A lot has happened with our marijuana stocks in recent weeks, with the most important being the release of excellent quarterly reports by all the major U.S. multi-state operators that explained why the sector had been so strong in recent months.

However, growth stocks in general—and marijuana stocks in particular—have now begun a well-deserved correction, so I’m now getting a bit more cautious.



Full details in the issue.

It’s time to look beyond the pandemic. It may seem like it will drag on forever. And it may still be a while yet before it’s behind us. But it will pass. In the grand scheme of things, it is a very temporary situation.

The overwhelming majority of your investing career from here will be in the post pandemic environment. And the virus has created opportunities. While the market indexes are at all time highs, many of the more cyclical and real economy stocks are still historically very cheap. But these stocks will be lifted by the inevitable recovery ahead.



In this issue, I identify two industry leaders with stock prices that are temporarily depressed in the current environment. Yet, they present fantastic opportunities if we look beyond the haze.

For now our positions remain in great shape, and this week we are adding a stock that we successfully traded in March, and has shown no signs of pulling back after an earnings blowout last week.

The market remains in good health and trending higher, though the rotation from previously hot growth stocks continues, to some degree.

This week’s recommendation is a well-known consumer name whose stock is truly cheap, in part because the company recently discontinued dividend payments (they had been 6%) in response to the pandemic shutdown.



As for the current portfolio, I will now drop Nvidia (which has been very successful but is now sky-high), and downgrade GFL Environmental (GFL) to hold.



Full details in the issue.

Current Market Outlook


There’s not much negative to say about the market if you’re looking at the major indexes—all remain in solid intermediate-term uptrends, and longer-term, there are many bullish signposts for the overall market. But it’s also a fact that this rally has become awfully thin—the number of stocks hitting new highs is half (or less) of what we saw earlier this month, and the rotation between extended growth (those that got going back in April/May), fresher growth (those that got going in the past month or so) and cyclicals is becoming more frequent and intense. Once again, none of this necessarily portends doom, but there’s little doubt that making money has become tougher, so factor that into your plan—possibly buying smaller positions, entering on weakness, and focusing on what’s attracting buyers.

That’s just what our screens do, and this week’s list has another batch of in-favor stocks. For our Top Pick, we’ll go with JD.com (JD), a well-traded name that just reacted positively to earnings, and whose group (China) is picking up steam.

Stock Name	Price	Buy Range	Loss Limit
The AZEK Company (AZEK)	39.88	37-38.5	33.5-35
Big Lots (BIG)	53.65	48.5-51	42.5-43.5
DaQo New Energy Corp (DQ)	124.59	119-125	101-104
Elastic (ESTC)	103.35	99-103	89-91
Emergent BioSolutions, Inc. (EBS)	125.55	120-125	105-108
Etsy (ETSY)	128.74	121-125	106-108
JD.com (JD)	76.18	72.5-75	65-66.5
Natera (NTRA)	65.49	60-63	52-53.5
Trade Desk (TTD)	466.66	445-467	395-410
Whirlpool (WHR)	181.38	171-176	153-156

The market remains in good health and trending higher, though there is some rotation going on from growth stocks to cyclicals—not unusual for this stage of a bull market.

This week’s recommendation is a big cap global technology stock benefitting from both the spread of communications technology and the company’s dominant position in the global supply chain.



As for the current portfolio, there are no stocks that look like they should be sold, but I must sell one to respect my portfolio cap, and the victim will be Brookfield Infrastructure Partners (BIP), where we have a modest profit.



Full details in the issue.

Current Market Outlook


The market continues to look fine, with both primary (trend) and secondary (new lows, etc.) evidence boding well—not to mention many of the longer-term signposts like blastoff indicators telling us this is a bull market. But for leading growth stocks, it’s tricky out there; while there haven’t been a rash of breakdowns, there’s plenty of iffy action, with low volume rallies, selling on strength and relatively few stocks hitting new highs. (While the Nasdaq tested new-high ground today, the number of stocks doing so was half of what we saw a week and a half ago.) We certainly don’t think you should be holed up in your bunker, and we’re staying flexible, but given the prolonged run and the recent sloppiness, we think moving closer to shore makes sense, especially if you own some sluggish performers.

Interestingly, while the leaders of the April-July move rest, we’re seeing other names (both growth and cyclical) perk up. This week’s list has plenty of both, and our Top Pick is Quanta Services (PWR), which has decisively broken out on the upside.

