There remains a lot of choppy action, where it seems like one stock does well and another hits a pothole. But we also continue to see improvement among growth stocks, with more launching pads and some names beginning to pop out to new highs. All in all, we’re paring our weakest names while holding (or averaging up in) our best performers. Tonight, we’re holding our 40% cash position but are looking to add a new holding soon if things hold together.

The marijuana sector peaked in February, bottomed from late March to mid-April, and since then has been building a base, preparing for a resumption of the big advance.

Fundamentals in the industry remain terrific, and the trend toward legalization in the U.S. continues, so it’s only a matter of time before these stocks enjoy their next upwave—perhaps as second quarter reports begin to be released next week.



In the portfolio today the one small change is that we’ll sell half our position in TerrAscend (TRSSF) and move the proceeds into Innovative Industrial Properties (IIPR).



Full details in the issue.

It’s been a sideways summer market. Perhaps earnings will change that. But summer markets have a tendency to do whatever they were doing before investors stopped paying attention in the dog days of August.

In this issue I highlight a high-paying REIT that has been bucking the trend and moving higher in this market. It presents a timely buying opportunity that can create a call writing opportunity in a short amount of time.



Few income stocks have had consistent upward momentum in this market, but those that do generally fetch higher call premiums. The target buy is a fantastic REIT that pays a high dividend and continues to move higher. It should provide a great income opportunity in an otherwise lackluster summer market.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the August 2021 issue.

With the stock market’s remarkable strength over the past five and ten years, most stocks have produced at least reasonable gains, such that even out-of-favor stocks aren’t down-n-out stocks. We look at attractive turnarounds among stocks with flat to negative five-year returns.



SPACs, or special purpose acquisition companies, are all the rage. While the group has rightfully earned the disdain of value investors, there are some post-SPAC companies worth a closer look. We highlight five.



Our featured Buy recommendation, Walgreens Boots Alliance (WBA), is viewed as a broken growth company. While its challenges are clear, its shares now trade at a bargain valuation, yet the company has sturdy finances and a new outsider CEO. This combination, combined with a sustainable (and growing) 4.1% dividend yield that pays investors to wait, makes it an attractive turnaround candidate.



During the month, we moved Macys (M) to a Hold and raised our price target on Duluth Holdings (DLTH) from 17.50 to 20.



Please join us for the our 9th Annual Smarter Investing, Greater Profits Online Conference, held on Tuesday, August 17 through Thursday, August 19. You can see presentations by all of our analysts, which will include updates in their areas of expertise and discussions of their best picks.



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.

The overall market continues to be, well, wobbly. After a 2.1% loss last Monday, the sharpest decline in roughly 10 months, the bulls took charge at the opening bell last Tuesday and have yet to give up. Last week, the S&P 500 climbed 1.92%, the Dow advanced 1.07% and the Nasdaq surged 2.76%.

Current Market Outlook


Looking at just the major indexes, things couldn’t be better right now. The S&P 500 and Nasdaq are both at all-time highs, while growth stocks look good for the most part. But a peek below the surface reveals that some crosscurrents still abound. There’s still an above-normal amount of Nasdaq stocks making new 52-week lows, while new highs aren’t as expansive as they could be—especially given the strength of the leading mega-cap names. Meanwhile, only around half of S&P stocks are above the 50-day line, and the advance-decline line could be stronger. That said, we’re still seeing lots of nice setups in growth stocks, and while we likely haven’t seen the end of earnings-related volatility, the latest earnings season has been mostly kind to growth stocks. We’re moving our Market Monitor to a level 6 but are keeping our eyes open for what comes next.

This week’s list includes a nice mix of sectors, including a few that have had spectacular earnings reactions. Our Top Pick is Trane Technologies (TT), an HVAC company benefiting from the return-to-office trend.

Stock Name	Price	Buy Range	Loss Limit
Arvinas, Inc. (ARVN)	95	92-96	84-85
ASML Holding (ASML)	754	730-748	685-700
AutoNation (AN)	116	114-116.5	104.5-107
BioNTech (BNTX)	286	275-286	250-257
Dropbox (DBX)	31	30-31	29-29.5
HCA Healthcare (HCA)	246	240-246	220-225
Morgan Stanley (MS)	97	94-97	88-90
PTC Inc. (PTC)	151	148-152	137-140
Snap Inc. (SNAP)	76	75-77	68-69
Trane Technologies plc (TT)	200	196-201	185-188

What a difference a week makes! Since our last issue, stocks have recovered from their worst trading day since March to reach new all-time highs. So, the bull market remains very much intact, though some growth stocks continue to wobble. Fortunately, today’s featured stock combines both elements of growth and value – and unlike many traditional growth stocks right now, it’s hitting two-year highs.

