Tesla shares have more than tripled this year as the company delivered a net profit yesterday, marking its fourth consecutive profitable quarter for the first time in its history. Alibaba connected Ant Group announced a mega IPO in Shanghai and Hong Kong.

These two companies dominated the news as investors looked past the upsurge in the pandemic, rising tensions in U.S.-China relations and wrangling in Washington over another shot of stimulus to jump start the economy. Today we highlight a recommendation that was previously in the Explorer portfolio but has moved only modestly from March lows despite a very innovative approach to cancer treatment.

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In anticipation of a booming economy in the months and quarters ahead, the stock market has rallied within a whisker of all time highs. But certain individual stocks and sectors are still languishing despite the index performance. It is among these stocks where great value and high yield can still be found.

In this issue I highlight one of the best banks in the country at a historically low price as the sector struggles. But the bank has remained solidly profitable through the horrible economy in the second quarter, and the stock will benefit as the recovery gains traction. It currently offers a great income opportunity with a high yield and getting high call premiums as the market anticipates better days ahead.

While we’re not normally fans of very low-priced stocks (you usually get what you pay for in the market), today’s recommendation has been around for a while, is liquid and is just beginning what looks like a multi-year growth wave thanks to two big drivers.

Current Market Outlook


Growth stocks suffered another shot across the bow last Monday, and for the next three days, most didn’t bounce much. But last Friday and today’s action was far more encouraging, with leading stocks rebounding nicely and the broad market doing decently, too. Of course, we never put too much emphasis on just a day or two; the market wasn’t hanging by a thread before the latest bounce (the trends of the indexes and leading stocks were up), and today’s action doesn’t necessarily mean it’s up and away from here, either. In fact, with earnings season coming up, we still think focusing on the right stocks and looking for relatively lower-risk entries is your best bet. But until proven otherwise, most of the rubber-meets-the-road evidence remains bullish, so you should, too.

This week’s list has a broad mix of cyclical and growth issues to choose from. For our Top Pick, we’re going a bit speculative—Plug Power (PLUG) is low priced, but very liquid, and the recent pattern (huge-volume rally, controlled pullback) looks very tempting.

Stock Name	Price	Buy Range	Loss Limit
ANGI Homeservices Inc. (ANGI)	14.81	14.5-16	12-12.7
Arconic (ARNC)	17.00	15-16.5	13-13.5
Bloom Energy (BE)	16.22	15-16.5	12.5-13.5
Carrier Global Corporation (CARR)	26.23	24.5-25.5	22-22.5
D. R. Horton (DHI)	66.55	61.5-64	55.5-57
GDS Holdings Limited (GDS)	80.15	78-82	71-73
Plug Power (PLUG)	8.35	8.0-8.7	6.6-7.0
Saia Inc. (SAIA)	129.19	120-125	109-112
Spotify (SPOT)	272.82	278-290	244-249
Vapotherm (VAPO)	48.53	44-47	38-40

The market remains in good health and trending higher, though the rotation out of the leading Nasdaq glamour stocks may have further to go—or may be just a false alarm.



In any case, it’s the stocks YOU own that matter, and if you’ve been choosing from our portfolio, you’ve been doing pretty well!



Today’s recommendation is a well-known and well-run company in the apparel business that should benefit from the trend toward more casual clothing. And according to our Cabot expert, it’s undervalued!



As for the current portfolio, there are two changes, a sell recommendation for Beyond Meat (BYND), which has lost momentum and a move to hold for Big Lots (BIG).



Full details in the issue.

The markets are certainly keeping us on our toes! I really didn’t know what to expect when I began calculating the returns for this Mid-Year Top Picks issue. We’ve had so much volatility; a big disruption in March, as coronavirus took hold; and many sectors that just haven’t bounced back.

So, you can imagine my relief and joy when I totaled up our contributors’ gains for the first six months of the year!



Despite the ongoing devastation of COVID-19, our contributors have broken all of our records, averaging a gain of 16.41%, while the Dow fell 8.6%, the S&P 500 is down 1.2% and only the Nasdaq is in positive territory, with gains of 18.3%.



Even better, our Top 5 picks averaged 221.48%!

The markets are certainly keeping us on our toes! I really didn’t know what to expect when I began calculating the returns for this Mid-Year Top Picks issue. We’ve had so much volatility; a big disruption in March, as coronavirus took hold; and many sectors that just haven’t bounced back.

So, you can imagine my relief and joy when I totaled up our contributors’ gains for the first six months of the year!



Despite the ongoing devastation of COVID-19, our contributors have broken all of our records, averaging a gain of 16.41%, while the Dow fell 8.6%, the S&P 500 is down 1.2% and only the Nasdaq is in positive territory, with gains of 18.3%.



