Markets are a bit subdued with low summertime volatility, though some Explorer recommendations are doing very well in the power sectors of cyber and space. Today we take a look at Brazil, which is struggling with high unemployment, Covid-19 and political instability though we offer a new recommendation in a high-growth sector with a clear uptrend in share price.

It’s time to think about investing on the other side of the pandemic.

When the environment normalizes, investors will find the best opportunities in the same place they did before – technology. Growth in technology exponentially eclipses all other industries. And the pace of growth will accelerate as new and game-changing technologies are on the cusp of transforming the world as 5G continues to roll out.



Sure, the cyclical sectors are coming back. There will also be solid growth in other industries. But nothing will compare to the immense growth in technology. The sector will rule the market for many years to come.



Recent stumbles in the sector create an opportunity for the great normalization ahead. In this issue I highlight two portfolio positions perfectly positioned to benefit in both the long and short term.

Today, we are recommending an energy company that is both a traditional energy company but also a transition play.

The company is up over 250% in the past year, but still looks cheap on forward numbers.



Some additional details:

• Historically, the company has grown revenue at a 26% CAGR yet trades at a cheap valuation.
• Inside ownership is high and insiders have been buying as many shares as possible in the open market.
• Revenue and EBITDA are already at record levels.
• My price target implies 100% upside.

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

With June expiration coming next Friday, June 18, the Cabot Profit Booster portfolio is in great shape as all four of our existing positions are either at the strike price that we sold (RRC) or well above it (FNKO, IGT, PGNY).

This week my attention turns to selling a July call against an emerging oil and natural gas star that just broke out to new highs last week.

Current Market Outlook


The holiday-shortened week was a relatively quiet one, with most indexes and sectors mostly meandered in tight ranges. After the prior two and a half weeks of constructive action, we consider the lack of selling a positive; to this point, the bears haven’t really come around for many names despite some decent rallies and a few breakouts. But now the real test will begin—if the former leaders that have run right into some tough resistance can hold firm, if recent breakouts can build on their gains and fresh breakouts can emerge, this rally could gain steam ... but if the sellers return, things could go back in the soup within a few days. Right now, we’re still in the trust-but-verify mode of the rally, slowly increasing exposure but also keeping a close eye to see if cracks show up.

This week’s list has a wide array of stocks, including a few cyclical names that are pushing up after a few weeks of consolidation. Our Top Pick is Marathon Oil (MRO), which showed some real power last week as oil stocks came to life.

Stock Name	Price	Buy Range	Loss Limit
Apellis Pharmaceuticals (APLS)	59	54-56.5	48-49.5
Callon Petroleum (CPE)	48	45.5-48	40-41.5
Discover Financial Services (DFS)	124	118-122	108-110
General Motors Company (GM)	63	62-64	56-57
Jabil Inc. (JBL)	58	55.5-57	51-52
Logitech (LOGI)	133	126-130	112-115
Marathon Oil (MRO)	14	13.0-14.0	11.5-12.0
SeaWorld Entertainment Inc. (SEAS)	58	56-58.5	50-51
United Parcel Service (UPS)	213	209-214	193-196
Vale S.A. (VALE)	22	21.5-22.5	19.3-19.8

The bull market is looking healthier this week, as growth stocks have strengthened after a few months wandering in the wilderness, so I’m happy today to recommend a leader in the hot semiconductor machinery industry.

This addition brings our portfolio to fully invested status, and the good news today is that there’s nothing that needs selling; all our stocks are working!



That, of course, will change, but for now you should enjoy it!



Details inside.

Growth stocks have taken a series of small, positive baby steps during the past three weeks, which, given where things were at early last month, we’ll take. It’s been enough for us to put some money to work.

That said, the environment has a lot of room for improvement; we’re going slow, but will be happy to put more money to work if we see further progress. In the Model Portfolio, we’re averaging up in one of our stocks tonight, but that will still leave us with around 57% in cash.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the June 2021 issue.

