Issues
Note: We are publishing this issue early due to our office being closed this Friday for a holiday.
The daffodils and Bradford pear trees are in bloom here in Tennessee; I’ve already begun my spring cleaning; I’ll get my second COVID-19 shot on Monday; and the markets and economy are holding up nicely--all in all, a great way to usher in a new season.
The Dow Jones Industrial Average has managed to stay above 32,000, housing continues to be strong, and more people came back into the job market this month, as unemployment claims declined to 684,000.
In this issue, our Feature Recommendation is a company operating in the container ship industry, which is recovering from crushing blows dealt by the coronavirus pandemic last year. As the flow of goods and services continues to climb, this stock should also profit.
And speaking of profits, we are banking some dollars with the sale of cbdMD, Inc. (YCBD), gaining about 76%.
Many thanks to subscribers who joined us on our first monthly Platinum Club call. We hope you can tune in for our next one on April 13.
We’ll check in with you with a Special Alert if anything major occurs in our portfolio. In the meantime, please let us know if you have any questions or concerns.
Happy Investing!
The daffodils and Bradford pear trees are in bloom here in Tennessee; I’ve already begun my spring cleaning; I’ll get my second COVID-19 shot on Monday; and the markets and economy are holding up nicely--all in all, a great way to usher in a new season.
The Dow Jones Industrial Average has managed to stay above 32,000, housing continues to be strong, and more people came back into the job market this month, as unemployment claims declined to 684,000.
In this issue, our Feature Recommendation is a company operating in the container ship industry, which is recovering from crushing blows dealt by the coronavirus pandemic last year. As the flow of goods and services continues to climb, this stock should also profit.
And speaking of profits, we are banking some dollars with the sale of cbdMD, Inc. (YCBD), gaining about 76%.
Many thanks to subscribers who joined us on our first monthly Platinum Club call. We hope you can tune in for our next one on April 13.
We’ll check in with you with a Special Alert if anything major occurs in our portfolio. In the meantime, please let us know if you have any questions or concerns.
Happy Investing!
The second quarter and major league baseball opens today after a good week for Explorer recommendations. Tech stocks struggle a bit but some EV stocks bounce back as investors look to play the long game. The Biden infrastructure plan captures media attention and today’s new recommendation should benefit from one of the plan’s more ambitious goals—universal broadband access
The action of high-growth stocks continues to be sloppy despite the strong performance of most underlying businesses.
To help ease our portfolio thorough this period I’ve been evaluating companies with exposure to the reopening economy, and I think I’ve nailed it.
Today’s stock is an online retailer serving younger generations. These consumers should be among the most active spenders as the world opens up again. And this up-and-coming retailer should be a major beneficiary.
Enjoy!
To help ease our portfolio thorough this period I’ve been evaluating companies with exposure to the reopening economy, and I think I’ve nailed it.
Today’s stock is an online retailer serving younger generations. These consumers should be among the most active spenders as the world opens up again. And this up-and-coming retailer should be a major beneficiary.
Enjoy!
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the April 2021 issue.
This month we look at defense industry stocks. These stocks have been left aside as investors rush to capture post-pandemic winners, and as the market has doubts about the Biden administration’s commitment to defense spending. Yet, these concerns appear overdone, and investors aren’t considering the possibility of a ramp-up in response to rising global tensions. We discuss six interesting stocks.
We also look at high yield bonds. Our call in February 2020, that “the Sun May Be Setting On High Yield Bonds,” appears to be the right one once again. Yield levels and spreads have returned to remarkably low levels. Our discussion also outlines what favorable and unfavorable conditions look like.
Our feature recommendation is pet health company Elanco Animal Health (ELAN). This company has produced mediocre operating and stock price performance since its 2018 spin-off from Eli Lilly. Yet, changes appear to be coming with the arrival of a credible activist that is reshaping the board of directors.
We also include comments on recent price target and rating changes, including our recent Sell recommendations on Valero Energy (VLO) and Volkswagen AG (VWAGY).
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.