Even better, our Top 5 picks averaged 221.48%!

After 16 relatively smooth weeks, the sellers have finally put up a fight this week, dragging most growth stocks down after big runs. We trimmed a bit earlier this week, selling one name and taking partial profits in another, leaving us with 20% in cash. But most of the evidence remains positive, and while we remain flexible, we’re comfortable giving most of our winners a chance to digest their recent moves.

This week’s issue writes about why a market pullback would make sense around here, but also talks about the most bullish factor we see (lots of early-stage leaders out there). And, as always, we give you all our latest ideas and thoughts on the market and our stocks, including key levels we’re watching.

Technology stocks took a hit on Monday when the Nasdaq posted a concerning reversal. However, the current evidence doesn’t yet suggest that we should be moving materially more conservative. That said, we’re not going to chase every hot stock right now. This month’s Issue of Cabot Early Opportunities seeks to offer a balance of rapid and modest growth from fresh faces, including some that have yet to break out and run wild (as many tech stocks have).

None of our Cabot Benjamin Graham Value Investor companies reported quarterly financial results during the past week, but today’s update includes subscriber questions about two Enterprising Model stocks with my responses.

The Emerging Markets Timer is in relatively good shape, as the iShares EM Fund is staying in contact with its 25-day moving average. Many of our stocks are acting great. We sold three laggards in last week’s issue and our only action today will be to move one stock back to a Buy rating.

Mike Cintolo, our market timing expert, wrote earlier this week that he wouldn’t be surprised to see this correction develop one more leg down, and it looks like that’s what we’re getting. All the major indexes opened significantly lower yesterday, and while they rebounded partially in the afternoon, the turbulence sent the VIX surging to its highest level since the U.S. election.

I’m not an energy industry wonk, but the 2017 crude oil export situation is so vastly different than it has been for most of our adult lifetimes that it’s worth paying renewed and inquisitive attention to energy stocks.

None of our Cabot Benjamin Graham Value Investor companies reported quarterly financial results during the past week, but I have analyzed the automotive industry for you and present my advice here. I also include complete instructions on how to access the Top 275 Value Stock spreadsheet on Google Drive.

Remain optimistic, but keep some powder dry, too. We’re pleased to see our Two-Second Indicator improve, but our Cabot Tides are still on the fence and few stocks are moving out to new highs. We believe the market’s next major move will be up, but near-term, we’re going to wait for confirmation that the buyers are back after a five-week pause.

We’re still cautiously bullish, and focused on the action of individual holdings. Sell any stocks that break down, prune your laggards, and focus new buying on outperformers. We have no rating changes today.

The market hit an air pocket last week but has since stabilized. It didn’t hurt that revised U.S. GDP figures for Q4 came in 0.2% higher than previously reported. That improvement bumped growth up to 2.1%. On the back of that good news, small caps regained their 50-day moving average line (they’re now up four straight days).

The U.S. stock market is beginning to show signs of gaining momentum to the upside, as evidenced by the Nasdaq’s new all-time high set yesterday.

The Emerging Markets Timer is in good shape, with iShares EM Fund sitting well above its 25-day moving average.

The broader U.S. stock market is having a pullback after a 12% post-election run-up. The S&P 500 is only down about 2.5% from its recent high, and it’s too soon to tell whether it might fall a little more.

Well, it couldn’t last forever, right? After months of hardly any pullbacks on the heels of the massive post-election rally, stocks—including small caps—finally had a down week.

This telecom is forecasted to grow at almost 20% next year, and by triple digits in the next five years.

As part of its new North American leadership changes, this turnaround flooring company just named a new CFO from International Paper, who will replace the current retiring Chief Financial Officer.

This automotive supplier beat analysts’ EPS estimates by seven cents last quarter.

Awareness of cannabis is definitely up, but there are still major friction points, which will continue at least until the U.S. government legalizes marijuana as it has just legalized hemp.

This chemical company’s stock was also recently recommended by Zacks, who cited the company’s rising earnings.

This infrastructure company’s stock was also recently recommended by simplywallstreet.com, due to its strong fundamentals, growth potential, and undervaluation.

Next, we are taking significant profits on a previous sale.

Our first idea is a mining company that is showing strong results; buy on weakness.

Seven analysts have raised their EPS estimates for this tech company in the past 30 days.

This food distributor has also just been recommended by Zacks, who cited the company’s earnings growth, asset utilization, and upward EPS revisions as attractive.

One stock reports strong fourth quarter and moves from Strong Buy to Hold.

Two recommendations today—an energy company with an improving future, and some profit-taking.

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.