Issues
The news of a new virus variant came out of left field late last week, whacking the major indexes on Friday … though today brought a so-so rally as some think the economic impact of omicron won’t be as bad as feared. We’re not in our storm cellar, but we’re not ignoring the action, either—on the buy side, we advise going slow and starting small, while for names you own, you want to honor your stops and make sure bad situations (losses, etc.) don’t get much worse.
That said, there remain many stocks that are pulling back or consolidating normally despite all the hectic action. Our Top Pick is one of those that already went through the wringer this year, broke out recently and is holding up well
That said, there remain many stocks that are pulling back or consolidating normally despite all the hectic action. Our Top Pick is one of those that already went through the wringer this year, broke out recently and is holding up well
While growth stocks had a rough time last week, the broad market remains strong, and thus I continue to think you should remain heavily invested as we head into the last month of the year.
Today’s stock has the potential to be a huge winner as it occupies a central position in a world-changing trend, but risk is high—as it should be when potential is high.
On the sell side, Coupa Software (COUP) gets the ax today, as it is going the wrong way.
Details inside.
Today’s stock has the potential to be a huge winner as it occupies a central position in a world-changing trend, but risk is high—as it should be when potential is high.
On the sell side, Coupa Software (COUP) gets the ax today, as it is going the wrong way.
Details inside.
This is a great time to sell covered calls.
The recent upward movement in the market increases upside speculation, and call premiums have risen. It’s a great time to take advantage of the recent surge in certain stocks to secure a high-income return. Even if the stock gets called, you are taking profits in a very high market ahead of what is likely a choppier environment.
In this issue, I highlight a covered call on the recently red-hot Qualcomm (QCOM). The stock soared 50% in a little over a month but has leveled off in recent days. It’s a great time to secure a huge call premium and lock in a huge income to go along with recent appreciation.
The recent upward movement in the market increases upside speculation, and call premiums have risen. It’s a great time to take advantage of the recent surge in certain stocks to secure a high-income return. Even if the stock gets called, you are taking profits in a very high market ahead of what is likely a choppier environment.
In this issue, I highlight a covered call on the recently red-hot Qualcomm (QCOM). The stock soared 50% in a little over a month but has leveled off in recent days. It’s a great time to secure a huge call premium and lock in a huge income to go along with recent appreciation.
Rare Earths Lift Off
Driven by strong demand in the magnet market, prices for rare earths like neodymium and praseodymium have skyrocketed and achieved a position of relative strength among the metals in November. Lithium, meanwhile, is also still a strong performer along with nickel, thanks to growing electric vehicle (EV) battery demand and tight supplies. Rising “green technology” demand has further served to fuel the bull market in both metals.
Driven by strong demand in the magnet market, prices for rare earths like neodymium and praseodymium have skyrocketed and achieved a position of relative strength among the metals in November. Lithium, meanwhile, is also still a strong performer along with nickel, thanks to growing electric vehicle (EV) battery demand and tight supplies. Rising “green technology” demand has further served to fuel the bull market in both metals.
With the short holiday week and only three trading days since last week’s update, we will go directly to a new recommendation. Markets welcomed the nomination of Jerome Powell as head of the Fed for another term, believing that he will keep interest rates low through early next year. As for our stocks, Cloudflare (NET) had a down day yesterday but we have no change in recommendation.
Have a great Thanksgiving holiday.
Have a great Thanksgiving holiday.
The market is in the midst of a short-term consolidation, which usually dishes out some pain and offers tedious action, which is what we’re seeing so far—earlier this week, we cut bait with one stock and have tight leashes on a couple of others. Further near-term shenanigans are possible, even likely, so we’re taking things on a stock-by-stock basis, but we’re also not opposed to putting money to work in resilient leaders—which we’re doing tonight, starting a half-sized position in a name we’ve long thought has the characteristics of a future winner.
To borrow a phrase usually deployed when tax cuts are rolled out, the infrastructure bill has “released the animal spirits” in Greentech. Our sector is bullish and appears to be working off of a strong base built since May.
This issue we have two new additions to our portfolios – one is an American company that suddenly has global market leadership in a crucial part of utility solar. The other is one of those companies long touted to be a game changer when in its start-up phase, so much so that Bill Gates backed it. It’s now public and fills an important energy niche with a delightfully simple approach.
This issue we have two new additions to our portfolios – one is an American company that suddenly has global market leadership in a crucial part of utility solar. The other is one of those companies long touted to be a game changer when in its start-up phase, so much so that Bill Gates backed it. It’s now public and fills an important energy niche with a delightfully simple approach.
This month’s issue of Cabot Marijuana Investor comes a week early, due to Thanksgiving holiday next week. And that’s good, because the sector is finally looking healthy again.
In last week’s update, I recommended averaging up in two stocks and buying two new stocks, and in this week’s issue, I give you the whole picture. It’s not too late to buy.
Full details in the issue.
In last week’s update, I recommended averaging up in two stocks and buying two new stocks, and in this week’s issue, I give you the whole picture. It’s not too late to buy.
Full details in the issue.
Inflation was the focus last week with the release of the much-anticipated producer price index (PPI) and the consumer price index (CPI). Both came in well above expectations. CPI came in at 6.2%, which was the highest level seen in over 30 years, while the PPI was 8.6%, the highest in more than 10 years. These data points flamed the inflation fears that many had been anticipating for the past several months.
