There are a lot of reasons why it’s easier to make more money if you already have money. But I will just focus on one undisputable fact, the rich have access to opportunities and investments that most of us do not.

Private equity (PE) or venture capital (VC) is a shining example of such privileged access. PE or VC is money provided to young and growing businesses that otherwise wouldn’t have access to sufficient capital. For ages, these highly profitable investments had been the sole domain of the very wealthy who were able to make fortunes by lending to growing companies at very favorable terms for themselves.



But times are changing.



As financial markets have grown in sophistication, private equity investing is no longer the exclusive domain of the wealthy. There are securities trading on the market today that enable regular investors to mimic the very same money-making strategies employed by the rich and famous.



In this issue, I highlight one of the very best such securities on the market. It has a phenomenal track record with a high dividend yield and a catalyst to move higher in the near future. These companies also tend to thrive in a strong economy and at this point in the economic cycle.

The three leading indexes pushed higher this past week as the S&P 500 rose 0.78%, the Dow gained 1.22%, and the Nasdaq added 0.08%.



Following a choppy and volatile start to the week, on Thursday politicians kicked the debt-ceiling can down the road, which seemed to make investors happy, at least for the day. Unfortunately, that investor excitement was short-lived as the September jobs report on Friday came in at 194,000 new jobs added, well under the expectation of 500,000. The market managed to close Friday only slightly lower despite the bad news.

It’s been over a month since the major indexes hit their peaks, and while there’s been no major move to the downside yet, the odds of one grow with time, particularly considering that we’re still in October (often a difficult month). Thus, I have no trouble recommending a slightly more cautious attitude at the moment.

But there’s always something attractive to buy, and this week it’s another stock in the vast and complex semiconductor industry. This will be our fourth in the industry.



As for selling, I’m working to hold a bit of cash until the climate improves, and the easy choice to sell today is our biggest loser, Global-E Online (GLBE).



Details inside.

Current Market Outlook


In true 2021 fashion, just when the market looked ready to go over the falls last week the buyers stepped in, pushing the major indexes sharply higher (recouping nearly 50% of the month-long correction in just three days and seeing many individual stocks pop as well). It’s certainly encouraging, but we need to see a bit more—by our measures, we haven’t seen confirmation of a new intermediate-term uptrend (most indexes remain below their 50-day lines or stuck in the middle of multi-month ranges) and, while a few stocks have popped to new highs, most individual names are in the same no-man’s-land environment. Longer term, the strong, broad bounce is a good sign the overall bull market is alive and well, but near term, it’s still uncertain whether we’ll see another leg lower or more vicious rotation. You shouldn’t be in your bunker, but keeping new buys small and holding some cash makes sense as we see if the strength can persist.

This week’s list is heavier on turnaround and commodity-related names, with many beginning to emerge from long rest periods. Our Top Pick is LPL Financial (LPLA), which won’t be your fastest mover but has staged a good-looking breakout in recent weeks.

Stock Name	Price	Buy Range	Loss Limit
Acuity Brands (AYI)	206	203-210	182-185
Applovin (APP)	87	83-86	73-74.5
Builders FirstSource (BLDR)	55	54.5-56	49-50
The Goodyear Tire & Rubber Company (GT)	19	18-19	16.3-16.8
Hilton Worldwide Holdings (HLT)	143	139-142	126-128
LPL Financial Holdings (LPLA)	167	165-169	148-150
The Mosaic Company (MOS)	42	39-41	35-36
Pioneer Natural Resources (PXD)	193	187-192	165-168
Teck Resources Limited (TECK)	28	26-27.5	23-24
UPST (UPST)	311	285-300	240-250

The market’s correction is about a month old, and so far it’s been fairly garden variety, with some potholes but not much big-picture abnormal action. And, this week, we’re seeing a very encouraging bounce, with most indexes recouping half of their decline in just two days and some growth stocks already testing new high ground. We’re not out of the woods yet, but we’re holding what we own (some of which act great) and fine-tuning our watch list should the trend turn back up.

Today we are jumping into a small-cap biotech company that has a drug delivery platform that could completely revolutionize how injectable drugs are delivered.

The short version is that millions of people that require injections could, if all goes well, just take a pill instead.



While the risks are meaningful with any biotech, so too is the potential. Early data shows this platform works, and already there are programs being designed to deliver treatments for osteoporosis, Type-2 diabetes and arthritis.



It’s all inside this month’s Issue.

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

Volatility is a value/contrarian investors’ friend. With the markets becoming more volatile, we’ve made some changes to the portfolio this past month. We recently added ConocoPhillips (COP), a major oil and gas producer that is also an undervalued cash flow machine at current commodity prices.

The current market is giving investors headaches, but it’s not unusual in Greentech to find savvy investors looking past the near-term economic fears and focusing on companies that are tapping into what promises to be terrific growth from de-carbonizing the economy.

