are within weeks of the end of year and the end of a decade. It is approaching the 11th year of the recovery and bull market. The S&P 500 is up 25% in 2019 and very near the all-time high. Where do we go from here?

A high percentage of stocks that I follow are exhibiting bullish price charts right now. Obviously, you already knew that the stock market has been acting well. I simply want to reiterate that the recent bullishness appears to be sustainable. Enjoy!

This has been a good year for the market. With only weeks left in 2019, the S&P 500 is more than 23% higher for the year. Some of that is the undoing of the overselling at the end of last year. But the market has trended consistently higher all year and is close to the all-time high.

Remain bullish. The market and leading stocks continue to act well, and while a pullback, shakeout or some other potholes could occur in the short-term, the odds continue to favor higher prices over time.

The marijuana sector looks increasingly healthy, as the leading companies continue to post triple-digit growth rates and the leading stocks continue to climb higher.

Our second recommendation today is a sale of a previous idea.

There are five holdings in this fund.

As the semiconductor industry heats up again, this equipment maker is estimated to grow at an annual rate of 176.8% over the next five years.

The S&P 500 has had a tremendous run-up. It’s due for a correction, although it’s not yet indicating that the correction is imminent. Be cautious. Use stop-loss orders and/or pare back positions on stocks that have retraced early 2020 highs.

Our first idea today, an instrument maker, beat analysts’ estimates by $0.30 last quarter.

The company is currently building homes, primarily for first-time home buyers, in 19 U.S. states from coast to coast and the District of Columbia.

Tyler updates six stocks in the Cabot Early Opportunities Portfolio

Coronavirus sent this high-quality grocer’s same store sales up more than 10%, providing a $0.24 earnings beat last quarter.

This Chinese AI/internet company beat analysts’ estimates by $0.68 last year, and Wall Street is forecasting 30.9% growth for 2020.

The first issue of Cabot Income Advisor just came out yesterday. The idea is to sell a covered call, meaning you already own or you just purchased IIPR on the buy recommendation.

Our second recommendation is a sale of a previous idea.

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.