Issues
The action of high-growth stocks continues to be sloppy despite the strong performance of most underlying businesses.
To help ease our portfolio thorough this period I’ve been evaluating companies with exposure to the reopening economy, and I think I’ve nailed it.
Today’s stock is an online retailer serving younger generations. These consumers should be among the most active spenders as the world opens up again. And this up-and-coming retailer should be a major beneficiary.
Enjoy!
To help ease our portfolio thorough this period I’ve been evaluating companies with exposure to the reopening economy, and I think I’ve nailed it.
Today’s stock is an online retailer serving younger generations. These consumers should be among the most active spenders as the world opens up again. And this up-and-coming retailer should be a major beneficiary.
Enjoy!
Note: We are publishing this issue early due to our office being closed this Friday for a holiday.
The daffodils and Bradford pear trees are in bloom here in Tennessee; I’ve already begun my spring cleaning; I’ll get my second COVID-19 shot on Monday; and the markets and economy are holding up nicely--all in all, a great way to usher in a new season.
The Dow Jones Industrial Average has managed to stay above 32,000, housing continues to be strong, and more people came back into the job market this month, as unemployment claims declined to 684,000.
In this issue, our Feature Recommendation is a company operating in the container ship industry, which is recovering from crushing blows dealt by the coronavirus pandemic last year. As the flow of goods and services continues to climb, this stock should also profit.
And speaking of profits, we are banking some dollars with the sale of cbdMD, Inc. (YCBD), gaining about 76%.
Many thanks to subscribers who joined us on our first monthly Platinum Club call. We hope you can tune in for our next one on April 13.
We’ll check in with you with a Special Alert if anything major occurs in our portfolio. In the meantime, please let us know if you have any questions or concerns.
Happy Investing!
The daffodils and Bradford pear trees are in bloom here in Tennessee; I’ve already begun my spring cleaning; I’ll get my second COVID-19 shot on Monday; and the markets and economy are holding up nicely--all in all, a great way to usher in a new season.
The Dow Jones Industrial Average has managed to stay above 32,000, housing continues to be strong, and more people came back into the job market this month, as unemployment claims declined to 684,000.
In this issue, our Feature Recommendation is a company operating in the container ship industry, which is recovering from crushing blows dealt by the coronavirus pandemic last year. As the flow of goods and services continues to climb, this stock should also profit.
And speaking of profits, we are banking some dollars with the sale of cbdMD, Inc. (YCBD), gaining about 76%.
Many thanks to subscribers who joined us on our first monthly Platinum Club call. We hope you can tune in for our next one on April 13.
We’ll check in with you with a Special Alert if anything major occurs in our portfolio. In the meantime, please let us know if you have any questions or concerns.
Happy Investing!
It’s been seven weeks since the marijuana sector topped, and every day the picture of this correction gets clearer. For example, today saw a rally across the board in the sector, but if you look at the charts, you see it’s really just an inconsequential blip.
Thus, defense remains the watchword for now. In fact, I am selling one stock in this issue, taking profits and freeing up a little more cash.
Long term, however, prospects for the sector remain very bright, as was made clear by our companies’ latest quarterly reports. And of course, we will always hold the leaders of the sector.
Full details in the issue.
Thus, defense remains the watchword for now. In fact, I am selling one stock in this issue, taking profits and freeing up a little more cash.
Long term, however, prospects for the sector remain very bright, as was made clear by our companies’ latest quarterly reports. And of course, we will always hold the leaders of the sector.
Full details in the issue.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the April 2021 issue.
This month we look at defense industry stocks. These stocks have been left aside as investors rush to capture post-pandemic winners, and as the market has doubts about the Biden administration’s commitment to defense spending. Yet, these concerns appear overdone, and investors aren’t considering the possibility of a ramp-up in response to rising global tensions. We discuss six interesting stocks.
We also look at high yield bonds. Our call in February 2020, that “the Sun May Be Setting On High Yield Bonds,” appears to be the right one once again. Yield levels and spreads have returned to remarkably low levels. Our discussion also outlines what favorable and unfavorable conditions look like.
