Markets are facing end-of-the-summer doldrums as concerns about job and Covid growth dampen enthusiasm. We move two stocks from buy to hold, while on the positive side, Cloudflare (NET) shares are up 73% this year and Novonix (NVNXF) shares are up 58% in the last 10 days of trading. Today we have a new semiconductor-related idea for you in an area usually overlooked by investors.

Here is your September Wall Street’s Best Digest, issue 845.

Thank you to all who attended our Cabot Wealth Summit last month. It was an information-packed few days, with lots of new ideas shared by all of our analysts. We hope next year we can resume our in-person meetings, as we miss seeing you!



Despite COVID’s resurgence, the markets are holding up surprisingly well. The economy is still strong, housing is robust, but businesses need employees. The unemployment rate for August fell to 5.2%, but new jobs added were much less than anticipated. Once those numbers improve, and COVID recedes, we should be in for an even stronger economy. And that’s great news for the markets!



In this issue, our Spotlight Stock revisits an old favorite of mine—a net-lease REIT that has boosted its dividend for 31 consecutive years! In my Feature article, I discuss all the reasons why this stock has been a perennial winner.



In our Growth section, you’ll find a lot of familiar names, including companies in the retail, hospitality, and communications realms, as well as a couple of newer ones in the fast food franchising, and electric vehicle charging arenas. There are a lot of great names to choose from in Growth & Income, including many industrial-related companies, as well as a home products and chemical manufacturer.



Our Financial offerings include a bank and a money exchange company. And in Healthcare, you’ll find options in biopharma, equipment, and 3-D. And speaking of 3-D, our contributors for technology stocks include one of those companies, as well as a semiconductor, cloud, and two payments businesses.



Resources, Energy, and Utilities continue to be popular fields, as our advisors offer several utilities and midstream energy companies here. Our Low-Priced Stocks are in two relatively new arenas—carbon credits and lab-grown gems. And in Preferred Stocks, High Yield, & REITs, you’ll find a couple of investment/capital corporations.



Lastly, our Funds & ETFs provide a variety of ideas, including cryptocurrency, consumer staples, alternative energy, and water sustainability.



Don’t forget to tune into my monthly Platinum Club webinars. Our October program is scheduled for October 6, at 2pm Eastern. And as always, please don’t hesitate to email me with your feedback and questions. My address is nancy@cabotwealth.com.

Today, we are recommending a small Canadian specialty pharma company that checks all the boxes of what we typically look for:

• High insider ownership (insiders own ~41% of shares outstanding)
• Recent insider buying (insiders bought as recently as August 21)
• Strong momentum (stock is near 52 week high)
• Low valuation (P/E of 5.2x)
• Low share count (only 26MM shares outstanding)
• Strong revenue growth potential (promising pipeline)
• No debt (29% of market cap is in cash)

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

It’s still an amazing market. The S&P is up 96% from the bear market low in March of 2020. The index is also up over 20% so far this year.

While the overall market may be pricey, there are still undervalued pockets within the market. The indexes don’t tell the whole story. Even in a market like this, some stocks get neglected.



The yield curve has flattened and two stocks in the portfolio, AGNC and USB, have pulled back as a result. I believe this interest rate dynamic is temporary and these stocks are good buys ahead of a likely reversal.

Ahead of the long holiday weekend, it was a mixed bag last week as the S&P 500 rose 0.58%, the Dow lost 0.25%, and the Nasdaq climbed 1.55%.



This week traders will keep a close eye on inflation as the Labor Department releases its August index of U.S. wholesale prices, otherwise known as the producer price index. The market is estimating an increase of 0.5%, after 1% increases in June and July. July witnessed a 7.8% increase year over year, which was the largest bump in over a decade. Another spike would not bode well for the overall market, so I will be keeping an eye on the release and its impact on price action.



With that in mind, and always an eye on diversification, this week’s pick is a steel and iron enterprise company.

Thanks to all of you who joined us for our Cabot Wealth Summit in August. It was a great few days—lots of new ideas to share amid a backdrop of a still bullish market.

Sentiment continues to be bullish, but cautious. And Value stocks are still leading Growth. So far in 2021, we are seeing double-digit returns across both styles, with the exception of small-cap growth stocks, which are up 7.6% year-to-date.



The Dow Jones Industrial Average has stayed above 35,000, propped up by a fabulous earnings season. According to FactSet, 87% of S&P 500 companies reported both a positive EPS and revenue surprises.



The economy continues strengthening, with a nice drop in the unemployment rate, to 5.2%. Home sales are helping tremendously. Although inventory continues to be a challenge, the rise in prices (18.6%) are helping to mitigate that.



Consumer confidence remains strong, although we are still battling COVID, and hoping that the variant does not derail all the good progress.



