Future Shock

Moral imperatives don’t drive the stock market, but they do drive peoples’ attitudes, which in the long run will move the market. The sixth report of the Intergovernmental Panel on Climate Change came out last week and is a sobering reminder that the world must decarbonize. Global sea level rise is accelerating and is advancing at a higher rate than at any time in the past 3,000 years. There is a growing belief the Amazon rainforest, Arctic ice and Gulf Stream are at tipping points that will worsen the effects of global warming. The most unnerving thought for me reading it: scientists are conservative in public projections like the report.



Stock investing plays its small role in the needed change: by pursuing profits in Greentech we’re putting capital to use supporting publicly traded companies–at the least buying and selling volume help create viable markets for raising additional capital for businesses. For our modest mission this issue, we have one new buy, one intriguing new watch and some ratings and sell-stop shifts in our existing portfolio.



As always, contact me anytime with questions or comments at brendan@cabot.net. Thank you for joining me on the path of climate profits.



All the best,



Brendan Coffey
Chief Analyst, SX Greentech Advisor

The chop factor remains in force in the market, with yet another round of rotation this week out of growth and into the broad market. Even so, we see more good than bad out there, with an increasing number of growth stocks having popped out of multi-month ranges and recent dips mostly looking manageable. We added another new name last week, and we could add more depending on how this rotation plays out, but tonight we’ll stand pat with our stocks and 30% in cash.

In tonight’s issue, we write about one sector that’s showing some signs of perking up, some encouraging sentiment readings and go over all of our stocks and many others we’re keeping a close eye on.

As summer winds down, the markets are not showing any signs of weakness. The Dow Jones Industrial Average passed 35,000 and is treading pretty close to that number, minus a few pullbacks. The outlook for the markets continues bullish, with a bit of belt-tightening, as our barometer depicts.

As long as the economy continues its strengthening, so should the markets. According to FactSet, 89% of the S&P 500 companies have reported second quarter earnings so far, and 88.8% have surpassed their forecasts! In addition to great earnings reports, the employment picture brightened last week, as we saw the unemployment rate drop from 5.7 to 5.4. That’s great news!



In this month’s issue, we begin with our Spotlight Stock, a cell tower provider, who is enjoying the 4G expansion around the world, and is poised to continue its leadership as 5G rolls out. In my Feature article, I further explore the growth of both of those technologies.



Our Growth ideas this month include a flooring retailer, a SPAC for car parts, an automobile dealer, and a pet products manufacturer. More and more companies are paying dividends, and you’ll see a wide variety of them in our Growth & Income section, including an eyecare company, the biggest retailer in the world, a mattress manufacturer, an infrastructure company, a consumer products maker, and a lithium miner.



We offer three Value stocks from the auto dealer, construction, and shoe retailing businesses. As Finance, Healthcare, and Tech stocks are producing big gains this year, our contributors are adding to their portfolios with these banks, pharma, and transaction service companies.



A big category for our advisors this month is Resources, Energy & Utilities, where you’ll find an energy exploration company, a silver miner, two utilities, and a resources land ownership business. In Low-Priced Stocks, we offer an amusement park company and a lithium miner.



Lastly, in our Funds & ETFs section, you’ll find ideas from the contra, small cap, international growth, and covered call arenas.



I hope you’ll join me on Thursday, August 11, 2021, at 1:20 pm - 1:50 pm ET, for my Money Show virtual presentation: Failing to Plan = Planning to Fail: How to Jump-Start Your Retirement with a Simple Stock and ETF Strategy.



And, of course, I hope to see you at our Cabot Smarter Investing, Greater Profits Online Conference next week, August 17-19, 2021. As always, please don’t hesitate to email me with your feedback and questions. My address is nancy@cabotwealth.com.

We’re in the middle of the summer market malaise. These markets tend to do whatever they were doing when investors went on vacation and stopped paying attention. The rubber usually hits the road when investors sober up and take a fresh look at things after Labor Day.

Sure, the market is historically cranky in September. Current fears about the Delta variant and inflation could gain more traction. The market could even sell off a bit. But I believe the current fears are overblown. Cyclical stocks and others that have been held back by recent concerns should shine again in the booming economy this fall.



In this issue, I highlight a stock with a strongly growing business that should thrive over the next several quarters as well as on the other side of the pandemic recovery. Meanwhile, it sells at a cheap valuation while the market is distracted by other things.

Before we get into this recommendation, I just wanted to highlight our upcoming annual conference.

9th Annual Smarter Investing, Greater Profits Online Conference



It will take place from August 17-19 and you will hear from many experts (including me!) about opportunities in the market.



Today, we are recommending an energy name with strong momentum and downside protection.



Some additional details:



It’s levered to natural gas which has recovered sharply in 2021.

• Strong earnings growth and free cash flow generation.
• Downside protection (no debt and significant cash on its balances sheet).
• Insider ownership (management and board own 25% of shares outstanding) and recent insider buying.

All the details are inside this month’s Issue. Enjoy!

The bulls continued their winning ways last week, but the advance wasn’t without some jostling. Late in the week several leading growth stocks pulled back, but those declines weren’t enough to keep the bulls from another weekly victory.

The S&P 500 gained 0.93%, the Dow advanced 0.78% and the Nasdaq rose 1.11%.



To put this market run into perspective, the current rally has lasted 189 days, basically nine months, without a 5% pullback. Additionally, there have been 43 days of a recorded new high.



