There are definitely some positives among the action out there—growth stocks, for instance, have continued their rally, with many “old” winners finally showing some power in both volume and price (including some names that have poked out to new highs). That said, the overall action in the market remains hectic: Cyclical stocks have cascaded for the most part while growth has ramped, with most major indexes we track now below key support. Moreover, on a daily basis rotation remains intense (like today), with stocks and sectors getting whipped around depending on what’s in favor on a given day. Again, it’s not bearish per se, but the environment is like Jell-O wobbling on a plate, making it tough to pinpoint entries and hold onto stuff. We’re OK with some buying, but until more investors row in the same direction, you should keep it smaller than normal and generally aim for dips.
This week’s list looks like 2020 all over again, with lots of technology and growth earnings spots. Our Top Pick is HubSpot (HUBS), which showed top-notch relative strength during the growth stock correction and has now started to power ahead.
Growth stocks continue to slowly repair the damage, with the evidence rounding into form. However, the trick of actually making (and keeping) much money remains very tough — few stocks are showing persistent moves, and those that rally for two to three weeks tend to back off. Maybe that will change—today was certainly a plus for growth stocks — but the point is the environment remains tricky and challenging.
In the Model Portfolio, we’ve been riding things up and down of late, but tonight are holding what we have. There are a couple of names we’re watching that we would like to own, but again, these have ramped up in recent days so we’ll wait for a little shaking and baking. Open up for all of our latest thoughts.
In the June Issue of Cabot Early Opportunities we take note of the market’s string of all-time highs and accelerating pace of consumer spending.
Against that backdrop we present a batch of stocks that offer exposure to a variety of trends, from retail spending and auto maintenance to consumer lending, customer care for enterprises and even vaccine manufacturing.
SPACs – special purpose acquisition companies – had their moment. For about six months until this spring, they were the hottest thing in the market – hotter even than meme stocks. That ended, though, thanks to a combination of a few poor deals that made institutional investors pull back from supporting SPACs and regulatory crackdowns that have dramatically slowed new blank-check creation. In the Greentech space, however, that retreat means there are some opportunities to be found amid the market detritus. That’s our focus this issue. We sorted through the more than 850 active SPACs in the market, identifying 71 that are ESG focused and then whittling our selections down from there.
These mark our first additions to the Excelsior (“ever upward”) portfolio. Excelsior is our special opportunities portfolio for occasional dips into equities that don’t fit into our regular Real Money Portfolio approach and strategy. The Real Money Portfolio is meant to be fully invested at 12 holdings of equal starting size, a design allowing us to seek market-beating results while containing long-term risk. Our approach in the Real Money Portfolio for each selection is largely the same too – a collection of chart and technical screens bolstered by fundamental evaluations. Excelsior will tend to be riskier: we don’t have a recommended position size among its recommendations (that is, don’t anchor buying to the Real Money Portfolio sizing) and selections often don’t have the trading history to be vetted deeply by technical analysis–as is the case with our SPAC choices. Still, we see SPACs as a type of late-stage venture capital opportunity and there are some very exciting businesses coming to market in solar, EVs and materials. We also discuss ways to grab quick, easy profits in any SPAC. Enjoy!
No issue ranks higher than climate change on our clients’ lists of priorities. They ask us about it nearly every day. -Larry Fink, CEO of BlackRock, the world’s largest asset manager in his annual letter to CEOs.
A 19th Century Japanese print of Ben Franklin’s electrical experiment
This Friday is the expiration of June options, and for the time being it looks like the Profit Booster portfolio will have yet another spectacular month of returns as IGT, PGNY, RRC are trading well above the strike price of the calls we sold, while FNKO is at the strike, which is also a good situation.
The bull market rolls on (though never in a straight line, of course) and Cabot analysts continue to discover great new investments.
Today’s featured stock is an established company that manufactures a very wide variety of sensors for industry, with the automotive industry being number one. Growth prospects are good, and the stock is a bargain.
As for the current portfolio, Broadcom (AVGO) is upgraded to buy, and we’re taking profits in Barrick Gold (GOLD).
Our thoughts on the overall environment remain the same—growth stocks continue to slowly repair the damage, though most stocks aren’t out of the woods yet (many have moved right into some tough resistance), and there remains lots of selling on strength and rotation on a daily basis (cyclical stocks look iffy), so it’s tough to make much progress. All in all, we’re going to keep our Market Monitor at a level 6—we’re close to raising it, but the lack of upside breakouts and the continued chop keep us in a “trust but verify” mode. There are things to like, but we need to see more.