Many of our recommended names are at or approaching our price targets. The decision to keep or sell isn’t easy in a strong market. Our patience is being tested (in a good way).



Few people would attend the Indy 500 and think about investment horizons. But, such is the world that your chief analyst inhabits. The race itself was a thrill, as always. It was also a showcase of different investment horizons, featuring that of new track owner Roger Penske.



Earning season has concluded, so it has been a slow period for company-specific news, although Tyson (TSN) announced the surprise departure of its new CEO. Some companies, including Bristol-Myers (BMY), Cisco (CSCO) and Dow (DOW) are presenting at various investor conferences. These can be worthwhile to watch and are free to the public, with replays available in addition to the live presentations.



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.



Thanks!

This month we’re jumping into a little-known company that makes and sells pop culture products.

It’s sort of an odd duck, but when you dig below the surface you find compelling products and interesting market exposures, including to the nascent Non-Fungible Token (NFT) market, which has exploded in trading value over the last year.



Revenue growth is above 30%, and the chart is strong.



Enjoy!

The market has strengthened again, which is great for our three open covered call positions, all of which are trading above the strike price of the call we sold. That being said, a sideways market is also fine for our volatility selling strategy, that is focused on buying the strongest stocks, while keeping the portfolio diversified.

The sellers finally showed up today, with some negative headlines causing the market to pull back. In the Model Portfolio, we’re standing pat tonight with 35% in cash, though we’re spying a few names for possible new buying.

The market isn’t spiraling downwards anymore. It’s actually looking healthy again. The next stages of this market should be ideal for dividend payers and the relative return of dividend stocks in the upcoming quarters and years could be the best in a long time. Only one rating change today as we are selling a half position.

Emerging markets (EEM) continue to gain ground, and just today moved above their 200-day average. Since the S&P 500 index bottomed the day after Christmas, the EEM has risen 14% to reach a seven-month high.

The stock market recovery continues in a slightly better style than I had hoped for. I had expected big upswings followed by pullbacks, which is normal for a recovery.

As we close out the fourth week of 2019 small caps are looking good.

It’s time to do some more buying. Our Cabot Tides has flashed a new buy signal, and while the near term could easily see some retrenchment, the evidence is building that the worst of the market’s downturn is over and that another bull phase could be starting. We are adding one new position and buying the remaining half (to make them full positions) of two other positions.

Just when the market seemed to be back on track, it had a terrible day. After rallying 13.6% from the Christmas Eve low and regaining most of what it lost since the September high, the S&P 500 fell 1.42% on Tuesday. I believe the market will likely trend higher but not by a lot, favoring the more recession-resistant plays. That’s the story right now but as result of the recent action, we have two rating changes in the portfolio.

Crista writes about four patterns she is looking at in the market.

The market looks a lot better less than three weeks into 2019.

The fund pays a current annual dividend yield of 9.83%, paid monthly.

Our second recommendation is a sale of a company that proved to be a disappointment.

Let’s talk about a specific category of stocks that I like to buy after they fall from grace. These are famous stocks that don’t fall very often, but when they do, I like to snap them up because they’re almost always destined to rebound. And it just hit me: these are MOVIE STAR STOCKS.

Our second recommendation is a short sale of a stock that is facing increasing competition.

Our first idea today is a medical device company who recently saw coverage of its shares initiated at Roth Capital with a ‘Buy’ rating.

The stocks in are our portfolio are gradually looking healthier, as bargain hunters invest more carefully, focusing on the stocks with the best prospects for real revenue growth and real earnings.

The shares of this low-cost airline company were recently upgraded by Vertical Research and Buckingham, to ‘Buy’.

This mortgage insurer has beaten analysts’ EPS estimates for the last four quarters, topping last quarter’s forecasts by eight cents.

This specialty chemical company is forecasted to grow at an annual rate of 13.2% over the next five years.

Today is the expiration of our first positions.

This energy stock reported a fourth-quarter earnings and revenue beat.

There are top five holdings of this growth fund.

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.