It’s been a sideways summer market. Perhaps earnings will change that. But summer markets have a tendency to do whatever they were doing before investors stopped paying attention in the dog days of August.

In this issue I highlight a high-paying REIT that has been bucking the trend and moving higher in this market. It presents a timely buying opportunity that can create a call writing opportunity in a short amount of time.



Few income stocks have had consistent upward momentum in this market, but those that do generally fetch higher call premiums. The target buy is a fantastic REIT that pays a high dividend and continues to move higher. It should provide a great income opportunity in an otherwise lackluster summer market.

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

With the stock market’s remarkable strength over the past five and ten years, most stocks have produced at least reasonable gains, such that even out-of-favor stocks aren’t down-n-out stocks. We look at attractive turnarounds among stocks with flat to negative five-year returns.



SPACs, or special purpose acquisition companies, are all the rage. While the group has rightfully earned the disdain of value investors, there are some post-SPAC companies worth a closer look. We highlight five.



Our featured Buy recommendation, Walgreens Boots Alliance (WBA), is viewed as a broken growth company. While its challenges are clear, its shares now trade at a bargain valuation, yet the company has sturdy finances and a new outsider CEO. This combination, combined with a sustainable (and growing) 4.1% dividend yield that pays investors to wait, makes it an attractive turnaround candidate.



During the month, we moved Macys (M) to a Hold and raised our price target on Duluth Holdings (DLTH) from 17.50 to 20.



Please join us for the our 9th Annual Smarter Investing, Greater Profits Online Conference, held on Tuesday, August 17 through Thursday, August 19. You can see presentations by all of our analysts, which will include updates in their areas of expertise and discussions of their best picks.



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.

The overall market continues to be, well, wobbly. After a 2.1% loss last Monday, the sharpest decline in roughly 10 months, the bulls took charge at the opening bell last Tuesday and have yet to give up. Last week, the S&P 500 climbed 1.92%, the Dow advanced 1.07% and the Nasdaq surged 2.76%.

What a difference a week makes! Since our last issue, stocks have recovered from their worst trading day since March to reach new all-time highs. So, the bull market remains very much intact, though some growth stocks continue to wobble. Fortunately, today’s featured stock combines both elements of growth and value – and unlike many traditional growth stocks right now, it’s hitting two-year highs.

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 lineup of experts ready to share their best picks.

Current Market Outlook


Looking at just the major indexes, things couldn’t be better right now. The S&P 500 and Nasdaq are both at all-time highs, while growth stocks look good for the most part. But a peek below the surface reveals that some crosscurrents still abound. There’s still an above-normal amount of Nasdaq stocks making new 52-week lows, while new highs aren’t as expansive as they could be—especially given the strength of the leading mega-cap names. Meanwhile, only around half of S&P stocks are above the 50-day line, and the advance-decline line could be stronger. That said, we’re still seeing lots of nice setups in growth stocks, and while we likely haven’t seen the end of earnings-related volatility, the latest earnings season has been mostly kind to growth stocks. We’re moving our Market Monitor to a level 6 but are keeping our eyes open for what comes next.

This week’s list includes a nice mix of sectors, including a few that have had spectacular earnings reactions. Our Top Pick is Trane Technologies (TT), an HVAC company benefiting from the return-to-office trend.

Stock Name	Price	Buy Range	Loss Limit
Arvinas, Inc. (ARVN)	95	92-96	84-85
ASML Holding (ASML)	754	730-748	685-700
AutoNation (AN)	116	114-116.5	104.5-107
BioNTech (BNTX)	286	275-286	250-257
Dropbox (DBX)	31	30-31	29-29.5
HCA Healthcare (HCA)	246	240-246	220-225
Morgan Stanley (MS)	97	94-97	88-90
PTC Inc. (PTC)	151	148-152	137-140
Snap Inc. (SNAP)	76	75-77	68-69
Trane Technologies plc (TT)	200	196-201	185-188

While concerns over the Covid Delta variants are escalating, the market has steadied as the week progressed as 85% of S&P 500 companies have exceeded analysts’ Q2 earnings expectations, according to FactSet. Still, investors remain moderately cautious and relatively risk averse. Today’s new recommendation is an overlooked stellar fund run by none other than value investor Bill Ackman.

