Issues
This month’s issue of Cabot Marijuana Investor comes a week early, due to Thanksgiving holiday next week. And that’s good, because the sector is finally looking healthy again.
In last week’s update, I recommended averaging up in two stocks and buying two new stocks, and in this week’s issue, I give you the whole picture. It’s not too late to buy.
Full details in the issue.
In last week’s update, I recommended averaging up in two stocks and buying two new stocks, and in this week’s issue, I give you the whole picture. It’s not too late to buy.
Full details in the issue.
To borrow a phrase usually deployed when tax cuts are rolled out, the infrastructure bill has “released the animal spirits” in Greentech. Our sector is bullish and appears to be working off of a strong base built since May.
This issue we have two new additions to our portfolios – one is an American company that suddenly has global market leadership in a crucial part of utility solar. The other is one of those companies long touted to be a game changer when in its start-up phase, so much so that Bill Gates backed it. It’s now public and fills an important energy niche with a delightfully simple approach.
This issue we have two new additions to our portfolios – one is an American company that suddenly has global market leadership in a crucial part of utility solar. The other is one of those companies long touted to be a game changer when in its start-up phase, so much so that Bill Gates backed it. It’s now public and fills an important energy niche with a delightfully simple approach.
Inflation was the focus last week with the release of the much-anticipated producer price index (PPI) and the consumer price index (CPI). Both came in well above expectations. CPI came in at 6.2%, which was the highest level seen in over 30 years, while the PPI was 8.6%, the highest in more than 10 years. These data points flamed the inflation fears that many had been anticipating for the past several months.
And while inflation is going to continue to be a worry for the bulls, as of last Friday, 460 of the companies that reside in the S&P 500 have reported earnings, with 80% outperforming expectations, a number which has far outperformed analyst expectations.
Speaking of strong earnings, this brings to me to this week’s idea which is a global leader in the tire market, and which just reported a strong third-quarter earnings report.
And while inflation is going to continue to be a worry for the bulls, as of last Friday, 460 of the companies that reside in the S&P 500 have reported earnings, with 80% outperforming expectations, a number which has far outperformed analyst expectations.
Speaking of strong earnings, this brings to me to this week’s idea which is a global leader in the tire market, and which just reported a strong third-quarter earnings report.
First off, due to our regular schedule (two weeks off all year), there will be no Top Ten next Monday (November 22), though we will likely do a Movers & Shakers update pre-Thanksgiving.
Onto the market, big picture, we remain quite bullish, but near term, we think there’s the possibility of further shenanigans—we’re seeing a few stocks crack key levels, and with most measures of sentiment showing complacency/giddiness, more pain could be in store to raise the discomfort level. We advise following the tried-and-true method of holding your strong, resilient stocks, while keeping stops in place on names that are beginning to wobble. We’re pulling our Market Monitor back down to a level 7 to respect the recent iffy action, though we still think the next big move is up.
This week’s list has a lot of good-looking charts, including another batch of names that recently reacted well to earnings. Our Top Pick is one of those, with a story benefiting from both housing and long-term growth trends.
| Stock Name | Price | ||
|---|---|---|---|
| AppLovin Corporation (APP) | 103 | ||
| CF Industries (CF) | 66 | ||
| Diamondback Energy (FANG) | 111 | ||
| Expedia Group (EXPE) | 178 | ||
| The Goodyear Tire & Rubber Company (GT) | 23 | ||
| GXO Logistics (GXO) | 99 | ||
| LendingClub (LC) | 44 | ||
| Livent Corporation (LTHM) | 30 | ||
| Seagate Technology (STX) | 106 | ||
| Trex Company (TREX) | 129 |
Note: There will be no issue of Cabot Stock of the Week next Monday, as our publishing schedule is fifty issues a year. I hope you have a great holiday with family and friends.
As for the market, it’s still strong, and our portfolio is still fully invested, and today we’re jumping back into the marijuana market (the focus of my other advisory) with a young marijuana stock that just came public this year.