Details inside.



Lastly, I hope you’ll join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible lineup of experts ready to share their best picks.

While concerns over the Covid Delta variants are escalating, the market has steadied as the week progressed as 85% of S&P 500 companies have exceeded analysts’ Q2 earnings expectations, according to FactSet. Still, investors remain moderately cautious and relatively risk averse. Today’s new recommendation is an overlooked stellar fund run by none other than value investor Bill Ackman.

In the July Issue of Cabot Early Opportunities we briefly consider some of the factors making right now a particularly difficult time to make investing decisions, even though markets are near record highs.

To help make life a little easier we once again seek comfort in diversification. This Issue features dissimilar stocks that are bound by a common denominator; each company is either in an early stage of its life cycle, or early in a phase of growth/business model transition that should drive market-beating returns over the coming quarters.



Enjoy

The Scale of the Problem
How big is the energy transition the world needs to undergo? The decline of carbon dioxide emissions last year (a drop of 6.3%) was the sharpest decline since WWII. The world needs 30 more years of that magnitude in a row to constrain global warming to “just” 2 degrees Celsius.

The European Union wants to do its part. It announced a stricter carbon program, aiming to slash emissions by 55% by the end of the decade and to more than double E.U. renewable use, with the expectation it may do away with carbon altogether after 2030. It also plans a carbon-adjusted border tax for goods, based on home country emissions. Domestically, we’re still waiting for an infrastructure bill, but are heartened by the creation of a federal platform for instant solar permits. The Solar Automated Permit Processing program integrates local and federal databases to streamline approvals of rooftop solar projects, which can eliminate a large pain point of time and money. Can these programs keep the growth going? Renewable energy use globally rose 14% in 2020. It needs much more of the same.



The more immediate problem for us is the market, which is suffering from delta variant worries. Yet a choppy market (we’re not in a bear market, yet) sows the seeds of the next rally. This issue we look at three stocks – Ameresco (AMRC), Chipotle Mexican Grill (CMG) and General Motors (GM). They each have a combination that makes future leaders – real sales, profits and a clear growth trajectory.



You’ll see for this issue of SX Greentech Advisor that we’ve tweaked our format to make information more accessible – shorter stock write-ups with bite-sized sections and more charts. It’s part of our aim to be nimbler. Please let me know if you have any feedback on the format, or any other questions or comments, at brendan@cabot.net. There is still time too to join me and my fellow Cabot Wealth analysts for our 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19, where we will present our look ahead and some of our best picks for the next year.

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 Emerging Markets Timer (EEM) has managed to maintain its positive stance this week as most of our positions moved forward. While this is a good sign, I remain somewhat cautious and awaiting a stronger signal to put more of our cash to work.

The market got a nice bounce off the Christmas Eve lows. It’s up about 10% since then. But the bounce back is leveling off. If the market continues to recover here, it will be in a guarded and cautious state for another year or two. Beyond that, there will be fantastic opportunities to get aggressive. But, for now, I will remain cautious but not fearful.

Crista is adding a new stock to the Growth Portfolio, it’s one of the world’s largest producers of nitrogen products, serving customers on six continents.

Crista continues to believe this stock is greatly undervalued.

Three analysts have recently increased their EPS estimates for this e-commerce company.

This portfolio stock shares are down 7% as investors worry about a potential pharmaceutical competitor.

Our second recommendation is profit-taking due to a buyout.

Our first idea is an oil company that is expected to grow more than 13% this year and has a current annual dividend yield of 5.55%, paid quarterly.

Not a lot has changed since last week’s issue—overall, the cannabis sector remains in a correction—but there are a few stocks worthy of an update.

In the past 30 days, 17 analysts have raised their EPS estimates for this medical device company.

This preferred stock is backed by one of the largest banks in the U.S.

The shares of this healthcare information services company were just upgraded by Guggenheim to ‘Buy’ and seven analysts have increased their EPS estimates for the company in the past 30 days.

Small caps have been lagging, and have failed to return to their 2018 highs, for too long. If the asset class can get back in gear, we’ll have more things working in the market for early-stage investors.

Small caps have been lagging, and have failed to return to their 2018 highs, for too long. If the asset class can get back in gear, we’ll have more things working in the market for risk-tolerant investors (that’s us!).

This retail stock reported fiscal 2020 third quarter results (January year end).

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.