In the July Issue of Cabot Early Opportunities we briefly consider some of the factors making right now a particularly difficult time to make investing decisions, even though markets are near record highs.

To help make life a little easier we once again seek comfort in diversification. This Issue features dissimilar stocks that are bound by a common denominator; each company is either in an early stage of its life cycle, or early in a phase of growth/business model transition that should drive market-beating returns over the coming quarters.



Enjoy

The Scale of the Problem
How big is the energy transition the world needs to undergo? The decline of carbon dioxide emissions last year (a drop of 6.3%) was the sharpest decline since WWII. The world needs 30 more years of that magnitude in a row to constrain global warming to “just” 2 degrees Celsius.

The European Union wants to do its part. It announced a stricter carbon program, aiming to slash emissions by 55% by the end of the decade and to more than double E.U. renewable use, with the expectation it may do away with carbon altogether after 2030. It also plans a carbon-adjusted border tax for goods, based on home country emissions. Domestically, we’re still waiting for an infrastructure bill, but are heartened by the creation of a federal platform for instant solar permits. The Solar Automated Permit Processing program integrates local and federal databases to streamline approvals of rooftop solar projects, which can eliminate a large pain point of time and money. Can these programs keep the growth going? Renewable energy use globally rose 14% in 2020. It needs much more of the same.



The more immediate problem for us is the market, which is suffering from delta variant worries. Yet a choppy market (we’re not in a bear market, yet) sows the seeds of the next rally. This issue we look at three stocks – Ameresco (AMRC), Chipotle Mexican Grill (CMG) and General Motors (GM). They each have a combination that makes future leaders – real sales, profits and a clear growth trajectory.



You’ll see for this issue of SX Greentech Advisor that we’ve tweaked our format to make information more accessible – shorter stock write-ups with bite-sized sections and more charts. It’s part of our aim to be nimbler. Please let me know if you have any feedback on the format, or any other questions or comments, at brendan@cabot.net. There is still time too to join me and my fellow Cabot Wealth analysts for our 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19, where we will present our look ahead and some of our best picks for the next year.

After a volatile week, the major market indices all closed out with losses. The S&P 500 fell 0.97%, the Dow lost 0.52%, and the Nasdaq declined by 1.87%. And the bearish sentiment continued on Monday as the S&P 500 lost another 1.6%. Which leads to a question I’ve been receiving from a few Profit Booster subscribers: “Will you keep recommending trades if the market gets ugly?” The answer is yes. In times of rocky market action, I will continue to make trades for two reasons:

Current Market Outlook


The evidence has been steadily improving, but July has changed that—first came a lot of narrowing (most stocks below their 50-day lines even though the big-cap indexes were near new highs) along with a lack of breakouts, then came last week’s selling pressure (that saw many growth stocks show real slippage), and today we saw the sellers really start to hit things left and right. On the positive side of things, many growth titles were resilient today, and we still see a good number of setups out there; given that there are renewed fears of the virus, it’s possible many growth titles could do well even if the market has a rough go of it. But right now, the onus is on the bulls as the market’s intermediate-term trend has turned down and most stocks look iffy. We’re moving our Market Monitor to a level 5 but are keeping our eyes open for what comes next.

This week’s list is a mix of names, though some of the growth titles look like decent risk-reward situations on this dip. One of them is Marvell Technology (MRVL), a leading chip maker that’s pulling back normally after a persistent move to new highs.

