You can still find sky-high yields.

Despite the recovery in the overall market, there are still lingering pockets of high yields. It reminds me of the years following the financial crisis. You could still find good stocks that paid a sky-high income relatively easily. But the situation didn’t last. Those high yields on quality stocks evaporated as investors realized the opportunity.



Some of the current high yields probably won’t last long either.



At the same time, it’s a great time for cyclical stocks. The economy is still booming. Plus, we are likely at the point in the economic cycle where such stocks tend to do best. We are likely still in the early stages of a bull market and recovery.



In this issue, I found a stock that benefits from both opportunities. It has a stratospheric 11.5% yield that likely won’t last. At the same time, the yield should be safe and growing as the company is highly cyclical.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the November 2021 issue.

Consumer staples stocks were pandemic beneficiaries, but now that the worst has passed, many of these stocks have been sold off fairly hard, even as the stock market continues to reach record highs. While investor concerns regarding negative year-over-year sales, tighter margins due to inflation, and the degree to which companies can raise prices have merit, we make our case for four stocks that have been discarded and now look like bargains.



Bank stocks have been strong performers following the pandemic stock market trough, including those we highlighted in late April 2020. Yet, not all have fully participated. We found four that have good fundamentals yet trade at price/earnings multiples below 10x, considerably lower than the peer average of 14.5x.

The marijuana sector peaked in February, corrected strong for a couple of months, and since then has been sinking slowly lower, shaking out weak hands as it prepares for its next upmove.

Fundamentals in the industry remain terrific, as I am confident third-quarter results will soon reveal, and while the trend toward legalization in the U.S. continues, it’s taken a back seat at the federal level for now, so all the action remains at the state level.



In the portfolio today, we continue to hold patiently, with the portfolio more than one-third in cash, waiting for a new uptrend—but if you’re eager to buy now (while things look cheap) I do have some suggestions.



Full details in the issue.

Silver Resumes Leadership Position over Gold
After a seemingly interminable decline this summer, silver prices are once again showing strength. And of greater significance, they’ve finally resumed a relative strength position over gold.

As emphasized here, silver leadership is typically a prerequisite for a strengthening gold market. That said, silver’s latest rally is welcome news for our speculative long position in our favorite gold-tracking ETF.



In the industrial metals, aluminum is still strong while copper has lately been the subject of a massive short-covering event. Lithium, meanwhile, is also in a solid position while the uranium market has been resurgent—thanks in part to the Reddit crowd.

Fueled by better-than-expected earnings last week the S&P 500 rose 1.6%, the Dow climbed 1.1%, and the Nasdaq added 1.3%.



Despite the strong week, on Friday traders’ enthusiasm for the recent rally faded a bit after Fed Chairman Jerome Powell’s commented that the central bank was “on track” to begin reducing its purchases of assets.



However, Monday the bulls stepped right back in and once again “bought the dip.”



This week brings earnings announcements from key mega-cap tech names Amazon (AMZN), Facebook (FB), Alphabet (GOOG), and Apple (AAPL). There is also a bevy of blue chips reporting including United Parcel Service (UPS), Visa (V), McDonald’s (MCD), Coca-Cola (KO), Boeing (BA), Merck (MRK), Caterpillar (CAT) and numerous others. Brace yourself, it’s going to be exciting!
Energy has taken off lately and I want to add exposure to the sector. However, I still want to maintain a somewhat conservative stance, especially as this week’s pick will report earnings next week. As a result, I will be selling in-the-money calls on hydrocarbon explorer Marathon Oil (MRO).

With two strong weeks of action behind us, the short-term trend of markets is once again positive, and thus I am happy to once again recommend that you be heavily invested in a diversified group of stocks that meet your investing needs.

Today’s recommendation is a repeat; we sold the stock in March for a nice 30% profit, and now we’re going to try again.



As for selling, there is one recommendation, a short-term sell of ConocoPhillips (COP), which has been unusually strong. But if you want, and it suits your style, you can hold.



Details inside.

The past three weeks have gone about as well as anyone could have hoped (assuming you’re a bull), with three main positive things. First and foremost, the major indexes have rallied enough to quickly flip the intermediate-term trend back up. Second, the upmove has been both broad (most stocks and sectors have rallied, with the rotation of 2021 taking a back seat for now) and coming during a spate of worrisome news (hyperinflation!). And third has been the action of leading stocks (especially growth stocks), many of which have been lighting up the sky. It’s not all peaches and cream, with earnings season set to really pick up steam, and that can always change a stock’s positioning. Thus, you shouldn’t throw caution to the wind, but you also shouldn’t ignore the shift in the evidence—we’ll keep our Market Monitor at a level 7 today but could hike it if we start seeing some bullish earnings gaps.

This week’s list has something for everyone, from small growth stocks to good-sized commodity plays that are seeing earnings boom. But we’re going with an oldie-but-goodie for our Top Pick: Netflix (NFLX), which isn’t the young buck it once was, but business is doing great and the stock is picking up steam after breaking out from a year-long base.