So, my stance hasn’t changed too much. I continue to take a cautious but optimistic approach.

The bull market remains intact, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.

Today’s featured stock is in the semiconductor industry, which as we all know, is enjoying great demand in a supply-constrained world.



As for the current portfolio, most of our stocks look good, but Progyny (PGNY) is a sell, simply because it is our biggest loser.



Details inside.



Lastly, I hope you’ll join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible line-up of experts ready to share their best picks.

Current Market Outlook


We continue to see more good than bad in the market as an increasing number of growth stocks move into new high ground, many other growth stocks set up nicely and even some cyclical names are getting into the act, rounding out nice launching pads. Still, there’s no question the chop factor is still real, as the vast majority of names that pop higher generally attract sellers for at least a couple of days, with more than a few sinking right back to where they started. Overall, we are encouraged by the rising level of leadership, so we’re nudging our Market Monitor up to a level 7, but the game plan remains generally the same—we favor starting small and/or buying on dips or consolidations, while focusing on stocks showing outsized accumulation.

This week’s list is another chock-full of recent earnings winners and other names showing excellent action. Our Top Pick is Alnylam Pharmaceuticals (ALNY), which has lifted off nicely and has a great story.

Stock Name	Price	Buy Range	Loss Limit
Albemarle Corporation (ALB)	231	218-227	195-199
Alnylam Pharmaceuticals (ALNY)	200	195-202	174-177
Datadog (DDOG)	130	124-128	110-112
Goldman Sachs Group, Inc. (GS)	400	394-404	375-380
Lending Club (LC)	26	25-27	21-22
Lightspeed POS Inc. (LSPD)	93	90-93.5	81-83
ON Semiconductor (ON)	45	44-46	40-41
Paycom Software (PAYC)	469	448-462	405-414
Under Armour, Inc. (UAA)	25	24-25	21.5-22
ZoomInfo (ZI)	61	59-62	52.5-54.5

Altogether it felt like a calm week. Considering the worsening performance of the S&P 600 Small Cap Index, which broke below its comfort zone, and the S&P 500, now 6% off its high, our portfolio’s resiliency continues to stand out.

Our Cabot Tides are still clearly negative, and in recent days the selling pressure has broadened out, causing more stocks and sectors to take on water.

Looking at the broad market we see that the S&P 500 is just 4% off its recent high, has thus far held above support around 2,800 and remains above its long-term (200-day) moving average line. The Nasdaq dipped to its May 13 low near 7,627, but it too is above its long-term moving average line.

Emerging and global markets struggled this week as our Emerging Market Timer remained negative, with the EEM clearly trading below its 20-day and 50-day moving averages.

A potential positive catalyst has turned distinctly negative—a swing and a miss. What does this mean for the market going forward?

Many of our stocks are still recovering from the steep stock market downturn that occurred in the fourth quarter of 2018. As long as their fundamentals (profits, valuation, etc.) remain strong, I’m going to give those stocks some rope and allow them to recover.

This is a great time to be invested in these stocks, clearly. And I hope the trend continues. But I do think we have a missing ingredient before we can feel super confident that these gains will stick. And that ingredient is more participation from a wider group of small-cap stocks. If we get that, we’ll see the S&P 600 Small Cap Index break above 990 and move back toward its 2018 high.

The market’s three-day rally has been solid, but even better than that has been the action of growth stocks, many of which have zoomed to new highs.

After the breakdown of trade negotiations with China and the escalation of tariffs, the market had a few ugly trading days, but now, it looks like we’re back in the saddle again.

After rising 25% from its December low to its May high, the S&P 500 index is finally taking a breather. I don’t expect a shocking price drop like we saw in December. Rather, I anticipate the S&P 500 receding to 2,750, which would be down 200 points from the recent high, or even 2,650. Pullbacks aren’t any fun, but they are normal, and they provide opportunities for investors to buy stocks while they’re on sale.

This vaccine maker just announced that it has initiated development of two product candidates for the treatment and prevention of coronavirus disease (COVID-19).

In this rare, mid-week update I will try to be brief, because I know you have a lot to read, including numerous notices of cancellations and closings.

The good news is that the amount of cannabis intercepted along all U.S. borders has fallen by 89% since 2011, from 2.5 million pounds per year to about 270,000 pounds in 2019.

We are now living through an unprecedented time in the U.S., and in the world at large, when institutions, schools, universities and more are being shut down from public attendance so as to curtail the spread of a virus named COVID-19.

The fund has five sectors with an annual dividend yield of 2.45%, paid quarterly.

After a sharp one-day bounce, the sellers are at it again today, with the indexes quickly diving back to Monday’s lows, bringing with them most every stock in the market

With this stock below its September lows, we’re back to square one. How did we get here?

Monday’s overnight market decline of 7% caused several stocks in the Profit Booster portfolio to blow through their stops before we could act.

Hedge fund interest is up 18% in this medical device company. The shares have a current dividend yield of 2.16%, paid quarterly.

It’s time to look at some income ideas and this preferred stock is paying a nice 5% fixed rate.

There aren’t a lot of bright spots out there in today’s market but one datapoint I thought worth sharing is this: Heading into today the average return of our positions was 15% better than that of the S&P 500 Index over a comparable time frame.

This is the type of day where you’d typically want to be just watching and waiting, or even doing a little buying. But we have two positions that are at or near prices where we need to take some action.

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.