Despite the current tug of war between cyclical and technology stocks for market leadership, financial stocks are likely the best positioned stock sector in the near term as well as for the rest of the year. They offer a complete package of value, momentum and position in the economic cycle.

Financials tend to thrive in the early stages of an economic cycle, which is where we are now. Financial companies also love rising interest rates. Interest rates are already rising and all but certain to keep climbing amidst a booming economy and trillions of stimulus dollars.



While the financial sector has been the second best performing sector on the S&P YTD, it isn’t as overextended as energy. It’s is only up about half as much so far this year.



In this issue I highlight two fantastic financial stocks for purchase. These stocks offer the very rare combination of value and momentum. It’s a great time to get in cheap ahead of great opportunities to write covered calls for a high income in the weeks and months ahead.

Despite the market having some bumpiness, March was another great month for the Cabot Profit Booster portfolio as we closed four positions for the following profits:

The market remains in an uptrend and, while the divergences and rotation of recent weeks haven’t been totally erased, our diversified portfolio is doing well and Cabot analysts continue to find attractive investment opportunities.

In our current portfolio, the only change this week is an upgrade of Sea (SE) to Buy.



As for today’s new recommendation, it’s in an out-of-favor sector that has the potential to deliver real upside surprises as the global economy emerges from COVID times.



Details inside.

Current Market Outlook


There were some intra-week ups and downs, but overall, not much changed with the evidence last week—the major indexes mostly closed down 0.5% to 1.5%, which keeps the broad market in an uptrend but also means growth stocks and the Nasdaq are still in corrections and consolidations. With many names now five to seven weeks into new launching pads, we’re looking for definitive signs that the buyers are coming back for growth stocks—and indeed, we have seen some encouraging action during the past two sessions—but it’s too soon to conclude the environment is changing. Thus, we’re sticking with the same stance: Some small buys of strong stocks on pullbacks is fine, but we’d stay relatively close to shore until the bulls prove that the buying pressures are spreading and more solid entry points emerge.

This week’s list has something for everyone, whether you’re looking for different sectors or setups. Our Top Pick is LGI Homes (LGIH), which has reemerged on the upside and could be leading a new group move in the homebuilders.

Stock Name	Price	Buy Range	Loss Limit
Aclaris Therapeutics (ACRS)	28	25.5-27.5	21-22
Alcoa (AA)	30	29-31	25.5-26.5
Cimarex Energy (XEC)	60	56-58.5	51-52.5
IAC/InterActiveCorp (IAC)	248	237-250	214-220
Jack in the Box (JACK)	115	111-115	100-102
LGI Homes (LGIH)	142	138-143	123-126
Spirit AeroSystems (SPR)	48	46-49	41.5-43
Steel Dynamics (STLD)	47	44.5-47	40.5-41.5
TripAdvisor (TRIP)	54	51-54	45-47
Williams-Sonoma (WSM)	180	167-173	148-152

Markets seemed to rotate and flatten this week, and the Explorer portfolio was relatively steady as well. The Federal Reserve pledged to keep its spigot open by continuing to buy $120 billion per month of Treasury debt and mortgage-backed securities and hold short-term interest rates near zero through 2023. This is encouraging to markets but unnerves me a bit as we already seem awash in liquidity.

In our new recommendation today, we explore a new technology that could shift the electric vehicle market into another gear.

Here is your March Wall Street’s Best Digest issue 839.

Happy almost Spring!



The daffodils are in blooming here in Tennessee, COVID-19 shots are reaching 2 million per day, and many children are going back to school full-time. I think that is certainly a nice beginning to the warmer season.



And the markets are continuing to surpass expectations, with the Dow Jones Industrial Average hovering at almost 33,000. We don’t know how long this bull run will last, but as you can see from our Advisor Sentiment Barometer and Market Views, investors and contributors continue to be mostly optimistic.



We begin this issue with our Spotlight Stock, the nation’s largest fully regulated, natural gas-only distributor. My Feature article further highlights the stock and summarizes the current state of the industry. We move on to Growth stocks, where we include ideas in the medical education, construction materials, and retail industries. In Growth & Income, you’ll find recommendations for transportation, pizza, and industrial companies.



This month, Value stocks have come rocketing back, and here we feature a food and a home building business. Financial stocks are also doing better, and our contributors offer several insurance companies and a Business Development firm for your review. Our Healthcare picks are focused on opioid management and COVID-19.



In Technology, you’ll find companies from the cybersecurity, wireless, semiconductor, credit scoring, hardware, and artificial intelligence sectors. We have quite a few offerings for you from the Resource & Energy industries, including miners, royalty companies, power conversion, timber, and utilities sectors. We also offer one Low-Priced stock for your consideration, heralding from the mobile device solutions business. And our Preferred Stock is backed by a banking institution.



