Issues
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.
Explorer positions have a good week on the back of a market moving up on broadly upbeat first-quarter earnings, rising consumer confidence and, of course, stimulus and spending from Washington. The cash and liquidity has definitely buoyed the market but how it is put to work long term is critical.
This week’s recommendation is a rather aggressive small Canadian player in the commercial drone business.
This week’s recommendation is a rather aggressive small Canadian player in the commercial drone business.
It’s been eleven weeks since the marijuana sector topped, sending the Marijuana Index down 50%. But as the picture of this correction gets clearer, every day I get a little more bullish about the possibility that the sector is ready to turn up again.
Two weeks ago, acting on this belief, I used half our cash to average up in the industry leaders and add one new small stock to the portfolio and today I’m doing just a little more buying, averaging up in another small operator.
After this buying, the portfolio will be roughly 29% in cash, and going forward, we’ll continue to take our cues from the market, always working to own the market’s leaders as we move closer and closer to full federal legalization.
Full details in the issue.
Two weeks ago, acting on this belief, I used half our cash to average up in the industry leaders and add one new small stock to the portfolio and today I’m doing just a little more buying, averaging up in another small operator.
After this buying, the portfolio will be roughly 29% in cash, and going forward, we’ll continue to take our cues from the market, always working to own the market’s leaders as we move closer and closer to full federal legalization.
Full details in the issue.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the May 2021 issue.
With the stock market continuing to reach record highs, and with most stocks either participating in the rally or facing structural, fundamental challenges that they won’t likely overcome, finding new ideas can be a challenge. As contrarians, we want to look for stocks in places which others find too unconventional or uncomfortable, as bargains may be found there. One such place is in stocks with low share prices, generally under $10. We discuss five interesting turnarounds among this group.
Real estate investment trusts, or REITs, have surged since Pfizer announced on November 9, 2020 that they had developed an effective Covid vaccine. Yet some REITs haven’t fully participated. We review six laggards that have quite favorable risk/return traits.
Our feature recommendation is Dril-Quip (DRQ). This company manufactures highly-engineered drilling and production equipment for offshore oil and natural gas projects. The shares are heavily out-of-favor yet offer considerable upside, backed by a solid company with a large cash hoard and zero debt.
We mention our April 1st price target increase for Mohawk Industries (MHK) from 180 to 220. As several companies continue to show strong fundamental improvements, we are raising our price targets on Adient (ADNT), Western Digital (WDC) and Wells Fargo (WFC), while moving Jeld-Wen (JELD) to a HOLD. Also, we update our article from last month on high yield bonds.
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.
With the stock market continuing to reach record highs, and with most stocks either participating in the rally or facing structural, fundamental challenges that they won’t likely overcome, finding new ideas can be a challenge. As contrarians, we want to look for stocks in places which others find too unconventional or uncomfortable, as bargains may be found there. One such place is in stocks with low share prices, generally under $10. We discuss five interesting turnarounds among this group.
Real estate investment trusts, or REITs, have surged since Pfizer announced on November 9, 2020 that they had developed an effective Covid vaccine. Yet some REITs haven’t fully participated. We review six laggards that have quite favorable risk/return traits.
Our feature recommendation is Dril-Quip (DRQ). This company manufactures highly-engineered drilling and production equipment for offshore oil and natural gas projects. The shares are heavily out-of-favor yet offer considerable upside, backed by a solid company with a large cash hoard and zero debt.
We mention our April 1st price target increase for Mohawk Industries (MHK) from 180 to 220. As several companies continue to show strong fundamental improvements, we are raising our price targets on Adient (ADNT), Western Digital (WDC) and Wells Fargo (WFC), while moving Jeld-Wen (JELD) to a HOLD. Also, we update our article from last month on high yield bonds.
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 market is still trending higher. But it can’t continue at the recent pace. And a 10% or so correction is possible at any time, especially after such a strong move higher. While the short term is always unpredictable, I’m still bullish over the intermediate and longer term.
With the market looking topsy in the near term, it’s a great time to write covered calls. In this issue, I highlight two call writing opportunities on existing portfolio positions. These calls provide a great way to cash in on a high market without giving away too much upside potential.
With the market looking topsy in the near term, it’s a great time to write covered calls. In this issue, I highlight two call writing opportunities on existing portfolio positions. These calls provide a great way to cash in on a high market without giving away too much upside potential.
Not to sound like a broken record, but day-to-day sector rotation continues to be the story of the last week of trading, and almost all of 2021. The good news is that this is a fine situation for the Cabot Profit Booster portfolio as we are rotating with the market, buying the best stocks, and keeping the portfolio as diversified as possible.
The market’s main trend remains up and thus I continue to recommend that you be heavily invested, always working to “upgrade” your portfolio by selling weak stocks and buying healthier ones.
Today’s recommendation is a well-known big technology stock that’s spent the past eight months going sideways, despite the fact that revenue growth has been accelerating. To me, it’s a very attractive setup.
As for our current holdings, there are no changes. After selling two stocks last week, everything looks good today.
Details inside.