Our feature recommendation is pet health company Elanco Animal Health (ELAN). This company has produced mediocre operating and stock price performance since its 2018 spin-off from Eli Lilly. Yet, changes appear to be coming with the arrival of a credible activist that is reshaping the board of directors.
We also include comments on recent price target and rating changes, including our recent Sell recommendations on Valero Energy (VLO) and Volkswagen AG (VWAGY).
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 defense industry stocks. These stocks have been left aside as investors rush to capture post-pandemic winners, and as the market has doubts about the Biden administration’s commitment to defense spending. Yet, these concerns appear overdone, and investors aren’t considering the possibility of a ramp-up in response to rising global tensions. We discuss six interesting stocks.
We also look at high yield bonds. Our call in February 2020, that “the Sun May Be Setting On High Yield Bonds,” appears to be the right one once again. Yield levels and spreads have returned to remarkably low levels. Our discussion also outlines what favorable and unfavorable conditions look like.
Our feature recommendation is pet health company Elanco Animal Health (ELAN). This company has produced mediocre operating and stock price performance since its 2018 spin-off from Eli Lilly. Yet, changes appear to be coming with the arrival of a credible activist that is reshaping the board of directors.
We also include comments on recent price target and rating changes, including our recent Sell recommendations on Valero Energy (VLO) and Volkswagen AG (VWAGY).
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.
It has been a volatile few weeks for the market, with the Nasdaq under consistent selling pressure and more than 7% off its February high, while the S&P 500 hit new all-time highs last week.
The market’s divergent behavior continues, with small growth stocks in particular suffering, but there are still attractive investments, and for investors looking for something in the electric vehicle sector, today’s recommendation is one of them.
As for the current portfolio, I have two sell recommendations, both small, lightly traded stocks that are losing support.
Details inside.
As for the current portfolio, I have two sell recommendations, both small, lightly traded stocks that are losing support.
Details inside.
Current Market OutlookFirst off, a heads up that our offices will be closed on Friday for Good Friday. So we’ll probably be sending you Movers & Shakers a day early this week.
As for the market, the split environment continues, with many major indexes closing last week near new highs, while the Nasdaq is still languishing beneath its 50-day line. Overall, the song remains mostly the same—growth stocks are mired in a correction (including some big winners from last year that can’t get out of their own way), and while many cyclical-related stocks are holding up well, few are really making much upward progress. There are some pullback opportunities here and there, and to be fair, we are seeing more potential setups in growth land. But at the moment, the market action resembles a kid scribbling on a piece of paper, with jerky movements that don’t persist. Thus, we continue to think you should mostly play it safe, keeping new positions small and holding a generous amount of cash until we see the next sustained uptrend get underway.
This week’s list is mostly turnaround-based, with some strong travel and retail stocks that could be decent entries on dips. Our Top Pick is Urban Outfitters (URBN), which staged a longer-term breakout a month ago, with this first pullback likely buyable.
| Stock Name | Price | ||
|---|---|---|---|
| Alaska Air Group (ALK) | 68 | ||
| Alliance Data Systems (ADS) | 113 | ||
| Callon Petroleum (CPE) | 37 | ||
| Expedia Group (EXPE) | 177 | ||
| Nexstar Media Group (NXST) | 139 | ||
| RH Inc. (RH) | 566 | ||
| SeaWorld Entertainment Inc. (SEAS) | 49 | ||
| Urban Outfitters (URBN) | 37 | ||
| Wayfair (W) | 335 | ||
| ZoomInfo (ZI) | 49 |
The market found a little support today, but there’s little doubt that growth stocks remain in a correction and the overall market is coming under pressure. We don’t have a strong opinion on the near-term path, but right now, no real money is being made, so we think less is generally more when it comes to stocks--we’re being patient until this correction finishes up.
That said, there should be some great opportunities on the long side once this correction finishes up, and we spend a lot of space in this issue talking about some indicators we’re watching closely as well as a bunch of names we’re keeping our eye on for potential leaders of the next upmove.