Interestingly, this week’s list is heavy on growth stocks, though finding buy points is tricky. Our Top Pick is DocuSign (DOCU), which has shown excellent accumulation since earnings, though we favor keeping it small and/or trying to get in on dips.
Here is your June Wall Street’s Best Digest issue 842.
Summer is upon us, and I hope you all are making plans to join us at our August 17-19 virtual Summit, entitled Smarter Investing, Greater Profits. You can register here.
The markets are still very bullish, reflected by our barometer, as well as our Market Views section. Energy, of course, is the biggest gainer so far this year. And style-wise, Value Stocks are leading the charge.
The economy continues to strengthen, with manufacturing improving, housing demand continuing to increase, and job creation rising.
Our Spotlight Stock this month is, indeed, sweet—that is, it’s a candy maker! The company made it through the pandemic, broadening its product lines, and showing how it’s managed to survive and prosper for 127 years. My Feature Article provides a bit more industry information, highlighting the continued growth of the confectionary business around the world.
Next, in our Growth section, you’ll find a variety of ideas, from the marijuana, retail, green, and educational sectors. In Growth & Income, our contributors sent recommendations from the chemical, media, food manufacturing, automobile sales, gun manufacturing, and beverage industries.
Our Value ideas feature businesses in the prison and agribusiness arenas. We offer an insurance stock in our Financial Section and a couple of pharmaceutical and medical equipment picks. In Technology, you’ll find a software company, and online platform business, an e-commerce firm, and a semiconductor company.
Our Resources & Energy section are chock-full of midstream, rare earth, precious metals, and utility businesses. And our Low-Priced Stock this month is a company that makes memory products for the computer industry. We also offer sever income ideas in our Preferred Stocks, Income, REITs, and High Yield segment.
Lastly, our Funds & ETFs section includes dividends and healthcare picks.
Please don’t hesitate to send me your feedback and questions. My new address is nancy@financialfreedomfederation.com.
After a mixed performance last week, the market opened significantly lower yesterday, and the Dow and S&P 500 both hit their lowest level since the start of October. One of Cabot’s long-term market timing indicators just turned negative, which tells us it’s time to get more defensive. As a result, we are doing some selling today and moving two position to Hold.
I’m moving another five stocks from Strong Buy to Hold. It’s a normal seasonal pattern in the market that any stock that’s trading at its low point for the year during the fourth quarter will then remain low through the very last days of 2018 due to tax-loss selling. And unfortunately, the stock market has decided to present us with another correction, so most stocks are down in recent weeks.
The market has been bouncing decently during the past four trading days, but our Cabot Tides remain clearly negative and most growth stocks are still in steep corrections. Longer-term we’re still optimistic the bull market will eventually resume, but until then, we’ll be patient. No rating changes to the portfolio tonight.
We’ve had a fierce six-day selloff, but the market has managed to find support and is rebounding this week. But I still advise caution as things are still dicey. Most of the positions in our portfolio are on Hold, but we’re adding one more to that list and selling half of one our weaker positions.
As earnings season unfolds, I’ll be very interested to learn more about the broader capital expenditure landscape. Americans haven’t experienced such a strong economy in many years. And frankly, younger adults have never experienced a strong economy!
I want to cover three things today: (1) possible reasons behind the stock market swoon, (2) what to expect over the next couple of months, and (3) what opportunities to look for both within and beyond our current portfolio.
The headline-making meltdown in U.S. stock markets on Wednesday, when the Dow fell 3.2% and the S&P shed 3.3%, made it clear that investors aren’t just worried about emerging markets.
The yield on the 10-year Treasury hit its highest level in seven years and remains elevated as this week progresses. This interest rate surge has created some unusual ripple effects across growth stocks, utilities, financials, and energy stocks. Thankfully our diversified portfolio is doing well so far and we have no rating changes, but the overall market might lead to some defensive moves in the future.
Stocks are churning in place, appearing unsure of how to proceed this month. The Dow Jones Industrial Average finally retraced its January 2018 record high. Will it advance promptly or establish a trading range? If we look back to recent patterns on the S&P 500 index, which retraced its January high in August, and we presume that the Dow might follow suit, then we’re in for some sideways trading on the Dow.
Coverage of the shares of this interactive fitness company were recently initiated at Bernstein with an ‘Outperform’ rating and at Bank of America, as a ‘Buy’.
With a new government strategy for increasing domestic production and a mine with a long life, analysts expect this lithium producer to grow at a rate of 27.7% next year.
The weakness in growth stocks in general, and cloud-related stocks in particular, continued today, which caused one of our stocks to trip its loss limit.
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.
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.
Current Market Outlook