A new year brings a fresh perspective. Flows into U.S. ESG funds rose 20% in 2021 and doubled worldwide. Some $3.9 trillion is now dedicated to environmental, social and governance issues globally, primarily in equities. All that money sees the long-term trend of Greentech continuing upward, driven by the desire to combat climate change and the universe of innovation it has inspired.



This issue we feature two selections. For the Real Money Portfolio, we focus on an upcycler benefitting from strong construction activity. For the Excelsior portfolio, we offer a high-risk, high-reward player in hydrogen.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the January 2022 issue.



We comment on the abrupt shift in market sentiment that has boosted the prices of our undervalued stocks relative to expensive hyper-growth stocks. Several of our left-for-dead stocks, like Arcos Dorados (ARCO), which jumped 17% in the past two weeks, have suddenly been rediscovered by the market. Others, like Coca-Cola (KO) and Sensata Technologies (ST), are reaching new all-time highs as investors find that their healthy fundamentals haven’t been fully reflected in their share prices.



This shift may not last, and is only two weeks or so in the making. But it reinforces our view that, to quote Warren Buffett, “in the short run, the market is a voting mechanism, but in the long run it is a weighing mechanism.”



Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the 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.

This week I’m adding American worldwide manufacturing services company Jabil (JBL) to the portfolio.

Since 1928, the Santa Claus rally has been positive 79% of the time. For this year, the stock market is shaping up to post the best Santa Claus Rally returns since 2000-2001, when the S&P 500 rose 5.7%.

The term was coined by Yale Hirsch, the founder of the Stock Trader’s Almanac, and one of my contributors to my Wall Street’s Best Digest newsletter. The definition: the markets tend to rise over a stretch of time right before and after the calendar flips to the new year. Specifically, the rally involves the last five trading sessions of the year and the first two of the new year.



And that’s really good news! With the pandemic and the omicron variant still weighing on us, any good news is heartily welcomed! But that’s not all that is glittering this holiday season. Home prices, while still rising, are certainly moderating, which should continue to keep the housing market strong. And, indeed, you can see the strength by the uptick in both existing homes (6.46 million) and new home sales (744,000).



Also, durable goods sales are up, and jobless claims have declined.



I’d say that’s a great start to the new year! We are still bullish, with a dose of caution, so stock picking continues to be of critical importance in growing and maintaining your portfolio.



This month, I’m going with another Real Estate Investment Trust, which pays a hefty dividend to add to your cash flow.



Please let me know if you have any questions; I always look forward to your emails.



Happy Investing!

There have been some positive baby steps since the market’s early-December low, but there remain many yellow flags, too, such as the fact that growth-oriented funds and indexes remain iffy at best. All in all, we’re a smidge more constructive than we were a couple of weeks ago, but we don’t advise making any big commitments until we see more individual names let loose on the upside.

This week’s list is heavier on cyclical names, as those have been holding up (some even advancing) much better than the growth areas of the market. Our Top Pick is a shipping name that’s posting huge numbers and is near new highs.

As we enter the brand-new year, we have a renewed buy signal from our intermediate-term timing indicator, and the best stocks are hitting new highs—including a lot in our portfolio. But one of ours is a true laggard, and will be sold today.




As for the new addition, it’s a hot growth stock favored by Mike Cintolo, which is seeing great growth in the exciting area of networking at the edge of the cloud.




Details inside.

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.

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 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.

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.

There has been no big picture change in the market over the last week. As expected, everyone is following earnings reports and trying to make broad assumptions based on what individual companies are reporting.

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.

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.

The top five holdings of this fund are: Microsoft Corp (MSFT, 11.92%), Apple Inc (AAPL, 11.19%), Amazon.com Inc (AMZN, 9.58%), Facebook Inc A (FB, 3.98%), and Alphabet Inc A (GOOGL, 3.96%).

Shares of this stock are bucking the downtrend early on Monday after management announced late last week that it would take steps to cut an additional $30 million in costs by reducing the workforce by roughly 90 employees across sales, marketing, general/administrative and R&D departments.

Like many countries, Singapore is struggling with the impact of the coronavirus. But given that it is a city-state of 6 million people with a well-organized, effective government, it is well positioned to cope with all of this better than most.

William Blair recently initiated coverage on this government contractor, with an ‘Outperform’ rating.

This preferred issue has a nice yield and is backed by a large North American insurance carrier.

The shares of this video game maker were just initiated at Wells Fargo with an ‘Overweight’ rating.

The shares of this chipmaker were recently upgraded by B o A Securities, to ‘Buy’.

This accounting solutions company is forecasted to grow at an annual rate of 50% over the next five years.

As I mentioned in yesterday’s issue, we got some bad news on this portfolio stock before the market opened regarding an internal investigation of fraud by the company’s COO and several other employees who apparently significantly overstated sales in 2019.

The majority of this insurance company’s analysts rate its shares a ‘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 Momentum 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 Momentum Trader features.