This month we look at defense industry stocks. These stocks have been left aside as investors rush to capture post-pandemic winners, and as the market has doubts about the Biden administration’s commitment to defense spending. Yet, these concerns appear overdone, and investors aren’t considering the possibility of a ramp-up in response to rising global tensions. We discuss six interesting stocks.
We also look at high yield bonds. Our call in February 2020, that “the Sun May Be Setting On High Yield Bonds,” appears to be the right one once again. Yield levels and spreads have returned to remarkably low levels. Our discussion also outlines what favorable and unfavorable conditions look like.
Our feature recommendation is pet health company Elanco Animal Health (ELAN). This company has produced mediocre operating and stock price performance since its 2018 spin-off from Eli Lilly. Yet, changes appear to be coming with the arrival of a credible activist that is reshaping the board of directors.
We also include comments on recent price target and rating changes, including our recent Sell recommendations on Valero Energy (VLO) and Volkswagen AG (VWAGY).
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.
It’s been seven weeks since the marijuana sector topped, and every day the picture of this correction gets clearer. For example, today saw a rally across the board in the sector, but if you look at the charts, you see it’s really just an inconsequential blip.
Thus, defense remains the watchword for now. In fact, I am selling one stock in this issue, taking profits and freeing up a little more cash.
Long term, however, prospects for the sector remain very bright, as was made clear by our companies’ latest quarterly reports. And of course, we will always hold the leaders of the sector.
Full details in the issue.
Thus, defense remains the watchword for now. In fact, I am selling one stock in this issue, taking profits and freeing up a little more cash.
Long term, however, prospects for the sector remain very bright, as was made clear by our companies’ latest quarterly reports. And of course, we will always hold the leaders of the sector.
Full details in the issue.
It has been a volatile few weeks for the market, with the Nasdaq under consistent selling pressure and more than 7% off its February high, while the S&P 500 hit new all-time highs last week.
Current Market OutlookFirst off, a heads up that our offices will be closed on Friday for Good Friday. So we’ll probably be sending you Movers & Shakers a day early this week.
As for the market, the split environment continues, with many major indexes closing last week near new highs, while the Nasdaq is still languishing beneath its 50-day line. Overall, the song remains mostly the same—growth stocks are mired in a correction (including some big winners from last year that can’t get out of their own way), and while many cyclical-related stocks are holding up well, few are really making much upward progress. There are some pullback opportunities here and there, and to be fair, we are seeing more potential setups in growth land. But at the moment, the market action resembles a kid scribbling on a piece of paper, with jerky movements that don’t persist. Thus, we continue to think you should mostly play it safe, keeping new positions small and holding a generous amount of cash until we see the next sustained uptrend get underway.
This week’s list is mostly turnaround-based, with some strong travel and retail stocks that could be decent entries on dips. Our Top Pick is Urban Outfitters (URBN), which staged a longer-term breakout a month ago, with this first pullback likely buyable.
| Stock Name | Price | ||
|---|---|---|---|
| Alaska Air Group (ALK) | 68 | ||
| Alliance Data Systems (ADS) | 113 | ||
| Callon Petroleum (CPE) | 37 | ||
| Expedia Group (EXPE) | 177 | ||
| Nexstar Media Group (NXST) | 139 | ||
| RH Inc. (RH) | 566 | ||
| SeaWorld Entertainment Inc. (SEAS) | 49 | ||
| Urban Outfitters (URBN) | 37 | ||
| Wayfair (W) | 335 | ||
| ZoomInfo (ZI) | 49 |
The market’s divergent behavior continues, with small growth stocks in particular suffering, but there are still attractive investments, and for investors looking for something in the electric vehicle sector, today’s recommendation is one of them.
As for the current portfolio, I have two sell recommendations, both small, lightly traded stocks that are losing support.
Details inside.
As for the current portfolio, I have two sell recommendations, both small, lightly traded stocks that are losing support.
Details inside.
The market found a little support today, but there’s little doubt that growth stocks remain in a correction and the overall market is coming under pressure. We don’t have a strong opinion on the near-term path, but right now, no real money is being made, so we think less is generally more when it comes to stocks--we’re being patient until this correction finishes up.
