First and foremost, all of us at Cabot wish you a great long holiday weekend; our offices will be closed tomorrow but we’ll be back at it again on Monday.

As for the market, the story remains largely the same--there are some blemishes, but most of the evidence is positive, so we’re sticking with a heavily invested stance, albeit with some moves based on the action of individual stocks. Earlier this week, we trimmed a bit, leaving us with around 14% in cash.



In tonight’s issue, we write about one new liquid leader we’d love to own at the right price, along with all our latest thoughts on our stocks and the market.

Digital payments were already a big trend prior to Covid-19. But the pandemic has pulled forward demand for solutions that help businesses pay and get paid whenever, wherever, and however.

Today we’re profiling a small company that specializes in payment processing solutions. It’s relatively new to the public markets and has a market cap well under $2 billion.



While areas of its busieness have been harmed by the pandemic the big-picture story remains great. And management reported record sales activity in both March and April. And the stock’s looking great.



All the details are inside this month’s Issue. Enjoy!

Today’s featured companies have sturdy financial conditions and attractive valuations, with appeal to buy-and-hold investors as well as traders.

The markets eked out a positive return for the month of June, with the S&P500 returning 1.99%, capping one of the strongest quarters (+20.5%) on record. In this month’s letter, I describe a bit more about the re-opening and how it might affect the markets.

Like many consumer goods producers, companies that make apparel and related products have experienced sharply lower sales and profits with the stay-at-home restrictions during the pandemic. But, for companies that make everyday apparel, particularly those with enduring brands or an outdoor/active lifestyle focus, demand should eventually return to healthy levels.

In this issue, we list seven companies that we believe offer interesting recovery potential.

Genetic testing makes it easier for medical professionals to understand and diagnose diseases since a big portion of health problems have genetic origins. Today’s recommendation specializes in gathering genetic info across every stage of a person’s lifespan, working to consolidate testing into a single low-cost, rapid turnaround service, and it’s making good progress on that front—its efforts have led to test costs dropping from thousands of dollars to as low as $250 today.

The market remains in good health, though there’s been some weakness among growth stocks, but overall I think this correction provides some decent entry points so I continue to recommend that you be heavily invested in a diversified portfolio of the best stocks—while pruning your portfolio of underperformers.

Today our underperformer is Verizon (VZ), which I’ll sell because the stock has weakened further.



As for the newest recommendation, it’s unusual in that it’s actually in a sector I don’t care for, but the confluence of several factors (including COVID-19) means there’s substantial upside potential right now.

Current Market Outlook


As we’ve been writing for many weeks, most of the primary evidence (trends of the major indexes, action of leading stocks) remains in the plus column, as do some key secondary pieces of evidence (blastoff indicators, number of new lows, etc.), so we’re sticking with a bullish stance. But the near-term should be interesting—the continuing dichotomy in the market means most indexes aren’t far from their 50-day lines, and we’ve started to see more up-down-up-down action, which, after a big, prolonged (13-plus weeks) upmove, tells you that the bulls and bears are beginning to fight it out. None of this is a reason to anticipate something sinister—again, most of the evidence is still positive—but it’s prudent to pick your spots on the buy side and have some stops in place in case the sellers make a stand and/or another bout of rotation takes hold (we started to see that today). We’re nudging our Market Monitor down to a level 7.

This week’s list has something for everyone, with stocks of all stripes making the cut. Our Top Pick is Etsy (ETSY), which has come alive after a year-long rest. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Crispr Therapeutics (CRSP)	84.11	71.5-75	62-64
Etsy (ETSY)	112.97	97.5-102	84-86
Farfetch (FTCH)	26.23	16-17.5	14.5-15.5
GenMark Diagnostics (GNMK)	15.47	12.3-13	10.6-11
HubSpot (HUBS)	582.89	207-212	187-190
Inphi (IPHI)	120.16	107-111	98-100
Invitae (NVTA)	32.06	26-27.5	22.5-23.5
Meritage Homes (MTH)	102.20	71.5-74	63.5-65
Plug Power (PLUG)	8.35	7.2-7.6	5.9-6.2
STAAR Surgical (STAA)	57.94	56-59	49-51

Markets, led by Nasdaq’s leading companies, had an impressive winning streak broken by concerns over an acceleration of coronavirus cases. Our Emerging Markets signal (EEM) stays positive as the virus is being handled well in Asia outside of China but is exploding in Latin America. The Explorer portfolio is well positioned with cash to deploy and stocks holding up well.

