Issues
Today, we are recommending a classic re-opening play.
Our latest recommendation operates golf courses as well as “entertainment” golf venues (high tech driving ranges). Traditional golf is booming and “entertainment” golf will boom in 2021 as vaccine penetration continues to increase and life returns to normal.
Some additional details:
All the details are inside this month’s Issue. Enjoy!
Our latest recommendation operates golf courses as well as “entertainment” golf venues (high tech driving ranges). Traditional golf is booming and “entertainment” golf will boom in 2021 as vaccine penetration continues to increase and life returns to normal.
Some additional details:
- The company will roll out its new concept (modern adult mini golf) and expects strong revenue growth.
- Insider ownership is high, and there has been recent insider buying.
- Downside is limited given asset value of golf operations business and existing entertainment venues.
- My price target implies 100% upside, but in my bull case scenario, we could see ~250% upside.
All the details are inside this month’s Issue. Enjoy!
The Cabot Profit Booster portfolio continues to be in the right stocks, even as sector rotation intensifies and countless stocks have come under intense selling pressure. This is a great situation, and sparked a great question from a CPB subscriber:
The market’s main trend remains up and thus I continue to recommend that you be heavily invested in stocks that can help you meet your investing goals, all while remaining diversified to reduce risk.
However, it’s become increasingly difficult to hold on to growth stocks. Last week I dealt with that by recommending a low-risk income stock with decent growth potential, and this week I’m recommending a very cyclical stock in an industry that was recently deeply out of favor.
As for our current holdings, this week there are two sells and three downgrades to Hold.
Details inside.
However, it’s become increasingly difficult to hold on to growth stocks. Last week I dealt with that by recommending a low-risk income stock with decent growth potential, and this week I’m recommending a very cyclical stock in an industry that was recently deeply out of favor.
As for our current holdings, this week there are two sells and three downgrades to Hold.
Details inside.
Current Market OutlookWhile there are still a handful of growth stocks in decent shape, the spate of setups we saw during the past few weeks has been replaced by a ton of breakdowns, including many big winners from last year slicing below longer-term support. Meanwhile, the broad market is OK, while some areas (commodity stocks, financials and many turnaround situations) are accelerating higher. For the here and now, sticking with what’s working (and avoiding what’s cracked) is key, but also keep in mind that such divergences can lead to wild action and reversals. Thus, some buying here or there is fine, but pick your spots (and stocks) carefully, take partial profits on the way up and don’t get too aggressive.
This week’s list is chock-full of names that are thriving in this environment, including a few that are getting going after multi-month rests. Our Top Pick is Wesco (WCC), a dominant electronic products distributor, which just gapped out of a base on earnings last week.
| Stock Name | Price | ||
|---|---|---|---|
| Celanese (CE) | 167 | ||
| Cleveland-Cliffs (CLF) | 21 | ||
| Devon Energy (DVN) | 26 | ||
| Fortune Brands Home & Security (FBHS) | 112 | ||
| Franklin Resources, Inc. (BEN) | 35 | ||
| Funko, Inc. (FNKO) | 23 | ||
| Revolve Group (RVLV) | 48 | ||
| Schlumberger (SLB) | 32 | ||
| Under Armour, Inc. (UAA) | 23 | ||
| WESCO International (WCC) | 108 |
This month we are changing things up a little and featuring a small company I suspect you’ve never heard of. It’s an up-and-coming Canadian media production and distribution company.
The company’s content has increasingly shown up on Netflix, AppleTV+, HBO Max, Amazon and Peacock. Much of the programming is for kids and families, which is where the growth and more significant deal flow is. But the company has also had many years of success in reality TV.
It is a speculative investment and trading liquidity is thin, so treat it appropriately and space out share purchases. Part of the strategy here is that we’re following a micro-cap fund that I respect into this trade, and their successful track record, philosophy and long-term holding strategy lends credibility beyond the increasingly visible presence of the company’s programming.
The company’s content has increasingly shown up on Netflix, AppleTV+, HBO Max, Amazon and Peacock. Much of the programming is for kids and families, which is where the growth and more significant deal flow is. But the company has also had many years of success in reality TV.
It is a speculative investment and trading liquidity is thin, so treat it appropriately and space out share purchases. Part of the strategy here is that we’re following a micro-cap fund that I respect into this trade, and their successful track record, philosophy and long-term holding strategy lends credibility beyond the increasingly visible presence of the company’s programming.
Growth stocks had worked to set themselves up nicely in recent weeks, but all of that has fallen by the wayside, with names getting obliterated this week before and after earnings.
Despite an already-cautious stance, we’ve sold three more stocks this week, though we are nibbling on one new name in tonight’s issue. Even so, we’re content to remain defensive until the bloodletting stops.
In tonight’s issue, we write about one of the factors that thankfully kept us cautious of late, as well as dive into the energy sector, where the bullish thesis is playing out
Despite an already-cautious stance, we’ve sold three more stocks this week, though we are nibbling on one new name in tonight’s issue. Even so, we’re content to remain defensive until the bloodletting stops.
In tonight’s issue, we write about one of the factors that thankfully kept us cautious of late, as well as dive into the energy sector, where the bullish thesis is playing out
Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the May 2021 issue.
The stock market, so far in May, hasn’t continued the robust momentum of the first four months. Treasury Secretary Yellen’s comment about the possible need to boost interest rates to ward off inflation seems to be the catalyst. The market and the broad economy will likely respond differently if rates increase. We briefly outline on our asset allocation philosophy, which helps guide us when the market is edgy, in our economic comments.