Stock Name	Price	Buy Range	Loss Limit
Berry Global (BERY)	64.22	51.5-53.5	47-48
Builders FirstSource (BLDR)	44.12	28-29.5	24.5-25.5
Cerence (CRNC)	107.77	53.5-56.5	46-47
First Solar (FSLR)	83.74	69-72	62-64
HubSpot (HUBS)	582.89	267-277	240-246
Innovative Industrial Properties (IIPR)	214.38	116-121	103-105
iRhythm Technologies (IRTC)	51.15	168-174	149-152
L Brands (LB)	79.48	26-28	22.5-23.5
Quanta Services (PWR)	91.45	48.5-51.5	42.5-44
Shift4 Payments (FOUR)	89.97	47.5-49.5	42-44

For now, the long-term trend remains up, and so do most of our Cabot Dividend Investor positions. Here’s what’s going on with each of them as we enter summer.

While I don’t think we just saw the end of the run-up in technology stocks, I do think investors should begin to pare back their tech holdings and do these two things: raise cash, and buy undervalued stocks in other sectors.

Market continues to climb a wall of worry. I don’t know if this is the last hurrah of the bull market. A final push before a major retreat. But I do know that we should be mindful of the risks out there.

In this Weekly Update, I include a summary for Five Below (FIVE) which reported quarterly financial results during the past week. I also include a question from a subscriber along with my answer.

Despite today’s pullback, the Emerging Markets Timer is doing just fine, as the iShares EM Fund remains safely above its moving averages. We have three portfolio moves tonight, including booking our profits in two positions and dropping one stock from the Watch list.

Most of the stocks in our Cabot Dividend Investor portfolio are behaving quite well; two stocks streaked to new highs in the last few days. I have no changes to the portfolio this week.

I include summaries for 11 Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or other noteworthy news during the past two weeks. I also include questions from subscribers along with my answers.

Remain mostly bullish, but hold a little cash to respect the market’s growing divergences. Our market timing indicators are still mixed, though the long-term trend and growth stocks remain in good shape.

There’s something unusual and significant afoot in the bond market so I’m going to pluck my Goldman Sachs update out of the Growth Portfolio updates, and put it right here in the intro so that nobody misses what’s going to be happening soon.

The S&P 600 Small Cap Index bounced off rock-solid support at the 820 level late last week, and over the last few sessions has migrated back to its 50-day moving average line at around 837.

The Emerging Markets Timer is doing just fine, as the iShares EM Fund has rebounded from its May 17–18 dip.

The S&P declined 1.8% last Wednesday, its worst drop since September. We’ve seen a decent rebound in most of our stocks since, but the market needs to behave for the next couple of weeks to keep the bullish case intact. Long-term, the market’s trend remains up.

Looking at the revenues of the 14 companies in our Marijuana Portfolio, the average growth rate in the latest quarter, relative to the previous year, was 409%. The median, for you statistical fans, was 255%. This is one fast-growing sector!

Crista has several portfolio updates and changes today.

This Chinese financial company beat analysts’ estimates by $0.37 last quarter, and four analysts have recently raised their EPS forecasts for the company.

This software company is forecasted to grow at an annual rate of 21.47% over the next 5 years.

The top five holdings of this Morningstar three-star-rated fund are: BioTelemetry Inc (BEAT, 4.78% of assets); Vericel Corp (VCEL, 4.64%); CareDx Inc (CDNA, 4.43%); Fluidigm Corp (FLDM, 4.14%); and AtriCure Inc (ATRC, 4.08%).

This e-commerce company beat estimates by $0.12 last quarter.

Five analysts have raised their EPS estimates for this flight simulator company’s stock (also traded as CAE.TO on the Toronto exchange) in the past 30 days.

The broad stock market remains healthy, with all indexes at or near highs, with the exception of small-cap stocks, which are lagging. A rising tide lifts all boats.

This health management company beat analysts’ estimates by $.07 last quarter, and Wall Street expects the company to grow at an annual rate of 15.07% over the next five years.

This stock reported great first-quarter results.

This scientific instrument manufacturer is growing at double-digit rates.

This insurance company beat analysts’ estimates by $.10 last quarter.

Our Cabot Top Ten 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 Top Ten features.