And while inflation is going to continue to be a worry for the bulls, as of last Friday, 460 of the companies that reside in the S&P 500 have reported earnings, with 80% outperforming expectations, a number which has far outperformed analyst expectations.
Speaking of strong earnings, this brings to me to this week’s idea which is a global leader in the tire market, and which just reported a strong third-quarter earnings report.
And while inflation is going to continue to be a worry for the bulls, as of last Friday, 460 of the companies that reside in the S&P 500 have reported earnings, with 80% outperforming expectations, a number which has far outperformed analyst expectations.
Speaking of strong earnings, this brings to me to this week’s idea which is a global leader in the tire market, and which just reported a strong third-quarter earnings report.
Note: There will be no issue of Cabot Stock of the Week next Monday, as our publishing schedule is fifty issues a year. I hope you have a great holiday with family and friends.
As for the market, it’s still strong, and our portfolio is still fully invested, and today we’re jumping back into the marijuana market (the focus of my other advisory) with a young marijuana stock that just came public this year.
On the sell side, CrowdStrike (CRWD) gets the ax today, as it is going the wrong way.
Details inside.
As for the market, it’s still strong, and our portfolio is still fully invested, and today we’re jumping back into the marijuana market (the focus of my other advisory) with a young marijuana stock that just came public this year.
On the sell side, CrowdStrike (CRWD) gets the ax today, as it is going the wrong way.
Details inside.
First off, due to our regular schedule (two weeks off all year), there will be no Top Ten next Monday (November 22), though we will likely do a Movers & Shakers update pre-Thanksgiving.
Onto the market, big picture, we remain quite bullish, but near term, we think there’s the possibility of further shenanigans—we’re seeing a few stocks crack key levels, and with most measures of sentiment showing complacency/giddiness, more pain could be in store to raise the discomfort level. We advise following the tried-and-true method of holding your strong, resilient stocks, while keeping stops in place on names that are beginning to wobble. We’re pulling our Market Monitor back down to a level 7 to respect the recent iffy action, though we still think the next big move is up.
This week’s list has a lot of good-looking charts, including another batch of names that recently reacted well to earnings. Our Top Pick is one of those, with a story benefiting from both housing and long-term growth trends.
| Stock Name | Price | ||
|---|---|---|---|
| AppLovin Corporation (APP) | 103 | ||
| CF Industries (CF) | 66 | ||
| Diamondback Energy (FANG) | 111 | ||
| Expedia Group (EXPE) | 178 | ||
| The Goodyear Tire & Rubber Company (GT) | 23 | ||
| GXO Logistics (GXO) | 99 | ||
| LendingClub (LC) | 44 | ||
| Livent Corporation (LTHM) | 30 | ||
| Seagate Technology (STX) | 106 | ||
| Trex Company (TREX) | 129 |
The markets have responded well to the compromises that Washington pols have neared on President Biden’s two spending plans. The Dow Jones Industrial Average is up more than 5% since our last issue.
The unemployment picture, of course, is helping, with October’s unemployment rate dropping from 4.8 to 4.6. As well, both the ADP and non-farm payrolls rose much faster than economists expected, meaning the economy is definitely moving forward. Housing prices—although still rising in some parts of the country—are beginning to stabilize. And the good news from the Mortgage Bankers Association that existing home prices should fall by 2.5% next year, should help the market for buyers improve.
All in all, excellent economic reports.
The unemployment picture, of course, is helping, with October’s unemployment rate dropping from 4.8 to 4.6. As well, both the ADP and non-farm payrolls rose much faster than economists expected, meaning the economy is definitely moving forward. Housing prices—although still rising in some parts of the country—are beginning to stabilize. And the good news from the Mortgage Bankers Association that existing home prices should fall by 2.5% next year, should help the market for buyers improve.
All in all, excellent economic reports.
Updates
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 big news that affected the market this week was, of course, the dreaded yield curve inversion. This happens when the 10-year Treasury yield goes below the 2-year yield.
This week is a still familiar story in the portfolio, with defensive stocks thriving and moving still higher.
U.S. stock markets have exhibited a high degree of volatility in recent weeks. There are lots of factors contributing to the turmoil, which will ebb and flow, probably for the rest of our lives. So let’s just circle back to why we’re here: We’re here to invest in stocks because over the long term, stocks outperform fixed income investments.
The market has been up, down and all over the place lately. So have our stocks. Oddly enough, from last Thursday’s close through yesterday’s close our portfolio is relatively unchanged—down just 2% using a simple average of each stock’s weekly return.
Remain cautious, but stay flexible. Our Cabot Tides are effectively back on the fence as the upmove of the past few days has been encouraging—a bit more strength could restore the Tides green light.
Alerts
The market continued its crash today, with the major indexes losing a bunch more ground on virus-related economic fears.
The rolling market crash of the past three weeks is continuing today.
In the largest insider purchase of this year, the Non-Executive Chairman of the Board, John Gibson, recently bought US$497k worth of stock, paying US$39.11 for each share.
As you pour over stock websites and ponder which stocks you might like to buy in the coming weeks, think hard about how badly these companies might be harmed by the cessation of public gatherings.
We’ve just been through a harrowing period in the stock market and the path forward remains uncertain.
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?
Portfolios
Strategy
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.