Today, we’ll look inside the indexes to see what’s working and also explore what more participation by individual investors in 2020 might mean for markets. Then we move north to Canada for a promising new recommendation that has all the characteristics of a winning gold stock.

This is a fantastic environment for income. The upward bias of the market is creating high call premiums. And certain pockets of the market still offer deep value and higher dividend yields than have existed in many years.

In this issue I identify three excellent dividend stocks to buy now.



One is a high yielding energy play with a stratospheric, but safe, yield. Another is one of the most defensive and reliable income generating stocks in the market that still offers good value and a strong yield. And the third is a technology stock that sells at a reasonable price with an incredibly strong catalyst for the stock price to shoot up in the future.



The issue also includes covered calls on these same stocks that will provide a double digit income in a short time if the stocks move higher, and a great income return if they don’t.

Remain bullish, but keep your eyes open. For the first time in months, we’re seeing some yellow flags, including from our Two-Second Indicator. That said, the trends of the market and most stocks are still positive, and pullbacks have been normal thus far.

After shooting to new all-time highs last Wednesday, the major indexes are taking a well-deserved breather this week. The pullback looks orderly and normal so far, and investors with money to put to work can use it as a buying opportunity.

This Weekly Update includes summaries for the 10 Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or other noteworthy news during the past week and were not reported in my March 3 Weekly Update.

This Weekly Update includes summaries for six Cabot Benjamin Graham Value Investor companies that reported quarterly financial results. On Monday, March 6, I’ll update the remaining stocks.

The Emerging Markets Timer continues to flash a buy signal, although the iShares Emerging Markets Fund (EEM) has weakened somewhat. We have one change in the portfolio today.

A few wobbles finally appeared in the stock market last week, as overextended growth and momentum stocks took a well-deserved rest. Most other names remain healthy though, and most of our portfolio holdings are in consolidation mode at or near their highs.

The stock market is still showing a lot of strength, despite an approximate 4% run-up since a breakout in mid-January. It’s perfectly normal for stock markets to rise and to have pullbacks. However, I don’t see the stock charts signaling an imminent pullback so be prepared for more near-term capital gains.

There’s been some softening in the broad market this past week and yesterday’s action looked a little erratic to me. By the time the market closed yesterday, small caps were down less than 1%. But they traded in a wide range.

I include summaries for 15 Cabot Benjamin Graham Value Investor companies that have reported quarterly financial results or other noteworthy news during the past week.

Our market timing indicators remain bullish, and while a short-term pullback is always possible, the odds favor higher prices down the road. For individual stocks, the goal is to hold your winning stocks while rotating out of any stocks that crack support.

Last week, Mattel (MAT) introduced a boy doll named Logan to its American Girl product line. I can’t say that the doll will change much at Mattel’s bottom line, but it will certainly bring attention to the company.

Two of our positions reported this week. One was up over 8% the day after reporting. And the other is up nicely in early trade today after reporting yesterday.

This medical device company beat analysts’ EPS estimates by $0.09 last quarter, and the shares were recently initiated at Deutsche Bank with a ‘Buy’ rating.

Two stocks have rating changes today.

Seven analysts have increased their EPS estimates for this financial stock in the past 30 days.

Trends remain good for investors in the marijuana industry.

One of our portfolio stocks reported Q4 2018 results the other night that were better than expected.

One stock reports strong fourth quarter and moves from Strong Buy to Hold; a second falls on temporary problems.

This digital entertainment and e-commerce company is expected to grow at double-digit rates this quarter, boosting its shares’ momentum.

The shares of this payment company were recently initiated by Jefferies with a ‘Buy’ rating and were upgraded by UBS to ‘Buy’

This medical equipment company beat earnings estimates by $0.04 last quarter.

This apparel company is seeing tremendous growth, with some very high-end brand names.

Three stocks are updated due to Earnings Reports.

The simplest reason is an imbalance of supply and demand; if supply is insufficient to meet demand, as it often is in a brand new industry, prices rise. That’s one reason marijuana stocks have been rising, overall, for the past few years.

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.