Issues
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The stock market was under a bit more selling pressure last week as investors seem to be acting negative, even in response to positive earnings results. Unfortunately, the volatility shook us out of our Coeur Mining (CDE) covered call position. We won’t get every trade right, but that highlights the importance of risk management, especially in turbulent markets. This leads me to this week’s Cabot Profit Booster recommendation from a somewhat more defensive sector.
Welcome to Wall Street’s Best Stocks! We are thrilled that you have joined us on this journey to find undervalued growth stocks that offer great upside potential.
In this monthly newsletter, our goal is to add to your knowledge about the markets while helping you make money. We’ll do that by leveraging our combined years of market expertise to uncover stocks in a variety of industries to help you build a diverse portfolio of growing wealth. We’ll tell you how to buy the stocks, giving you both our target price, as well as a stop-loss strategy.
Each month, we’ll also give you our take on the markets and keep you up to date on our stocks, including any important news that may affect our view of the stocks, as well as price and rating changes. And should an event occur that requires immediate notification to you, in between issues, we will send you an email containing all the information you need to know.
In this inaugural issue, you’ll see that we’ve already built a base portfolio, which will be augmented each month with a new stock. Right now, the market has risen so quickly that the stocks in the existing portfolio are too pricey to enter, but keep your eyes glued to your email, in case we see an opportunity to add shares. And, of course, in each monthly issue, we will update those ratings with either Buy, Hold, or Sell.
As for the markets right now, we are very bullish, but cautious. We believe these are markets that require judicious stock-picking, not the dartboard approach, and we will be very diligent in our selections.
The economy is beginning to gain strength, and as more of our population is vaccinated, we should see some great opportunities in industries and sectors that were hit pretty hard by COVID-19.
We are ready to roll, and are looking forward to bringing you some great investment opportunities.
Happy Investing!
Nancy Zambell and Kate Stalter
In this monthly newsletter, our goal is to add to your knowledge about the markets while helping you make money. We’ll do that by leveraging our combined years of market expertise to uncover stocks in a variety of industries to help you build a diverse portfolio of growing wealth. We’ll tell you how to buy the stocks, giving you both our target price, as well as a stop-loss strategy.
Each month, we’ll also give you our take on the markets and keep you up to date on our stocks, including any important news that may affect our view of the stocks, as well as price and rating changes. And should an event occur that requires immediate notification to you, in between issues, we will send you an email containing all the information you need to know.
In this inaugural issue, you’ll see that we’ve already built a base portfolio, which will be augmented each month with a new stock. Right now, the market has risen so quickly that the stocks in the existing portfolio are too pricey to enter, but keep your eyes glued to your email, in case we see an opportunity to add shares. And, of course, in each monthly issue, we will update those ratings with either Buy, Hold, or Sell.
As for the markets right now, we are very bullish, but cautious. We believe these are markets that require judicious stock-picking, not the dartboard approach, and we will be very diligent in our selections.
The economy is beginning to gain strength, and as more of our population is vaccinated, we should see some great opportunities in industries and sectors that were hit pretty hard by COVID-19.
We are ready to roll, and are looking forward to bringing you some great investment opportunities.
Happy Investing!
Nancy Zambell and Kate Stalter
Current Market OutlookAfter one of the wildest weeks in months, you’ve probably seen countless articles talking about the action and the reasons for it. To us, though, it’s what happens during the next few trading sessions that will count most—right now, the intermediate-term trend of the major indexes is up, though it’s more of a mixed bag for leading stocks (both growth and cyclical). In our view, there’s been enough iffy action to warrant some action; we’re moving our Market Monitor down to a level 6 in today’s issue and have a fair number of sells. But what comes next will count most, with a strong, broad rebound (including some positive earnings reactions) likely boding well, while an inability to bounce/further selling possibly putting a nail in the coffin of the post-November advance. For now, we’re paring back and tightening stops but still giving most of our winners a chance to hold support and resume their advances.
This week’s list has a surprising number of solid charts given the recent turmoil, though we generally still favor buying on dips or some tightening action. Our Top Pick is PagerDuty (PD), which is refusing to budge.
| Stock Name | Price | ||
|---|---|---|---|
| Affiliated Managers Group, Inc. (AMG) | 114 | ||
| Aphria Inc. (APHA) | 13 | ||
| Axon Enterprise, Inc. (AXON) | 166 | ||
| Marvell Technology Group (MRVL) | 53 | ||
| Matador Resources Company (MTDR) | 16 | ||
| The Michaels Companies (MIK) | 15 | ||
| Novavax, Inc. (NVAX) | 269 | ||
| PagerDuty (PD) | 51 | ||
| Penn National Gaming (PENN) | 104 | ||
| Redfin (RDFN) | 75 |
The market’s main trend remains up, and thus I continue to recommend that you be heavily invested.
