The market was hit hard again last week, so all trends remain down, and increased caution is still advised.


This week I’m selling two stocks that have weakened since reporting first-quarter results last week, but I’m also upgrading one to buy!


As for the new recommendation, it’s a well-known retailer with a slow but solid growth story whose stock is cheap.


Details inside.

Today was another day of bloodletting, with the major indexes and many former leaders continuing to melt down. Short-term, there’s little doubt things are getting emotional—thus, it’s certainly possible we’re close to a low point, but of course you could have said that a few days ago as well. As always, you shouldn’t fight the tape—with most things cratering, you should be holding much more cash than stocks, though we’re still not opposed to a nibble here or there. When this maelstrom is over, there are going to be some great buying opportunities, but right now, you should remain defensive. Our Market Monitor is down to a level 2.



This week’s list is heavy on commodity names, which did get hit today but in general remain in uptrends. Our Top Pick is a refining name that has recently shown accelerating strength.

The market has been up and (mostly) down, but not much has changed with our thoughts: The primary evidence remains terrible, though we continue to see more than a few rays of light from some secondary indicators. For now, we’re remaining defensive (we sold two more half positions this week) and are patiently awaiting the bulls to return.



In tonight’s issue, we write about a couple of commodity-names that we’re watching closely, as well as go over some thoughts on handling big losers (it happens to the best of us) and some of those secondary indicators we’ve mentioned--you can cut the bearishness with a knife, so it’s best to at least stay alert to a positive change in the market’s character.

The market remains very challenging for high-growth stocks. While I have a list of innovative companies I’m excited to recommend (at some point), for now we’ll continue to diversify our portfolio with more value-oriented names.

This month’s new addition is a little-known supermarket chain I’ve been following for some time. The pitch is very straightforward – rising prices and an insulated business model should help the company post impressive growth in 2022 and 2023. Not to mention we have upside if/as the name spreads among investors that are increasingly looking for just this kind of stock.



Last but not least, the chart looks fantastic.

In the April Issue of Cabot Early Opportunities, we take a look at the earnings calendar for our current portfolio and spread new research around by covering a diverse group of small-cap companies.
We have a newly public (again) pet retailer, a leaner and meaner defense and aerospace company, and a rising star in the fitness studio space. We also upgrade two stocks from our Watch List (and ditch a few others), including a key supplier for the EV market and a rapidly growing IT services company.


Enjoy!

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the May 2022 issue.



One of the enduring features of the stock market is that near-term share prices are driven by momentum and narratives. While this may yield huge money-making stocks on the way up, losses can be devastating on the way down. Fortunately for value investors, downturns driven by negative momentum and unfavorable narratives can create impressively attractive opportunities.



We discuss two groups of stocks that fit this bill: homebuilders and stocks with valuations below 5x EV/EBITDA. Our featured recommendation this month is homebuilder M/I Homes (MHO), which trades at a large discount to its liquidation value despite what may be a reasonably steady industry over the next several years.



We note our recent move of Vistra Energy (VST) from a Buy to a Sell.

We still face headwinds in the market, but action to start the week in Greentech is encouraging. This issue we look at what stocks the “typical” ESG mutual fund and ETF own and examine an undiscovered stock that is showing great strength appealing to health-conscious consumers.

As always, we also suggest three ESG stocks to consider and review our current portfolios.

This week we will add an American energy company engaged in hydrocarbon exploration and pipeline transport, EQT Corp. (EQT).

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

We’re back in the States after an unplanned but superb extended stay in London. It seems that most of the pandemic-driven adrenaline rush in speculative stocks has burned off, leaving a tremendous amount of losses in the wake, while stocks of companies with more enduring business models that trade at prosaic valuations continue to hold their ground or advance.



In the letter, we review earnings reports of several Recommended companies as well as provide updates on all of the others.



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.

There’s been a lot of action of late, mostly on the downside, and this week’s news flow (Fed meeting, jobs report, etc.) is sure to create more. But, really, nothing much has changed with our view: There remain many secondary-type indicators that are at intermediate-term (if not multi-year) extremes, so we’re keeping our eyes open should the buyers show up for more than a day or two. But we have to actually see it to believe it, and to this point, any bounce has been soundly rejected. We’re lowering our Market Monitor to a level 3.



There are still a couple of decent-looking areas, mostly either slow/steady growth firms or special situations. Our Top Pick this week is one of the latter, with an almost hard-to-believe cash flow story.

The market was hit hard again last week, so all trends are down, and increased caution is advised.
But I’m not selling any stocks this week, mainly because last week I sold four, and today so many of our stocks are sitting at their 200-day moving averages, thanks to last week’s broad selloff, that I see a good possibility for some bounces.


As for the new recommendation, it’s a well-known discount retailer whose stock is cheap.


Details inside.

The sellers continue to come out of the woodwork, with a generally weak environment hitting a big air pocket to end last week, decisively dragging all indexes and the vast majority of individual stocks lower—we’re even seeing the selling spread to the commodity arena, with even the impenetrable defensive areas taking hits. At this point, the major indexes are retesting their January-March lows, and we’re still seeing positive divergences under the surface, but as we’ve been saying for most of the past few months, you have to see it to believe it—right now, there’s no question the trends are pointed down, so we advise staying mostly on the sideline. Our Market Monitor is now at a level 4.



This week’s list is a potpourri of names that are holding well, including some that have lifted thanks to huge earnings beats. Our Top Pick is one of those and, if all goes well, could be part of a new group move.

The S&P 500 paused its recovery over the past week, moving sideways over the past five days. Here is my take on the market.

The S&P 500 has now regained more than half of what it lost in the bear market selloff. We are still in the midst of a six-week rally, although it has leveled off in the past few weeks. What can you expect going forward?

The overall market continues to look good, though this week we’ve seen most growth stocks take hits as money has flowed into the broad market.

The market continues to remain strong in the face of economic data that’s anything but. As we’ve already discussed at great length, this is because the market is forward looking and there’s been enough potential positive news around treatments and the timeline to a vaccine that the path of least resistance has been higher.

Here is a Top Picks update we missed, on our fourth-place winner, a company that is making great progress with an Alzheimer’s drug.

This blue-chip Hong Kong conglomerate has a current dividend yield of 7.64%, paid annually.

It was another fantastic month for the Cabot Profit Booster portfolio, and with today being the expiration of July options we are likely going to close seven positions for full profits ranging from 5.4% to 12.3%.

Last quarter, this industrial machinery company beat analysts’ estimates by $0.03.

COVID-19 has beaten this REIT stock down, but it has a long track record of success, and while you wait for appreciation, you can enjoy the 5.38% dividend yield, paid quarterly.

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.

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.