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.

Today, we are recommending an energy company that is both a traditional energy company but also a transition play.

The company is up over 250% in the past year, but still looks cheap on forward numbers.



Some additional details:

• Historically, the company has grown revenue at a 26% CAGR yet trades at a cheap valuation.
• Inside ownership is high and insiders have been buying as many shares as possible in the open market.
• Revenue and EBITDA are already at record levels.
• My price target implies 100% upside.

All the details are inside this month’s Issue. Enjoy

It’s time to think about investing on the other side of the pandemic.

When the environment normalizes, investors will find the best opportunities in the same place they did before – technology. Growth in technology exponentially eclipses all other industries. And the pace of growth will accelerate as new and game-changing technologies are on the cusp of transforming the world as 5G continues to roll out.



Sure, the cyclical sectors are coming back. There will also be solid growth in other industries. But nothing will compare to the immense growth in technology. The sector will rule the market for many years to come.



Recent stumbles in the sector create an opportunity for the great normalization ahead. In this issue I highlight two portfolio positions perfectly positioned to benefit in both the long and short term.

With June expiration coming next Friday, June 18, the Cabot Profit Booster portfolio is in great shape as all four of our existing positions are either at the strike price that we sold (RRC) or well above it (FNKO, IGT, PGNY).

This week my attention turns to selling a July call against an emerging oil and natural gas star that just broke out to new highs last week.

Current Market Outlook


The holiday-shortened week was a relatively quiet one, with most indexes and sectors mostly meandered in tight ranges. After the prior two and a half weeks of constructive action, we consider the lack of selling a positive; to this point, the bears haven’t really come around for many names despite some decent rallies and a few breakouts. But now the real test will begin—if the former leaders that have run right into some tough resistance can hold firm, if recent breakouts can build on their gains and fresh breakouts can emerge, this rally could gain steam ... but if the sellers return, things could go back in the soup within a few days. Right now, we’re still in the trust-but-verify mode of the rally, slowly increasing exposure but also keeping a close eye to see if cracks show up.

This week’s list has a wide array of stocks, including a few cyclical names that are pushing up after a few weeks of consolidation. Our Top Pick is Marathon Oil (MRO), which showed some real power last week as oil stocks came to life.

Stock Name	Price	Buy Range	Loss Limit
Apellis Pharmaceuticals (APLS)	59	54-56.5	48-49.5
Callon Petroleum (CPE)	48	45.5-48	40-41.5
Discover Financial Services (DFS)	124	118-122	108-110
General Motors Company (GM)	63	62-64	56-57
Jabil Inc. (JBL)	58	55.5-57	51-52
Logitech (LOGI)	133	126-130	112-115
Marathon Oil (MRO)	14	13.0-14.0	11.5-12.0
SeaWorld Entertainment Inc. (SEAS)	58	56-58.5	50-51
United Parcel Service (UPS)	213	209-214	193-196
Vale S.A. (VALE)	22	21.5-22.5	19.3-19.8

The bull market is looking healthier this week, as growth stocks have strengthened after a few months wandering in the wilderness, so I’m happy today to recommend a leader in the hot semiconductor machinery industry.

This addition brings our portfolio to fully invested status, and the good news today is that there’s nothing that needs selling; all our stocks are working!



That, of course, will change, but for now you should enjoy it!



Details inside.

Growth stocks have taken a series of small, positive baby steps during the past three weeks, which, given where things were at early last month, we’ll take. It’s been enough for us to put some money to work.

That said, the environment has a lot of room for improvement; we’re going slow, but will be happy to put more money to work if we see further progress. In the Model Portfolio, we’re averaging up in one of our stocks tonight, but that will still leave us with around 57% in cash.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the June 2021 issue.

Many of our recommended names are at or approaching our price targets. The decision to keep or sell isn’t easy in a strong market. Our patience is being tested (in a good way).



Few people would attend the Indy 500 and think about investment horizons. But, such is the world that your chief analyst inhabits. The race itself was a thrill, as always. It was also a showcase of different investment horizons, featuring that of new track owner Roger Penske.



Earning season has concluded, so it has been a slow period for company-specific news, although Tyson (TSN) announced the surprise departure of its new CEO. Some companies, including Bristol-Myers (BMY), Cisco (CSCO) and Dow (DOW) are presenting at various investor conferences. These can be worthwhile to watch and are free to the public, with replays available in addition to the live presentations.



Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the 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.



Thanks!

This month we’re jumping into a little-known company that makes and sells pop culture products.