In the meantime, I’m constantly searching for new ideas for you, and am pleased that our portfolio continues to outperform.



Please don’t hesitate to email me with your thoughts and questions. I look forward to hearing from you.



Happy Investing!

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 one of my favorite kinds of stocks—a small company that’s not well known but that’s growing fast by making a big difference in a global marketplace.



As for the current portfolio, most of our stocks look good, and many are hitting new highs, but I have two sells, Five Below (FIVE) and Molson Coors (TAP).



Details inside.

Current Market Outlook


We traded in our crystal ball years ago, especially when it comes to short-term predictions, but our screens over the weekend told a clear tale: While it’s not 1999 out there, many growth stocks and indexes have enjoyed good moves of late, and when you combine that with some signs of complacency, a retrenchment looks possible. (Today, in fact, might be the start of that, as many growth stocks were hit.) Still, this isn’t some grand market call—overall, the environment remains the same, with some divergent and rotational action, but also more and more names acting well—but our point is more to make sure you’re still sticking with great-looking stocks at decent entry points, as opposed to chasing things higher. We’ll leave our Market Monitor unchanged this week.

This week’s list has a bunch of strong names thanks to recent earnings reports and other news items. Our Top Pick is Ambarella (AMBA), which staged a massive blastoff on earnings—we’re OK starting small here or on dips.

Stock Name	Price	Buy Range	Loss Limit
Academy Sports and Outdoors (ASO)	45	43-46	38-39
Ambarella (AMBA)	136	132-138	112-115
Asana Inc. (ASAN)	95	88-92.5	75-78
Avalara (AVLR)	188	180-185	164-167
Chipotle Mexican Grill (CMG)	1895	1850-1900	1700-1760
Floor & Décor (FND)	125	122-126	110-112
Macy’s, Inc. (M)	22	21-22	18.5-19
Nutanix (NTNX)	44	41.5-44	36.5-37.5
Quanta Services (PWR)	115	109-113	97.5-99.5
TX (TX)	54	51.5-53.5	46.5-47.5

Today’s new addition has all the attributes we look for in a small-cap software stock.

The company is young, management is insanely smart, the products fit a huge need, growth is 30%+, and the sales team is growing quickly.



In short, it’s an extremely attractive opportunity. Which is why we’re jumping in right after the company came public.



Enjoy!

Greentech peaked in February and bottomed in May. There are still headwinds – as there are for many growth stocks – but we’re seeing the sector build a base for a resumption of its long-term bull move. We’re also seeing more stocks that are setting up for long-term success and more predictable performance from our current holdings.

This issue, we examine one of the leading providers of an essential technology for residential solar systems, a fast-growing market. The last two quarters for home-based solar have been the best ever in the U.S. Our pick this week is gaining market share with a unique approach that makes systems more efficient and more reliable. It’s also expanding into segments that could quadruple sales in coming years.



We also have newly recommended ratings and sell-stops for many of our current portfolio holdings.



Read through for more details.

Amidst the uncertainty investors are gravitating toward dividend stocks. You’re in the right place at the right time.

Altogether it felt like a calm week. Considering the worsening performance of the S&P 600 Small Cap Index, which broke below its comfort zone, and the S&P 500, now 6% off its high, our portfolio’s resiliency continues to stand out.

Our Cabot Tides are still clearly negative, and in recent days the selling pressure has broadened out, causing more stocks and sectors to take on water.

Looking at the broad market we see that the S&P 500 is just 4% off its recent high, has thus far held above support around 2,800 and remains above its long-term (200-day) moving average line. The Nasdaq dipped to its May 13 low near 7,627, but it too is above its long-term moving average line.

Emerging and global markets struggled this week as our Emerging Market Timer remained negative, with the EEM clearly trading below its 20-day and 50-day moving averages.

A potential positive catalyst has turned distinctly negative—a swing and a miss. What does this mean for the market going forward?

Many of our stocks are still recovering from the steep stock market downturn that occurred in the fourth quarter of 2018. As long as their fundamentals (profits, valuation, etc.) remain strong, I’m going to give those stocks some rope and allow them to recover.

This is a great time to be invested in these stocks, clearly. And I hope the trend continues. But I do think we have a missing ingredient before we can feel super confident that these gains will stick. And that ingredient is more participation from a wider group of small-cap stocks. If we get that, we’ll see the S&P 600 Small Cap Index break above 990 and move back toward its 2018 high.

The market’s three-day rally has been solid, but even better than that has been the action of growth stocks, many of which have zoomed to new highs.

After the breakdown of trade negotiations with China and the escalation of tariffs, the market had a few ugly trading days, but now, it looks like we’re back in the saddle again.

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.

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.

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.