On the sell side, CrowdStrike (CRWD) gets the ax today, as it is going the wrong way.
Details inside.
As for the market, it’s still strong, and our portfolio is still fully invested, and today we’re jumping back into the marijuana market (the focus of my other advisory) with a young marijuana stock that just came public this year.
On the sell side, CrowdStrike (CRWD) gets the ax today, as it is going the wrong way.
Details inside.
Inflation stays high, infrastructure week arrives, and Rivian stock surges while markets sold off a bit yesterday. The weakness yesterday halted some good rallies among Explorer stocks. We continue to explore new ideas and for this week’s recommendation, we go into the Cloud for a familiar name.
The markets have responded well to the compromises that Washington pols have neared on President Biden’s two spending plans. The Dow Jones Industrial Average is up more than 5% since our last issue.
The unemployment picture, of course, is helping, with October’s unemployment rate dropping from 4.8 to 4.6. As well, both the ADP and non-farm payrolls rose much faster than economists expected, meaning the economy is definitely moving forward. Housing prices—although still rising in some parts of the country—are beginning to stabilize. And the good news from the Mortgage Bankers Association that existing home prices should fall by 2.5% next year, should help the market for buyers improve.
All in all, excellent economic reports.
The unemployment picture, of course, is helping, with October’s unemployment rate dropping from 4.8 to 4.6. As well, both the ADP and non-farm payrolls rose much faster than economists expected, meaning the economy is definitely moving forward. Housing prices—although still rising in some parts of the country—are beginning to stabilize. And the good news from the Mortgage Bankers Association that existing home prices should fall by 2.5% next year, should help the market for buyers improve.
All in all, excellent economic reports.
Today, we are profiling a micro-cap bank that is focused on serving an attractive niche, the litigation industry. It looks highly compelling:
All the details are inside this month’s Issue. Enjoy!
- High insider ownership (insiders own ~12.5% of shares outstanding).
- Strong momentum (stock is near 52 week high).
- ~20%+ earnings growth for the foreseeable future.
- Low valuation: P/E ratio of 12x.
- ~60% upside to fair value.
All the details are inside this month’s Issue. Enjoy!
Inflation is back. And it might be for real this time.
Inflation has taken off since the end of the lockdowns this past spring. In September, the inflation rate rose to 5.4%, the highest monthly reading in 30 years. Inflation over the last twelve months is also the highest such measure in 30 years.
This inflation may prove to be a temporary side effect of the pandemic recovery that will fade away over the next year. But maybe not. Once that inflation genie gets out of the bottle it can be hard to put back. There are powerfull reasons why it could be worse than most expect.
Inflation has taken off since the end of the lockdowns this past spring. In September, the inflation rate rose to 5.4%, the highest monthly reading in 30 years. Inflation over the last twelve months is also the highest such measure in 30 years.
This inflation may prove to be a temporary side effect of the pandemic recovery that will fade away over the next year. But maybe not. Once that inflation genie gets out of the bottle it can be hard to put back. There are powerfull reasons why it could be worse than most expect.
This week I’m continuing to diversify my overall portfolio exposure by adding American subscription-based software company ZoomInfo (ZI).
Gold Shows Signs of Life
Gold prices perked up late last week in the wake of some bullish interest rate developments. While silver and other white metals didn’t confirm the strength, there are reasons for believing that the safety-related move into gold will persist. Lithium, meanwhile, remains the undisputed leader in the broad metals sector as electric vehicle (EV) battery demand continues to accelerate. Rising EV sales from some major auto companies have only served to fuel the lithium bull market.
Gold prices perked up late last week in the wake of some bullish interest rate developments. While silver and other white metals didn’t confirm the strength, there are reasons for believing that the safety-related move into gold will persist. Lithium, meanwhile, remains the undisputed leader in the broad metals sector as electric vehicle (EV) battery demand continues to accelerate. Rising EV sales from some major auto companies have only served to fuel the lithium bull market.