Earning and proxy voting are in full swing. We’re updating the earnings as they come in.
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.
The stock market, so far in May, hasn’t continued the robust momentum of the first four months. Treasury Secretary Yellen’s comment about the possible need to boost interest rates to ward off inflation seems to be the catalyst. The market and the broad economy will likely respond differently if rates increase. We briefly outline on our asset allocation philosophy, which helps guide us when the market is edgy, in our economic comments.
Earning and proxy voting are in full swing. We’re updating the earnings as they come in.
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.
While some sectors of the market look tired (growth), other sectors and stocks (retail, materials, financials, energy) continue to make new highs and/or come alive. Fortunately, the Cabot Profit Booster portfolio has avoided the hyper-growth stocks that are under pressure, and is positioned in stocks that are in the strongest sectors.
We’re happy to see that the markets – despite a brief pullback – continue to rise. Home prices – as calculated for the Case-Shiller Index of 20 metropolitan areas – now stand at 246.04, up from 220 a year ago.
Consumer confidence and sentiment continue to increase, and that’s great for the economy. In the first quarter of 2021, GDP rose 6.4% – the second-fastest pace for growth since the second quarter of 2003!
This month, our Feature Recommendation is a French company that is the leading fiber telecom platform in rural France. The company has been awarded 4.5 million FTTH (fiber to the home) lines spread across 23 Public Initiative Networks. Additionally, investors will like the very nice 5.60% annual dividend yield.
We’re taking some more profits this month, with the sale of Unilever PLC (UL). Earnings performance has not been great, and it’s having a lot of trouble clearing resistance. We’ll take our 37.5% return to the bank and use it for our new recommendation.
We hope to see you on our May Platinum Club webinar; it’s scheduled for May 6 at 2pm. In the meantime, don’t hesitate to reach out to us if you have any questions.
Happy Investing!
Nancy Zambell and Kate Stalter
Consumer confidence and sentiment continue to increase, and that’s great for the economy. In the first quarter of 2021, GDP rose 6.4% – the second-fastest pace for growth since the second quarter of 2003!
This month, our Feature Recommendation is a French company that is the leading fiber telecom platform in rural France. The company has been awarded 4.5 million FTTH (fiber to the home) lines spread across 23 Public Initiative Networks. Additionally, investors will like the very nice 5.60% annual dividend yield.
We’re taking some more profits this month, with the sale of Unilever PLC (UL). Earnings performance has not been great, and it’s having a lot of trouble clearing resistance. We’ll take our 37.5% return to the bank and use it for our new recommendation.
We hope to see you on our May Platinum Club webinar; it’s scheduled for May 6 at 2pm. In the meantime, don’t hesitate to reach out to us if you have any questions.
Happy Investing!
Nancy Zambell and Kate Stalter
The market’s main trend remains up and thus I continue to recommend that you be heavily invested in stocks that can help you meet your investing goals, all while remaining diversified to reduce risk.
Today’s recommendation is a high-yielding stock that has a great history of performance—and as it’s still working its way back toward its high of February 2020, it’s attractive technically.
As for our current holdings, there are no changes. With the new addition, the portfolio is fully invested.
Details inside.
Today’s recommendation is a high-yielding stock that has a great history of performance—and as it’s still working its way back toward its high of February 2020, it’s attractive technically.
As for our current holdings, there are no changes. With the new addition, the portfolio is fully invested.
Details inside.
Updates
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.
Crista has three portfolio changes today.
Markets remain strong. The major stock market indexes all ended last week in the black and, after a brief pause Monday, advanced strongly yesterday. Earnings season has began and only rating change today moving a position to hold.
Earnings Season – Second quarter earnings season began late last week. Your brokerage firm probably provides quarterly earnings estimates on a thousand stocks. Call your advisor or use their website chat box to find out where to locate the quarterly earnings estimates.
Talk of trade wars continues to dominate stock market news but investors appear increasingly willing to shrug off related concerns. They do in the U.S. at least, where stocks are faring far better than in both the European Union and emerging markets.
If you own shares of Walt Disney (DIS), it’s time to decide whether you’re planning to hold it forever because you’re in love with the stock, or whether you’d rather trade it for an undervalued growth stock, thereby lowering your portfolio risk and increasing your chances of achieving capital appreciation.
The market’s bounce off support last week was encouraging, and while we remain in a news-driven, choppy environment, our current cash level is too high given the mostly positive evidence. Thus, tonight, we’re adding two new stocks leaving us with a cash position of 20%.
Markets ended last week with a strong performance, despite the mid-week holiday, which typically reduces trading. For now, I have no portfolio changes. If you’re looking to a do a little buying, we have plenty of options in every tier of the portfolio.
It’s earnings season! Hoo-boy, I’d better clear my calendar. Just a guess, but I think we’re going to see fantastic quarterly results from financial stocks that will catch investors with their…er, let’s just say “catch investors by surprise”. Financial stock share prices might have a very good couple of weeks!
Alerts
Shares of this animal health company fell after the announcement of its recent acquisition, but it appears that was an overreaction.
It’s been just over a week since the first Issue of Cabot Early Opportunities became available and I’d first like to thank all of you for jumping in early, and for the loads of positive feedback I’ve received.
Yesterday, investment manager Elliott Management Corp. sent a letter to Marathon Petroleum (MPC), the nation’s largest energy refiner, seeking changes that could potentially increase the MPC share price.
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’.
Portfolios
Strategy
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.