The bull market remains alive and well, with major indexes hitting new highs in the last week. However, growth stocks in particular have been hit hard recently—finally spilling into the broad market in the last few trading days—and that requires some selling, so today we’re purging four of our weakest performers from the portfolio. As for new buying, today’s recommended stock is growing by consolidating a fragmented mature industry. It just came public this year, so it’s a name few investors are aware of. The stock was originally recommended by Tyler Laundon in Cabot Early Opportunities.

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.

Growth stocks had been improving some, but the sellers never quite disappeared, and now they’re back with a vengeance—many growth-oriented measures are down 6% to 10% this month alone, and even the broad market is going along for the ride.

Thankfully, we never got heavily invested given the indecisiveness, and now we’re throwing up some safety nets—we sold one stock yesterday (giving us more than half in cash) and put two others on hold.



Despite the selling, we’re not throwing in the towel—we see a ton of decent setups still, so if earnings season goes well, there could be some liftoffs. But for now we’re remaining cautious until things change for the better.

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 a stock with hidden value.



Some additional details:

• Its healthcare analytics division has grown at a 30%+CAGR and has a huge market opportunity in the years ahead.
• A slower growing competitor just got acquired at a premium valuation.
• My price target implies 70% upside within 12 months, but longer term this could be a multi-bagger.

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

A 10-year Treasury bond pays just 1.4%. A three-year CD pays less than 1%. A 20-year AAA-rated municipal bond pays 1.20%. After taxes and inflation, you don’t even break even. And that’s not to mention the fact that bond prices can plummet if interest rates rise.

The only game in town is dividends. You can still generate high rates from well-chosen dividend stocks and other income-paying securities. It’s nerve-racking to have so many of your investment dollars in the stock market, but with bonds so low paying and treacherous, there is little choice if you need to generate income.



In this issue I highlight an ETF that strikes a more conservative cord than most dividend stocks. It employs a time-tested strategy that has proven to earn consistent high income while generating capital appreciation at the same time. It also pays dividend on a monthly basis and should thrive when the environment normalizes on the other side of the pandemic recovery.



For more great picks and information about navigating the current environment please 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.

This Friday marks the expiration of July options, and if everything holds steady, our calls in MRO, GPRO and SGMS will expire worthless. As a result, we will maximize the call premium on each position. Per usual, on Monday I plan to sell my shares in each position and start the search for more opportunities.

Current Market Outlook


The news-driven environment featuring incessant rotation and crosscurrents remains in effect; throw in the fact that breadth is narrow (about half of stocks are still below their 50-day lines despite the S&P 500 and Nasdaq being near new high ground; broad market indexes are chopping sideways) and earnings season is approaching and we think it’s best to continue going slow and aim to buy on weakness. That said, there are a growing number of good-looking growth stocks out there—not a ton are kiting higher, but there are lots of setups and, while there have been bumps in the road, the sellers really haven’t been able to sink their teeth into them despite some recent strength. All in all, we’re more optimistic than not, but stock selection and solid entry points are key.

This week’s list has a variety of sectors represented, including a few that have avoided the market’s volatility. Our Top Pick is Arista Networks (ANET), whose stock is in a smooth uptrend as growth picks up steam.

Stock Name	Price	Buy Range	Loss Limit
Antero Resources (AR)	15	13.8-14.3	12.3-12.7
Ares Management (ARES)	65	62-64	57-58
Arista Networks (ANET)	371	363-370	340-345
Bentley Systems (BSY)	64	62-64.5	57-58.5
FIGS, Inc. (FIGS)	44	42.5-45	36-37
L Brands (LB)	77	73-75.5	65.5-67.5
NVIDIA Corporation (NVDA)	821	775-795	700-710
PayPal (PYPL)	303	288-297	268-273
Rapid7 (RPD)	103	97-101	87-89
Synaptics (SYNA)	158	154-158	136-138

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 a consumer stock with a classic cookie-cutter story, which brings the possibility of extended long-term growth.



As for the current portfolio, to keep it at our maximum level of 20 stocks, we’re parting company with long-time holding Huazhu Group (HTHT), for a variety of reasons.



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.

Markets struggled for direction this week as data coming in is mixed and growth and inflation battle for a “goldilocks” middle ground. The controversy over DiDi’s recent IPO has Chinese-listed U.S. stocks in the crosshairs of both China’s regulators and American legislators. Looking ahead, these summer doldrums may just be a precursor to the market continuing its bull run and a bit of a pullback totally in line with the sharp upward swing we have experienced since March 2020. Today we have a pink sheet blue chip clean tech idea of the highest quality.

As we enter the second quarter, emerging markets are on solid footing in a constructive uptrend as EEM remains just above both 50-day and 25-day moving averages. In light of this we are positive and increasing our allocation.

The tide is changing. The recent perception was that of sputtering economic growth in a market that was panicking about the possibility of a near-term recession. Many of our defensive positions have gone gangbusters in the past turbulent year but I’ll be watching the situation closely but for now I will bow to strong momentum.

You may have noticed that the price of West Texas crude oil is up about 48% since it bottomed in late December.

The overall market is still in fine shape, but there have been a growing number of yellow flags, including among growth stocks, which came under fire today. As a result, we are selling one position from the portfolio and downgrading another to Hold.

The S&P 500 was up 13% for the quarter, making it the best first quarter since 1998 and the best overall quarter since 2009. It’s impossible to predict short-term gyrations in the market, at this point, it looks like a slow slog higher for the market for the rest of the year. It is an ideal environment for dividend stocks and only once change to the portfolio as we are selling one position.

The market has been jumping around lately as it digests the Fed’s announcement last week that it expects to hold interest rates steady until 2020 (and just one hike in that year) and would stop shrinking its balance sheet later in 2019.

The MSCI Emerging Market index (EEM) is up 9% so far in 2019 but has basically hit the pause button in March.

The March flooding in Nebraska and neighboring Midwest and Great Plains states is devastating to farmers, crops and livestock. Consumers can expect prolonged food price inflation that reaches around the globe.

Right now, keep new positions small and don’t get fooled into thinking we’re on a one-way conveyor belt higher. If this bull market is to stay healthy and continue, we’ll need to see a pause in leading stocks and some catch up performance from areas of the market that haven’t done much lately.

Position update: This recommendation’s covered call has seen extreme volatility the past several days.

Carl will update the market and our portfolio on Thursday.

This staffing company just reported excellent fourth quarter results, but the share have dipped a bit, creating a buying opportunity.

Today’s market meltdown is turning our Cabot Tides negative, which, following the many yellow flags in recent weeks, has us paring back some.

Global citizens are beginning to witness a relatively unprecedented situation in which a communicable virus that originated in China is now traveling around the globe.

This preferred stock has a current annual yield of 6.76%, and is backed by a lodging Real Estate Investment Trust with a market cap of $2.75 billion.

Today three of our covered calls will expire. The great news, all three trades will be closed for nice profits!

Earnings continue to grow at this Chinese internet company, consistently beating analysts’ forecasts.

Headed into the event our position is in fantastic shape as the stock is trading marginally above our short strike price.

Crista has two rating changes today and reports on another with a good 2020 outlook.

Earnings and occupancy are up for this REIT. The shares have a current annual dividend of 5.87%, paid quarterly.

We’re putting a little cash back to work tonight, buying a half-sized position in this application performance management stock, which will leave us with around 23% on the sideline.

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.