The market remains challenging and divergent, and few growth stocks look ready to start a sustained upmove just yet. But the evidence has slowly improved since the start of the month, including the fact that our Cabot Tides (which have admittedly been on-again, off-again of late) have returned to a bullish stance. We don’t think it’s time for a major buying spree, but we are putting some of our large cash hoard to work by filling out one of our positions and starting a small stake in a new, resilient growth name. Last but not least — all of us here at Cabot wish you and yours a happy, healthy and prosperous New Year.

As we come to the end of a difficult year for marijuana stocks, it’s worth remembering that the best buying opportunities occur when the picture looks gloomiest; perhaps we’re there now, because the stocks look pretty bad, even though the fundamentals of the industry are terrific!





If so, our portfolio is well positioned to benefit, as we own all the leading companies in the industry, as well as a few more conservative peripheral stocks for diversification.





This week’s issue brings one small change, the addition of well-known ScottsMiracle-Gro, which is currently trading 37% off its high.





Full details in the issue.

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

This issue includes our Top Five Stocks for 2022, our annual market review and outlook for 2022, as well as our update on the bankruptcy and high-yield bond markets.



Our featured recommendation this month is Brookfield Asset Management Reinsurance Partners Ltd (BAMR). This recent spin-off has received little market attention yet offers considerable long term potential.



We note our recent ratings change that moved shares of GCP Applied Technologies (GCP) to a Sell with a +77% total return.



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.

As we enter the final week of the year, the leading indexes remain strong, while less popular indexes are weaker. Still, there are pockets of strength, including energy stocks, and that’s where we find this week’s recommendation.

As for our current holdings, most look good, but we have two sells today, of long-time holdings which have brought us healthy profits.



Details inside.

Cyclical stocks have been getting clobbered over the past month amidst virus concerns. But I think the recent action is creating an opportunity.

The inflation and Fed contraction issues, which are good for energy and financial stocks, will outlast this latest virus strain. The virus will fade away before too long, but the other problems are much stickier. Certain stocks are being knocked back temporarily ahead of a very promising new year.



In this issue I highlight one of the very best financial stocks on the market. It’s has pulled back recently and is about 15% below the 52-week high, yet the company is poised for a fantastic 2022.

In the December Issue of Cabot Early Opportunities we try to capitalize on the pullback in stocks with the addition of disruptive players in the electric vehicle (EV) and metaverse arenas as well as an up-and-coming apparel/footwear company. We also take a swing at a dinosaur that may finally start to become relevant again following the spin-out of a dying business segment.

This week we are adding Alcoa (AA), which has held up very nicely during the recent market malaise.

First, a scheduling note: With Christmas coming quick, next Monday (December 27) is the second of our two regular weeks off for Top Ten. We’ll be in later that week, but if we don’t talk to you have a great holiday season!

After an encouraging bounce, the sellers immediately came back to the well last week. While we don’t think this is going to morph into 2008, it’s clear that most of the evidence remains negative: The intermediate-term trend of most indexes and stocks is pointed down and the vast majority of former leaders are in shambles. We’ll let others predict (guess) what happens from here, but with most things acting poorly, it’s best to remain cautious, holding plenty of cash, building your watch list and keeping any new buys on the small side.



This week’s list has a variety of names that are resisting the market’s weakness, so if you want to nibble on something, you’ll find it here. Our Top Pick is a unique IoT-related firm whose stock is acting just fine.

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In the November Issue of Cabot Early Opportunities, we take our first step into the crypto economy, delve deeper into international e-commerce markets, bring in another security specialist, attempt to fix the world’s supply chains and jump back into a high-end consigner that’s finally past the pandemic’s ill effects.

NEW! Download your copy of Cabot’s 10 Favorite Low-Priced Stocks for 2022 Report - a subscriber-exclusive benefit.



The rally after the early-December low has clearly come under pressure, especially with growth stocks, most of which are in shambles; our Cabot Tides remain negative and we’re remaining cautious in the Model Portfolio, with 50%-ish cash for the past three weeks. We’re not ruling out the fact that, for the overall market, we could have a workable low if things hold up here. But there’s no question that the sellers are in control of most stocks and indexes, so we advise caution and defense while waiting for the sellers to finish their work. In the portfolio, we continue to pare back when needed, though we’re also holding our more resilient names and keeping our watch list up to date; this is still a bull market, but right now it’s about preserving capital and waiting patiently for the next uptrend.

Omicron, inflation and the Fed all seem to be conspiring to make traders restless. While Greentech is down, we appear to be at the bottom end of a long-term trading range. The sector has managed to find the strength to rebound at current levels before over the past half year, we expect it to find reason to do so again.

We set aside the high-growth, high-volatility stock this issue to focus on a quotidian task: collecting waste oil and waste water for purifying and recycling. Our featured stock this issue is a leader in the U.S. and Canada. It makes money, has a good price chart and trades at a discount to its main competitor.

Today will be an important day for our retail apparel stocks.

Both large and small growth stocks continue to advance off their October lows despite all the political turmoil from the impeachment hearings.

The Cabot Global Stocks Explorer portfolio is doing well in 2019 and a number of recommendations have recently surged on the strength of impressive earnings and an improving environment for emerging and international stocks.

The market mood is always changing. Just last week the market indexes were forging new all-time highs and cyclical stocks were the best performers. What a difference a week makes.

U.S. stock markets, as represented by the S&P 500 (SPX) and Dow Jones (DJIA) indexes, continue reaching new highs. But stocks and stock markets don’t go straight up, even during bull runs.

The S&P 600 Index just made another run but called it quits at 990 and has turned south.

Continue to put money to work. The market and individual stocks are acting very well, and while there are some short-term yellow flags out there (complacency, overbought, etc.), the fact that stocks haven’t given up much ground is encouraging.

The market still has an upward bias, albeit less so than the past couple of weeks. Investors are starting to sniff out 2020.

The stock market continues to reach new all-time highs. I’m very comfortable with current market momentum.

For the last month stocks have been going gangbusters and this week things have been as hot as any time in recent memory.

Five portfolio stocks reported earnings and one moves to Strong Buy.

Two portfolio stocks reported earnings today.

This portfolio stock was up 18.3% yesterday in anticipation of earnings that were released after the market closed.

This candy company has grown at an annual rate of nearly 20% in the last five years.

Three portfolio stocks reported earnings today, and we’re selling one for a nice profit.

This global beverage company is adjusting sales due to the coronavirus pandemic, but new products and initiatives should keep it growing steadily.

Three portfolio stocks reported earnings today, and one moves to Hold.

Three portfolio stocks recently reported earnings and one moves to Strong Buy.

This gaming company is benefiting from stay-at-home orders.

This portfolio stock has exploded over 25% to all-time highs following a beat and raise Q1 that seemed in the cards, but still comes very much as a surprise to me.

Several portfolio stocks recently reported earnings and move to Strong Buy.

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 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.