That said, there should be some great opportunities on the long side once this correction finishes up, and we spend a lot of space in this issue talking about some indicators we’re watching closely as well as a bunch of names we’re keeping our eye on for potential leaders of the next upmove.
That said, there should be some great opportunities on the long side once this correction finishes up, and we spend a lot of space in this issue talking about some indicators we’re watching closely as well as a bunch of names we’re keeping our eye on for potential leaders of the next upmove.
Updates
We are continuing to fly a caution flag from the Cabot Emerging Markets Timer. We remain in a defensive stance as we wait for some good news to turn investors’ sentiment around.
Investors who subscribe to Cabot Undervalued Stocks Advisor run the gamut from speculative investors who are looking for very short-term profits to buy-and-hold investors who want to build a portfolio full of good, market-leading companies like FedEx (FDX) and Amazon (AMZN).
There continues to be a lot of noise out there regarding Donald Trump, his legal team, trade, tariffs and security threats/manipulation on social media platforms in advance of the upcoming mid-term elections
Stay bullish. We’ve seen an improvement in the evidence during the past week, with growth stocks acting well and more names hitting new highs. We’re moving one of our positions back to buy and our cash position stands at 27%.
The broad market looks healthy. The S&P 500 is close to breaking out to new highs, and the Dow is at its highest level since February, propelled by strong performances from industrial and consumer staples stocks. Energy stocks are still lagging a bit, but everything else looks healthy. We are putting four stocks back on Buy today.
It’s fairly easy to find stock market prognosticators who will tell you to head for the hills, and buy gold along the way. As for me, the market is doing everything that I expected this year, despite the harrowing headlines. Stick with your investment plan.
It’s been a relatively quiet week in our portfolio so there aren’t many stock-specific updates to cover.
Our Buy signal from the Cabot Emerging Markets Timer has turned decidedly negative and most of our stocks are under selling pressure.
We continue to see an unusual amount of rotation in the market, with crosscurrents sending sectors up one day and down the next. However, our portfolio looks healthy. We have a two rating changes today, but overall we are in good shape.
Many investors are aware that over the short-term, a stock share price can bounce all over the place, often with no apparent correlation to a company’s successes.
Even though there was some crazy action in the market last week the bulls remain in charge and many stocks are breaking out to fresh highs.
In recent months, I’ve helped investors unwind some of their Benjamin Graham Value stocks, while keeping those with sound fundamentals and good earnings growth prospects.
Alerts
The top five holdings of this fund are: Googl Call Usd 1275 15/Nov/2019 (7.84% of assets); Fidelity National Information Services Inc (FIS, 7.16%); Microsoft Corp (MSFT, 4.27%); IHS Markit Ltd (INFO.PA, 4.14%); and Air Liquide SA (AI, 4.00%).
This entertainment/media company beat analysts’ estimates by $0.12 last quarter, and five analysts have recently increased their EPS forecasts for the company.
This media and internet company is considering a major spin-off, with the remaining company being the most attractive investment.
I’ve made my contempt for the media rather clear in my weekly commentaries at Cabot Undervalued Stocks Advisor, and in my frequent radio appearances.
The top five holdings in this fund are: Nestle SA (NESN, 2.27% of assets); Roche Holding AG Dividend Right Cert. (ROG, 1.47%); Novartis AG (NOVN, 1.30%); Toyota Motor Corp (7203, 1.11%); and HSBC Holdings PLC (HSBA.L, 1.06%).
There’s been a lot going on lately as earnings season has heated up. With many of the stocks covered in the September and October Issues of Cabot Early Opportunities we have a few updates to get into.
Two more portfolio stocks report good earnings.
The top three sectors in this Value fund are: Technology (22.69% of assets), Healthcare (13.25%) and Financial Services (12.44%).
Three more portfolio stocks report good earnings.
Three portfolio stocks report third-quarter results.
The shares of this mega-tech company are now available in a Direct Stock Purchase Plan.
Two stocks blastoff after reporting earnings.
Portfolios
Strategy
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.