Lastly, our Funds & ETFs section includes a couple of bond ideas, as well as a small cap fund.



I’m looking forward to getting my garden started soon and hope that you will also have much to look forward to this season. Please don’t hesitate to send me your feedback and questions. My address is nancy@financialfreedomfederation.com.

In the March Issue of Cabot Early Opportunities we offer up a diverse mix of growth stocks with exposure to vastly different markets, all of which should be healthy for the duration of 2021.

While it’s been a rough month since the February Issue and investors are still on edge, stimulus checks should be hitting the economy soon and the broader economic picture is a heck of a lot better than even a couple months ago.



Still, on balance it’s best to keep new buying on the small side and average into these positions as the market seeks the firm footing that is needed to launch a sustained advance higher.



Enjoy!

This week is the expiration of March options, and the good news is we appear to be headed to full profits on four of our March positions (JCI, SONO, GS, APHA) and are in good shape with our one position that is unlikely to be called away Friday (DT). Expect to hear from me Thursday afternoon or early Friday morning on these expiring covered calls.

The market rallied nicely last week, and growth stocks joined the crowd (which is good), but today’s strong open didn’t last and now we’re seeing deterioration across the board, reminding us that the market is a two-way street. Plus, in the background is the fact that investor sentiment is so high, and the economic news has been so good, that eventually we’re going to need a big correction.

Still, looking at the stocks in our portfolio, I see no need for any ratings changes today.



As for today’s new recommendation, it’s a growth stock that hit a new high just last Friday and has a long runway of growth ahead of it as its young industry expands.



Details inside.

The overall market and most growth stocks have stabilized in recent days but there are still some yellow flags. Our 50%-plus cash position is a bit too high so we’re going to change that tonight by adding one new position and buying a bit more of another.

Earnings season has seen some huge reactions, and this week brought the drama to our portfolio. There have been sharp selloffs, but we’re not going to overreact. A few rating changes to the portfolio today, but overall we’re in good shape.

Our previous moves to put the portfolio in a defensive stance have given us some protection. But today’s slump in emerging market stocks has put our Buy signal in question and further weakened many of our stocks.

In recent days, there’s been a proliferation of articles and news commentaries about a tentative shift in the market’s multi-year preference of growth stocks over value stocks.

It’s been an eventful week in the market, as some big earnings blowups worsened the ongoing exodus from leading growth stocks and big tech names. We’ve also seen selling in small- and mid-cap stocks. As we navigate the rotation in the market, one of our positions broke down over technical weakness and we are selling 1/3 of that today.

This earnings season, shares of Facebook (FB), Twitter (TWTR) and Netflix (NFLX) got pummeled by investors, and mostly for good reason.

There was a lot going on in the market this week but news flow from our portfolio holdings was relatively quiet.

We’re going through a period of tremendous stock price volatility, very similar to the aftermath of a correction in the broader stock market, except this particular price action is affecting random individual stocks and industries.

Growth stocks snapped back today after yesterday’s blood bath, and our trend-following market timing indicators remain positive. Thus, we’re sticking with a heavily invested position, though are keeping a close eye on growth stocks and their reactions to earnings during the next couple of weeks.

There are no rating changes in today’s update.

We’re going to be laser focused on earnings for the next three weeks given that 11 of our positions will report within that time frame.

Emerging market stocks have been attempting to bounce after a sharp selloff in late June, but haven’t been able to hold up to investors’ fears of a trade war between the U.S. and China.

This ETF is a bet on declining interest rates. It has a current annual yield of 2.33%, paid quarterly.

Additional thoughts on one portfolio stock after reporting

This software company that’s changing the world through digital experiences moves from Hold to Buy.

This technology company is expected to grow at an annual rate of 20% over the next five years.

One of our portfolio stocks reported this morning and will host a conference call at 8:30 a.m. I’m including a quick overview now and will detail any learnings from the conference call later.

Gurus Ken Fisher and Jim Kramer have recently touted this cyclical stock, based on its global prospects.

This bioprocessing specialist reported Q3 results this morning that should be good enough to keep the stock stable, and hopefully get it moving back in the right direction.

Four portfolio stocks report earnings.

This annuity company is expected to grow at an annual rate of 15.39% over the next five years.

Three portfolio stocks report earnings and a fourth stock moves to Hold.

Our second recommendation is a sale of a previous idea

Our first idea is an energy company that has a current dividend yield of 3.12%, paid quarterly.

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.