It’s sort of an odd duck, but when you dig below the surface you find compelling products and interesting market exposures, including to the nascent Non-Fungible Token (NFT) market, which has exploded in trading value over the last year.



Revenue growth is above 30%, and the chart is strong.



Enjoy!

The market has strengthened again, which is great for our three open covered call positions, all of which are trading above the strike price of the call we sold. That being said, a sideways market is also fine for our volatility selling strategy, that is focused on buying the strongest stocks, while keeping the portfolio diversified.

The iffy action we saw among growth stocks in September has turned into a severe selloff so far in October. Our Cabot Tides are still neutral, but we have to be cautious given the recent volatility. We did some selling yesterday so no further changes tonight.

The stock market managed to tread water for most of September but we’re seeing some renewed rotation as we start October. Selling is prevalent in growth stocks the past two days but the portfolio is holding up just fine with the short-term volatility. I have two ratings changes, moving one position to Hold and putting one back on Buy.

Big picture, things still look reasonably good out there. That said, we’ve seen persistent, but not severe, weakness in small-cap stocks since the beginning of September.

The iShares EM Fund (EEM) has climbed back atop both its 25- and 50-day moving Buy signal from the Cabot Emerging Markets Timer.

A few days ago, I reviewed the price charts on the 59 stocks in my “Waiting in the Wings” list – a list of undervalued growth stocks that I might add to these portfolios at some point. What really struck me was that less than 15% of them have attractive price charts right now.

The undercurrents we felt in the market last week bubbled to the surface this week as value-oriented sectors opened a modest performance gap as compared to growth-oriented sectors.

Remain bullish, but keep your antennae up. We’ve seen repeated bouts of selling in leading growth stock so far this month, but a few yellow flags have appeared. We’re holding our 16% cash position and placing two positions on Hold tonight.

The market has calmed down a bit as the Nasdaq is virtually unchanged in the last week and the Dow, meanwhile, made some decent strides, gaining 1% to reach a new six-month high. Several of our stocks have taken encouraging steps forward since last Wednesday and I have no rating changes today.

In reviewing the charts of the major U.S. stock market indexes, I noticed that the Dow, the S&P 500 and the NASDAQ each look as if somebody is slogging uphill in deep thick mud. That’s a bit like a “two steps forward one step back” pattern.

Small caps made no net new progress over the past week but we definitely saw some movement under the surface. This week we’re pulling back just a little given some softening in momentum stocks. A few positions were moved to hold, but for now we’re not cutting anything from the portfolio.

The yellow flag is still out from the Cabot Emerging Markets Timer, but there has been a little bump of interest from buyers. There are no changes in today’s update.

The Nasdaq has sold off last week but thankfully the selling was limited to growth stocks and like the Dow, our portfolio has been largely unscathed. There’s no reason to panic and we’ll watch for any more signals of a longer or larger correction. Two rating changes today with one position going back on Buy and another moving to hold.

Two portfolio stocks delivered strong earnings beats are their recommendations are raised to Strong Buy. A third stock delivered a strong earnings beat.

Wells Fargo recently initiated coverage on this luxury consignment website stock with an ‘Outperform’ rating.

One portfolio stock is up on news of a successful drug trial and another reported a strong earnings beat.

Coverage of the shares of this alcoholic beverage producer was recently initiated at MKM Partners with a ‘Buy’ rating, and 10 analysts have increased their EPS estimates for the company in the past 30 days.

Four analysts have increased their EPS forecasts for this financial firm in the past 30 days.

As we’ve seen in recent days, the major indexes are a bit soft this morning, with the Dow down 73 points and the Nasdaq down 15 points.

Baker Hughes changes their corporate name and stock symbol. And, two stocks report third-quarter earnings beats.

This master limited partnership is benefiting from the growth in natural gas exports, but is trading at a discount.

There are a couple quick things to cover today. First, the introduction in the email that went out introducing yesterday’s Issue was placeholder text from a past update. I apologize for the error and hope it didn’t seem too random. Second, I’ve received questions about the stocks in the Special Reports that you have access to as subscribers to Cabot Early Opportunities.

Two stocks report earnings and two more are rising again.

The top five holdings in this ETF are: Abbott Laboratories (ABT, 13.40% of assets); Medtronic PLC (MDT, 13.21%); Thermo Fisher Scientific Inc (TMO, 10.57%); Danaher Corp (DHR, 7.91%); and Intuitive Surgical Inc (ISRG, 4.66%).

It’s been a tough few months for cannabis investors, but no downtrend lasts forever, and yesterday’s blast-off by Aphria (APHA), which sparked buying across the sector, is a sign that the worst has almost certainly passed.

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.