This issue, we highlight a small cap stock with amazing engineering savvy at a minor, but essential, feature of electric vehicles. Management expects it can grow revenue about 50% every year through the rest of the decade as automaker customers begin to churn out EVs. It’s in the early stages of growth and is seeing strong fund buying as well as exceptional technicals.



We also highlight three ESG stocks showing the best technicals in the group, as part of our recurring ESG Three, give the current sector outlook indicated by our Greentech Timer, and provide a detailed rundown of the stocks in our current portfolios. We have some ratings changes and refreshed sell-stop recommendations for many of our holdings.



Read through for more details.

Last week the major indices pulled back in a meaningful way. The S&P 500 lost 2.20%, the Dow declined 1.36%, and the Nasdaq pulled back 3.20%.



The benchmark index sank 4.8% in September, marking its worst month since March 2020. It was also the first losing month for the S&P after seven straight months of gains. The outlook didn’t look much brighter Monday as the market saw another bout of losses.

Bearish sentiment has risen a bit last month, following the market’s up and down gyrations—mostly due to COVID-19 (although new cases finally seem to be slowing), as well as the continuing drama from Congress, who doesn’t appear to be able to agree on anything!

However, the economy is continuing on a strong bent. Durable goods manufacturing has risen, the unemployment rate remains healthy, and housing is strong. Building permits and housing starts—along with prices—continue to rise. There has been some abatement in the rate of pricing increases, which is a good sign. We are seeing a little more inventory, just not enough to put a big damper on prices as of yet.



It’s a mixed outlook for the markets right now—we’re seeing some major pullbacks in certain big names, but today’s action was very positive. We may continue to see some dips in the next few weeks, but overall, I’m optimistic that the economy is still strong. And as long as earnings continue to outperform, the markets should hold up nicely.



I’m looking forward to the colorful fall, which is already starting here in Tennessee. I wish you a pleasant autumn and hope you will email me with your thoughts and questions. I look forward to hearing from you.



Happy Investing!

October is a historically ominous month for stocks. After all, it is the month of the 1929 stock market crash and the 1987 crash. After a rough May and August we step into the mother of all jinxed months with a terrible start.

I’m going to go off on a little tangent this week to share something with you that I think will help put this market, and the action in our stocks, into context.

Our portfolio advanced this week led by India’s ICICI (IBN), which was up 19% on the back of a tax cut and prospects for higher growth.

The S&P 500 index continues to act well, rising to new highs in July, conducting a very orderly pullback in August, and rebounding in September. To my eyes, the price chart still looks strong.

For the first time in a while we’ve had a relatively calm week. On average, our portfolio is unchanged from last Thursday’s close.

Stocks rallied early in the day but then skidded after that, closing not that far from where they started. The environment remains mixed, with the market looking fine but growth stocks a bit sluggish.

It’s one of those special days in the market where the Fed will make a highly anticipated decision on interest rates. It is widely expected that the Central Bank will cut the Fed Funds rate by 0.25%.

Oil prices are volatile now that about half of Saudi Arabia’s oil production is temporarily curtailed. Rising oil prices can help oil and chemical stocks, and hurt airline stocks.

Looking at the broad market, it seemed like a calm week. Even a good week! The S&P 500 moved up near all-time highs and even the languishing S&P 600 Small Cap Index broke out of its funk and shot up near 2019 highs for the first time since early May.

It was a pretty quiet week with most of our stocks up in the 3% -5% range. There are no changes to the portfolio.

The overall market appears to be largely pricing in a continued trade war with China and a slowing global economy. It’s also pricing in a rate cut this month and more to follow. The indexes appear to want to forge higher provided trade frictions don’t get worse, the global economy doesn’t crash and the Fed comes through on the rate cuts.

This portfolio stock reported Q1 results after the close yesterday that should have investors feeling pretty good about the company’s ability to weather this pandemic.

This assisted-living REIT will report earnings on May 4. Analysts expect revenue growth on flat earnings.

The major theme that I’m noticing during this earnings season is that Wall Street analysts were low-balling their earnings and revenue estimates as they cautiously assessed the potential impact of the COVID-19 virus on business activity.

This social media platform was hit hard in March, but looks to be regaining its footing.

This REIT just reported that its Funds from Operations rose 6.4%, to $1.82 per share, last quarter as a result of increased rents and strong leasing activity.

This portfolio stock reported preliminary first-quarter results after yesterday’s market close. The results are strong enough that they could enhance the share price today.

This automation company, whom you may have never heard of, has been building robots since the 1970s.

On April expiration this recommendation’s calls that we sold for $0.70 expired worthless.

There are several portfolio changes today

Challenging times for this midstream producer, but as the economy improves, the price of oil should recover.

COVID-19 likely sounds the death knell for many companies, like slow-to-adjust retailers. But it also represents a likely accelerant for others, including those exposed to trends such as work from home (WFH), cloud, e-commerce, internet, digital transformation, streaming, etc.

The stay-at-home orders are boosting the shares of this cybersecurity company.

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.