Today’s recommendation is a well-known big technology stock that’s spent the past eight months going sideways, despite the fact that revenue growth has been accelerating. To me, it’s a very attractive setup.
As for our current holdings, there are no changes. After selling two stocks last week, everything looks good today.
Details inside.
Current Market OutlookEarnings season is always important, but it looks even more so this time—many growth stocks have been sitting around for the past two to three months (some even longer), while a decent number of cyclical names have been mostly up-and-down for the past four to five weeks. Thus, a collection of positive, powerful reactions to earnings could result in a bunch of good-looking buying opportunities … but, as always, we have to wait to see that happen before pouncing. Just going with what’s in front of us, nothing much has changed, with a lot of good setups but also a lot of selling in names that approach their old highs. Once that changes (due to earnings reports or anything else), it will be time to get more aggressive, but right now we’re sticking mostly with a buy-on-dips approach and waiting for buyers to really flex their muscle.
This week’s list has a broad mix of names, though most are more cyclical or turnaround plays. Our Top Pick is Steel Dynamics (STLD), which just leapt to new highs out of a tight area on huge volume. You can start a position here or (preferably) on weakness.
| Stock Name | Price | ||
|---|---|---|---|
| Burlington Stores (BURL) | 321 | ||
| Floor & Décor (FND) | 113 | ||
| Goldman Sachs Group, Inc. (GS) | 343 | ||
| Harley-Davidson Inc. (HOG) | 48 | ||
| The Middleby Corporation (MIDD) | 181 | ||
| Okta, Inc. (OKTA) | 285 | ||
| Qorvo (QRVO) | 199 | ||
| Seagate Technology (STX) | 93 | ||
| Steel Dynamics (STLD) | 55 | ||
| Tractor Supply Company (TSCO) | 191 |
Updates
Emerging market stocks have been attempting to find a bottom after a month of accelerating declines. The week has been fairly calm, with the iShares EM Fund (EEM) and many of our stocks showing some signs of basing.
In this weekly update, we have one stock that moves from Hold to Buy.
After a one-to-two-week pullback (the S&P 500 and Dow peaked back on June 12, while the Nasdaq high came a week later, on June 20) the broad market has found support for now, moving mostly sideways since our last update. Markets have been closed since 1 p.m. (Eastern time) Tuesday due to the Independence Day holiday.
We could see some funky trading action next week since the Wednesday Fourth of July holiday will mean a lot of people out of the office. But then the market will start looking forward to Q2 earnings reports, which will begin to come out in late July and early August. Stay the course as the volatility probably isn’t over hasn’t yet translated to lowered growth expectations.
In this weekly update, we have no changes to the portfolio, but that’s expected given the current market environment and the recent sales in previous weeks. A lot of of our stocks are influenced by the corporate news splashes and media headlines which I cover in today’s update.
Raise some cash. Our Cabot Tides are now on the fence, and more important, individual stocks have been hammered during the past week, with a few showing abnormal action. In the Model Portfolio, we’ve sold a few positions lately, leaving us with around 40% in cash.
In today’s update, I outline the reasons why I have every intention of remaining invested in various oil industry stocks in the foreseeable future and give a detailed update on all positions in the portfolio.
Despite all the tariff talk, small caps continue to hold up well and even rose by 0.3% this past week.
Emerging market stocks have had a nasty week, with the iShares EM Fund (EEM) dropping decisively below its 25- and 50-day moving averages. While we have several stocks that are vulnerable, we’re going to stand pat for now and have no moves in the portfolio.
In this weekly update, you’ll find great news from RV-makers Thor Industries (THO) and Winnebago (WBO), the potential for a near-term breakout in shares of Intercontinental Exchange (ICE), and exciting news about the Disney-Comcast-Fox takeover tussle and how it’s affecting the Discovery Communications (DISCA) share price.
Stocks pulled back yesterday, but the market’s intermediate-term trend remains up. Stay the course, and resist overreacting to the oscillations.
I wrote to you recently about upcoming changes in the Global Industry Classification Standard (GICS), which classifies stocks into 11 sectors and dozens of industries, and is commonly used in professional portfolio management as a guideline to portfolio diversity.
Alerts
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.
Oil prices and shares of oil-related stocks surged this morning after a terrorist attack on Saudi Arabian oil fields shut down about half of Saudi Arabia’s daily oil output.
Earnings estimates are moving up for this alcohol beverage company.
One major factor in investing, particularly in small stocks and young sectors where growing pains are still the norm, is sentiment. Good sentiment can take a sector to extreme highs—as it has done for the marijuana sector at every major legalization milepost.
One of our portfolio stocks moves is being retired and there is news on five more.
This global insurance company beat analysts’ EPS estimates by $0.04 last quarter.
This energy company has absorbed its most recent acquisition and is posting significant cash flow, yet the shares remain undervalued.
The major indexes were mixed today, with the Dow up 74 points and the Nasdaq losing three points. But the story once again was weakness under the surface, as growth stocks remained under the gun.
This P&C and energy services company beat EPS estimates by, $0.03 last quarter.
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.