Stock Name	Price	Buy Range	Loss Limit
Autodesk (ADSK)	287	284-290	270-274
Avantor (AVTR)	36	35-36.5	32-33
Bruker (BRKR)	78	76-78	70-71
Burlington Stores (BURL)	311	307-313	290-295
Chipotle Mexican Grill (CMG)	1551	1520-1560	1400-1425
CrowdStrike (CRWD)	250	247-253	223-226
Dexcom (DXCM)	435	425-438	390-395
Horizon Therapeutics (HZNP)	92	90-93	84-85.5
Marvell Technology Group (MRVL)	55	53.5-55.5	48.5-49.5
Revolve Group (RVLV)	64	62.5-65	56-57.5

Remain bullish, but keep your eyes open. Our indicators and most of our stocks are still trending up, though we’re seeing some funky action that’s worth monitoring.

The new all time high is a significant milestone. Although the S&P 500 hasn’t hit new highs quite yet it is only just about .01% from the mark. The new high is significant because it negates any possibility that we have been in a bear market since September, when the previous high was established.

When a famous company’s stock falls, there are lessons to be learned that can help you improve your game. Shares of 3M Co. (MMM) fell last week when first-quarter results revealed revenue and profits that did not meet the market’s expectations.

It’s earnings season so most investors are focused on individual stocks. And with the S&P 500 and Nasdaq hitting new all-time highs this week, the big picture is looking pretty good too!

Our EEM Signal slipped below its 20-day moving average this morning and is right on top of its 50-day average. We will remain positive and constructive but lean toward finding some bargains. Most likely, the next two ideas will come from heavyweights India and China.

There are three changes to the portfolio today.

Prepare yourself for more ups and downs in our medtech & biotech stocks if this debate heats up. I’m not planning to step out of the space since I think this will pass and we can still do quite well with these types of stocks.

The overall market remains in good shape, with both of our trend-following indicators—the Cabot Tides (intermediate-term) and Cabot Trend Lines (longer-term)—currently pointing up. We’re still keeping an eye on small-cap indexes, which have still not eclipsed their late February peaks, as well as the Nasdaq, which has found repeated resistance near 8,000. But overall, there’s no question that the trends are up.

The new all time high is a significant milestone. Although the S&P 500 hasn’t hit new highs quite yet it is only just about .01% from the mark. The new high is significant because it negates any possibility that we have been in a bear market since September, when the previous high was established.

We have obviously lived through a very difficult period in the stock market recently, from which most of the portfolio stocks are recovering or have already recovered. Hopefully we will not see another similarly ugly stock market downturn for several years, but there are no guarantees.

Small-cap discretionary, energy, financials, industrials, technology and materials are all moving higher. That’s a healthy mix, and it’s helped push the S&P 600 Small Cap Index back up near overhead resistance.

After seven consecutive down days and a swift, brutal stock market correction, we’re bound to see a few up days quite soon. Please be cautious.

This accessories manufacturer/retailer is trading at discounted levels.

This portfolio stock reported last night that Q4 revenue rose 20.6% to $43.5 million (beating by $1.7 million) and that adjusted EPS of -$0.21 beat by $0.07.

The market has been tripped up by what seems to be an overreaction to the potential economic disruption of the coronavirus, but which is more likely the result of a trifecta of potential issues including coronavirus, a previously elevated market trading at high multiples, and uncertainties related to this year’s Presidential election.

With the market’s decline only intensifying today, more stocks are beginning to crack.

Now that the market has fallen substantially, I think we’ve reaped the bulk of the potential profits on our recent purchase of these two ETFs.

Once again, the media has done a splendid job of creating fear and panic among the citizenry.

Wall Street expects this communications equipment company to grow at a 30% annual rate over the next five years.

One portfolio stock had a earnings beat and there are two additional rating changes.

Further upside is expected from this biotech, as a result of ongoing data on the company’s drug’s trials.

This financial firm beat earnings estimates by $0.32 last quarter and is due to report fourth quarter results at the end of this month.

As the market correction continues, it’s important not to focus on the coronavirus news but to focus on the actions of your stocks instead.

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.