However, last week’s GameStop affair has increased the risk of a well-deserved major correction and thus for the second week in a row, I’m recommending a slightly conservative stock with less downside potential—and a small dividend.
As for our current holdings, there are no obvious bad apples, but we must sell something to keep the portfolio a proper size and the victim today is our Brazilian Water company SABESP (SBS).
Details inside.
However, last week’s GameStop affair has increased the risk of a well-deserved major correction and thus for the second week in a row, I’m recommending a slightly conservative stock with less downside potential—and a small dividend.
As for our current holdings, there are no obvious bad apples, but we must sell something to keep the portfolio a proper size and the victim today is our Brazilian Water company SABESP (SBS).
Details inside.
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Risk has been rising for a while, and this week, we’ve seen some wild action along with some abnormal selling. That said, we haven’t seen a rash of breakdowns, either, so we’re moving gradually--we pared back some earlier this week, leaving us with 27% in cash, but we’re also willing to give our stocks a bit of rope as we wait to see how this plays out. As always, we’re flexible when looking ahead, and are willing to put money to work if this morphs into yet another shakeout, or pare back further if the sellers stay at it.
In tonight’s issue, we go over all our stocks in depth, write a piece about the marijuana industry and talk about a couple of intriguing individual stocks that have been setting up for months and could be ready to go if the market can find support.
In tonight’s issue, we go over all our stocks in depth, write a piece about the marijuana industry and talk about a couple of intriguing individual stocks that have been setting up for months and could be ready to go if the market can find support.
The S&P 500 is making yet another new all time high. The index has risen 72% since last March and over 17% just since the beginning of October. That’s amazing performance in a short amount of time.
I’m positive on the market for the rest of this year as a full recovery along with low interest rates and massive stimulus should be very positive for stocks. But the market never goes straight up. And a selloff is overdue. It would present a buying opportunity ahead of a promising year.
While I am increasingly cautious in the near term, there are very select places where great value can still be found. And even fewer that historically move independently of the overall market.
In this issue I highlight a stock that moves to its own drummer and not with the market. It is near the low point of its range in a long-term uptrend facilitated by rapid growth in its business. The situation presents an ideal time to buy into the stock now and write calls later.
I’m positive on the market for the rest of this year as a full recovery along with low interest rates and massive stimulus should be very positive for stocks. But the market never goes straight up. And a selloff is overdue. It would present a buying opportunity ahead of a promising year.
While I am increasingly cautious in the near term, there are very select places where great value can still be found. And even fewer that historically move independently of the overall market.
In this issue I highlight a stock that moves to its own drummer and not with the market. It is near the low point of its range in a long-term uptrend facilitated by rapid growth in its business. The situation presents an ideal time to buy into the stock now and write calls later.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the February 2021 issue.
This month we look at energy pipeline stocks. These companies are heavily out of favor, yet a secular shift in their strategic priorities may finally restore their appeal. We list five that look attractive.
We also explore some bargains in the United Kingdom. This island nation is dually challenged by Brexit and the pandemic. We highlight seven stocks that have company-specific turnarounds that look promising.
Our feature recommendation is Viatris (VTRS). Created through the recent merger of Mylan and Pfizer’s Upjohn division, this company is now one of the world’s largest generic pharmaceutical manufacturers. Viatris should generate stable revenues and solid free cash flow, but investor skepticism is high. With the shares trading at a low 4.3x earnings, the step-up in leadership quality and transparency, and an attractive 5.2% dividend yield, the shares look poised for considerable gains.
We also include comments on recent price target and ratings changes, including our earlier sell recommendation on DuPont.
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 energy pipeline stocks. These companies are heavily out of favor, yet a secular shift in their strategic priorities may finally restore their appeal. We list five that look attractive.
We also explore some bargains in the United Kingdom. This island nation is dually challenged by Brexit and the pandemic. We highlight seven stocks that have company-specific turnarounds that look promising.