That said, there should be some great opportunities on the long side once this correction finishes up, and we spend a lot of space in this issue talking about some indicators we’re watching closely as well as a bunch of names we’re keeping our eye on for potential leaders of the next upmove.
Despite the current tug of war between cyclical and technology stocks for market leadership, financial stocks are likely the best positioned stock sector in the near term as well as for the rest of the year. They offer a complete package of value, momentum and position in the economic cycle.
Financials tend to thrive in the early stages of an economic cycle, which is where we are now. Financial companies also love rising interest rates. Interest rates are already rising and all but certain to keep climbing amidst a booming economy and trillions of stimulus dollars.
While the financial sector has been the second best performing sector on the S&P YTD, it isn’t as overextended as energy. It’s is only up about half as much so far this year.
In this issue I highlight two fantastic financial stocks for purchase. These stocks offer the very rare combination of value and momentum. It’s a great time to get in cheap ahead of great opportunities to write covered calls for a high income in the weeks and months ahead.
Financials tend to thrive in the early stages of an economic cycle, which is where we are now. Financial companies also love rising interest rates. Interest rates are already rising and all but certain to keep climbing amidst a booming economy and trillions of stimulus dollars.
While the financial sector has been the second best performing sector on the S&P YTD, it isn’t as overextended as energy. It’s is only up about half as much so far this year.
In this issue I highlight two fantastic financial stocks for purchase. These stocks offer the very rare combination of value and momentum. It’s a great time to get in cheap ahead of great opportunities to write covered calls for a high income in the weeks and months ahead.
Despite the market having some bumpiness, March was another great month for the Cabot Profit Booster portfolio as we closed four positions for the following profits:
Updates
One of the Cabot Benjamin Graham Value Investor subscribers asked me about a few stocks that were formerly in this portfolio, so here’s an update on those stocks.
Although the market remains volatile, the action in the major indexes improved this week. The S&P 500, for example, bounced off its 200-day moving average again Friday, its third time retesting that level and finding support since the start of the year. As a result, I have three rating changes today including one sell.
If you are an investor who owns mutual funds or ETFs, either in taxable accounts, IRA accounts, children’s custodial accounts, variable annuities, pension funds, 401(k) plans or 403(b) plans, you probably own AAPL as part of those funds’ portfolios.
It’s been my experience that the more an investor can lower their portfolio risk, the more enjoyable and lucrative their investing experience will be. When researching stocks, select the ones with strong future earnings per share (EPS) growth, relatively low price-earnings ratios (P/Es) and relatively low debt levels.
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.
Alerts
A diversified global manufacturing company of highly engineered products.
The market enjoyed a couple rounds of decent buying during the past week, but today brought a huge round of selling as the headlines blared about the inverted yield curve.
Yesterday’s strong market triggered a technical indicator, a follow-through signal that tells us buyers are lurking. Of course, today’s big decline so far isn’t good to see, but nevertheless, this and other measures (awful sentiment, etc.) tell us there should be support on weakness.
A spin-off is in the works for this entertainment company, and analysts are forecasting the company will grow at an annual rate of 16.9% over the next five years.
This 5G player is forecasted to grow at an annual rate of 20% over the next five years.
The good news is that many cannabis companies have been releasing their second quarter reports and the results have been excellent.
In the past 30 days, eight analysts have raised their earnings estimates for this tech company.
Four stocks in our portfolios reported earnings this week.
The top five holdings in this fund are: Total System Services Inc (TSS. 3.93% of total assets); VeriSign Inc (VRSN, 3.62%); Roper Technologies Inc (ROP, 2.75%); Fiserv Inc (FISV, 2.43%); and WellCare Health Plans Inc (WCG, 2.22%).
The market has opened higher today following yesterday’s nice upside reversal. Recent support combined with some positive action among some growth stocks is encouraging.
This software company is forecasted to grow at an annual rate of 51% over the next five years.
One of the portfolio stocks is being sold.
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.