Stock Name	Price	Buy Range
Arch Coal (ARCH)	97	93-99
Ford Motor Co. (F)	16	15.3-16.2
KKR & Co. Inc. (KKR)	75	69.5-72
Marathon Oil (MRO)	17	16.0-16.8
monday.com Ltd. (MNDY)	383	377-387
MongoDB (MDB)	519	500-520
Netflix, Inc. (NFLX)	672	630-650
SiteOne Landscape Supply (SITE)	228	213-223
Tandem Diabetes (TNDM)	129	125-131
United Rentals, Inc. (URI)	366	358-370

The market’s nascent bounce two weeks ago has morphed into a very impressive rally, led by a gaggle of growth stocks that are acting better than they have since late last year and early 2021. We’re not completely out of the woods, and earnings season can always throw a wrench into things, but there’s no question the evidence has improved. We’re putting some more money to work tonight, averaging up in one name and adding a familiar face back to the portfolio as well.

In the October Issue of Cabot Early Opportunities we continue to snap up shares of high-growth software stocks, while adding a couple of consistent growers in the landscaping and waste management arenas to round out our market exposure.

Enjoy!

Greentech’s made some modest strides the past week and is indicating some bullishness for the first time in three months. There’s still some work to be done to shake the bears loose, but we’re encouraged by recent action. We still believe the market is weighed down by a lack of progress on the proposed infrastructure and long-term spending bills. We’ve said a few times recent history shows clean energy doesn’t need Federal support to thrive, but the promise of still-murky regulatory action has investors wary of making commitments.

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.

The S&P 500 (SPX) stock index rose to new all-time highs in July, commenced a pullback during the final week of that month, then traded between 2840-2940 in a very orderly pattern during August. For that, I am grateful.

Remain cautious, but stay open minded. We’re encouraged by the recent action from the market, including some of the power and breadth of the rally.

The economy is still solid and the market isn’t overpriced in this low interest rate world. The S&P 500 is only 2% higher than it was in January of 2018, 20 months ago. The stock market is still the best place to be. Fear spikes and then it wanes. And when fear inevitably wanes, money always trickles back into the market because it’s the only game in town.

This is one of those periods when there’s not much going on in the market. Earnings season is essentially over, the summer is winding down, kids are about to go back to school and it feels like fall is right around the corner.

Hopefully, we can all gain from the growing realization that while America and China will be fierce rivals for some time—they can also benefit from playing some ball with each other.

This week’s update of Cabot Undervalued Stocks Advisor is focused on portfolio stocks that are being affected by recent news or upcoming earnings reports. Next week’s September issue will include all portfolio stocks, with at least one new portfolio addition.

With earnings season largely over most of our stocks are now moving based on news that affects the broad market, and less on company-specific trends, with a few exceptions.

Remain generally cautious given that our Cabot Tides are still negative, though you shouldn’t be outright defensive given the encouraging action from so many growth stocks.

The market seems to be rebounding and stabilizing after a tumultuous couple of weeks. The escalation of trade tensions, a sputtering global economy and talk of the next recession spooked investors. But as fear wanes investors realize that money has no place else to go but stocks to earn a decent return and they come back into the market.

Today’s and next week’s issues of Cabot Undervalued Stocks Advisor are going to look a bit different. I won’t be reviewing all of our portfolio stocks today. Many Wall Street analysts are on vacation, so there will be very little in the way of changes in earnings estimates or new research reports for several weeks.

The top five holdings of this fund are Acceleron Pharma Inc (XLRN, 4.02% of assets), Momenta Pharmaceuticals Inc (MNTA, 3.99%), Ultragenyx Pharmaceutical Inc (RARE, 3.10%), Regeneron Pharmaceuticals Inc (REGN, 2.79%), and United Therapeutics Corp (UTHR, 2.71%).

This tech company just added another big collaboration, striking a deal with NVIDIA, to use its UE emulation (UEE) to test NVIDIA’s 5G software solutions.

Analysts are forecasting 13.6% growth for this meat producer this year.

In the past quarter, 27 hedge funds have this financial stock in their portfolios, up from 24 in the previous quarter.

This portfolio stock has just pulled Q1 2020 guidance, saying revenue will be roughly 35% to 45% below the low end of its prior revenue guidance ($47 million) due to global disruptions from COVID-19.

This car reseller will report quarterly earnings on April 2. Forecasted EPS is $1.12.

This biotech is working on a coronavirus vaccine that looks promising.

The market has bounced decently during the past couple of days, and we’re cautiously optimistic that a workable low is in.

This gaming stock has lost 115% of its value since the coronavirus has shut the door on entertainment.

Shares fell below a 10% trailing stop.

This maker of electronic display systems is expected to grow this year, at triple-digit rates.

This biotech is forecasted to grow 16.10% next year. And four analysts have recently increased their EPS estimates for the company.

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.