With the often-tricky September-October period behind us, and all trends positive, I’m happy to continue recommending that you be heavily invested in a diversified group of stocks that meet your investing needs.
Today’s recommendation is not a familiar name—it serves global businesses, not individuals—but it’s part of the solution to one of the globe’s biggest problems these days.
As for selling, something’s got to go, and it’s not an easy choice; most of our stocks look great. But rules are rules, so we’ll say farewell to long-time friend (and solid winner), NextEra Energy (NEE).
Details inside.
Today’s recommendation is not a familiar name—it serves global businesses, not individuals—but it’s part of the solution to one of the globe’s biggest problems these days.
As for selling, something’s got to go, and it’s not an easy choice; most of our stocks look great. But rules are rules, so we’ll say farewell to long-time friend (and solid winner), NextEra Energy (NEE).
Details inside.
Updates
The Financial Times this week reported that Beijing is preparing plans to remove Hong Kong’s chief executive, Carrie Lam, whose term is not up until 2022, as anti-government protests in the city intensified.
The market seems to want to move higher, albeit slowly and with rude interruptions from the headlines. The S&P 500 is within less than 1% off the all-time high set in July, although the index has been somewhat range-bound since June.
When market pundits toss about terms like “growth stocks” and “value stocks,” it seems as if they’re saying “companies that are growing” vs. “companies that are not growing,” so we sugar-coat these companies and pretend that they have ‘value.” That’s not really what “growth vs. value” means!
There is a lot of uncertainty out there, which isn’t an entirely new scenario. We’ll continue to try and play it a little safe right now by keeping all stocks previously rated hold at the same rating.
While we’re growing more optimistic that the next big move will be up, we continue to advise a cautious stance as the market’s numerous crosscurrents continue—the indexes are still range bound, there’s rotation under the surface and relatively few stocks are hitting new highs.
The market is once again flirting with all time highs. The good week was driven largely by the announcement of a partial trade deal with China. But the main event will be earnings going forward.
There’s been a variety of news pertaining to airlines, and also to the Boeing 737 MAX jet problem, in recent weeks. It can be hard to know which industry-specific stocks to own and which to ignore. I always use profit growth as my first line of defense when deciding which stocks might join my portfolios, on the theory that rising profits should theoretically lead to rising share prices.
Today marks the first face-to-face talks between senior officials from America and China since July.
The indexes are near all-time highs in what is now the oldest bull market and recovery in history. And risks are mounting. There’s the trade war with China, the sputtering global economy, weaker growth at home and impeachment. The market is really struggling to muster the enthusiasm to forge higher from here.
The markets have been quiet, heading into earnings season, which begins next week with financial stocks and a couple of our stocks move to Buy recommendations today after recent pullbacks.
Alerts
Expiration Friday of our April Cabot Profit Booster Positions went largely as expected.
Our Cabot Tides are now positive, which means it’s time to put some money to work.
This insurance company reported mixed results for the quarter, but nine analysts have recently increased 2020 EPS estimates for the company.
Please expect volatility, and that definitely includes periodic large market pullbacks. I’m not just saying that as a standard disclaimer. There’s a certain amount of irrational exuberance that’s taking place now.
Today is the expiration of our April Covered Calls. I don’t anticipate adjusting any of these positions today. Here are my thoughts on each.
Despite the market’s recent declines, this security system company has announced some very good preliminary results for its last quarter.
From top to bottom, the Marijuana Index fell 88% from early 2018 to last month’s market low, and now the recovery has begun.
Then yesterday, I sent out some stock trading ideas, and the dam burst. I heard from at least a dozen investors who are clamoring for specific trading ideas. Great!
This investment management company beat analysts’ earnings estimates by $0.65 last quarter, and four analysts recently raised their EPS forecasts for the company.
This is our first company this quarter to report earnings tomorrow morning before the opening bell.
This high yield preferred stock is issued by a mortgage REIT.
With the market surging today, 20 positions under coverage and five more coming tomorrow, we’re going to take advantage of the opportunity to trim a few positions.
Portfolios
Strategy
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.