Our feature recommendation is Viatris (VTRS). Created through the recent merger of Mylan and Pfizer’s Upjohn division, this company is now one of the world’s largest generic pharmaceutical manufacturers. Viatris should generate stable revenues and solid free cash flow, but investor skepticism is high. With the shares trading at a low 4.3x earnings, the step-up in leadership quality and transparency, and an attractive 5.2% dividend yield, the shares look poised for considerable gains.
We also include comments on recent price target and ratings changes, including our earlier sell recommendation on DuPont.
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.
2021 kicked off with a bang, as investors small and large poured money into marijuana stocks in anticipation of growing legalization, so our portfolio is off to a fine start.
But the threat of a downturn is ever-present, and the longer the bull market runs, the greater my unease.
Still, I can’t argue with the trend, which by all measurements remains up, so I’m keeping the portfolio fully invested. And if you’ve got cash, the softness of recent days is now presenting some buying opportunities!Full details in the issue.
Full details in the issue.
But the threat of a downturn is ever-present, and the longer the bull market runs, the greater my unease.
Still, I can’t argue with the trend, which by all measurements remains up, so I’m keeping the portfolio fully invested. And if you’ve got cash, the softness of recent days is now presenting some buying opportunities!Full details in the issue.
Full details in the issue.
Updates
Remain cautious. The market is doing more chopping than declining in recent weeks, and because of that, a couple of good days on the upside could actually turn the intermediate-term trend up.
The major indexes have mostly moved sideways since our last update, but volatility remains high. The past week also brought a slew of earnings reports, and some big reactions, so I have three rating changes today.
With rapid adoption of cloud-based technologies, subscription software and online advertising, communication, commerce, etc., it’s apparent that technology companies play an increasingly important role in the global economy.
The iShares EM Fund (EEM) has been through a bad week, pulling it decisively below its 25- and 50-day moving averages. It’s a clear red light, and we’re taking action to reduce our exposure while we await both quarterly earnings reports from our holdings and a return of the buyers to emerging market stocks.
The stock market correction continues. It’s a normal correction that arrived after a 15-month bull run. As you hear newscasters attribute the market’s ups and downs to daily news stories, please know that the market bounces around, regardless of what topics are being highlighted en masse by the media.
I find myself shaking my head when I read the words Efficient Market Theory or Efficient Market Hypothesis (EMH), because my experience doesn’t jive with that concept.
Small caps have recovered nicely over the last three weeks and the S&P 600 Small Cap Index is bumping up against resistance at 980 for the third time in 2018.
In today’s portfolio one stock moves from Buy to Hold. Another rose to its target sale price of 14 and is now a sell, and one moves from Hold to Sell at 84.
Do a little buying, but continue to keep a good chunk of cash on the sideline. The market’s evidence has definitely improved recently, though our Cabot Tides have yet to turn positive—in essence, the overall trend is neutral, though many growth stocks are setting up well.
It’s been a constructive week for the market, and for our portfolio. After bouncing off its 200-day moving average two weeks ago, the S&P 500 turned positive for the year yesterday, its first return to the black in four weeks.
It’s earnings season, first featuring bank stocks, then oilfield service companies a week from today. Most of the other companies in our portfolio won’t report results until early May. Others operate on different fiscal cycles.
Small and large cap indices are up around 2.4% from Friday’s close and the portfolio is up almost 5%.
Alerts
This preferred stock is issued by a large regional bank and pays above average yields.
Our second recommendation is a sale of a company whose guidance has faltered.
The shares of our first idea today were just initiated with a ‘Buy’ rating at Jefferies. Our second recommendation is a sale of a company whose guidance has faltered.
While this company is straightening out its financial snafu, the shares are trading at bargain levels and analysts are predicting 30% annual growth over the next five years for the company.
Continue to step lightly. The overall market is still positive, but it’s clear that the buyers aren’t in firm control—the environment is news driven and rotational, with few stocks hitting new highs.
Analysts are forecasting annual growth of 43.9% next year for this tech company.
The shares of this transportation company were recently upgraded by KeyBank to ‘Overweight’.
In the broad market, all is well, as all trend-following indicators are positive, and the number of stocks hitting new lows has been minuscule in recent days.
Coverage of the shares of this industrial and energy services provider were recently initiated by Credit Suisse with an ‘Outperform’ rating, and upgraded by Raymond James to ‘Outperform’.
Our first idea is a semiconductor industry company that beat analysts’ EPS estimates by $0.14 last quarter.
This tech company is seeing interest from some big pockets on Wall Street.
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.