The good news is the election has passed, and there is hope in the race to find a coronavirus vaccine. The bad news is that these two developments aren’t necessarily great news for all stocks, as money viciously rotated yesterday out of hyper-growth stocks, and into cyclicals.

The market strength of the past week has turned our intermediate-term market timing indicator positive once again, so it’s a good time to buy, especially if you focus on the leaders, like this week’s recommended stock, which has a novel and effective treatment for cancer.

As for our current holdings, some are hitting new highs today, while some have taken a hit, as investors sell stocks (like Zoom) that benefitted from the pandemic. But one day does not a trend make; we’re selling nothing today.

Current Market Outlook


The market staged a stunning rebound last week, producing rare strength that bodes well for the months ahead. And today’s action was even more dramatic, with news of a virus vaccine causing some wild moves up in the major indexes. The intermediate-term trend is now clearly up, but the tricky part comes with individual stocks—today’s action saw growth stocks get hit (in general) while lagging cyclical names exploded higher. Overall, the evidence has clearly improved so we’re optimistic the next leg up has begun, but at the same time, it’s likely the crosscurrents we’re seeing among individual names and sectors will be with us a while (rotation and re-rotation, etc.). Thus, we’re OK with gradually extendingyour line, but it’s probably not going to be like April or May when throwing a dart made you money; continue to pick your spots and stocks carefully and give names room to maneuver.

This week’s list is growth-heavy after we saw many positive earnings reactions last week; yes, most took on some water today but they remain in uptrends until proven otherwise. Our Top Pick is Zendesk (ZEN), which is early stage and acts like it wants to go higher. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
Amicus Therapeutics (FOLD)	21.15	19.5-20.5	17-18
Enphase Energy (ENPH)	116.95	112-118	96-99
HubSpot (HUBS)	345.57	335-350	295-305
JD.com (JD)	84.91	83-86.5	75-77
QUALCOMM Incorporated (QCOM)	142.44	139-144	123-126
Roku, Inc. (ROKU)	221.95	220-232	190-196
Uber (UBER)	48.20	45-47.5	39-40.5
Yeti Holdings (YETI)	51.52	50-53	45-46
Zendesk (ZEN)	124.63	121-126	108-111
Zillow (Z)	104.12	100-105	88-92

The market’s recovery this week has been very impressive, especially in the face of what looks like continued election uncertainty in the days ahead. That said, two days of action isn’t the be-all, end-all, but it’s certainly encouraging; we’re adding one new half position tonight in Novocure (NVCR) and aiming to add more. The only issue is that many stocks we’re high on are reporting earnings tonight or early next week; if they can survive their reports, we’ll likely be putting money to work.

In tonight’s issue, we write about all our stocks and some bullish signposts for the market longer-term--whether we’re seeing a kickoff here or whether it takes a while longer, the odds strongly favor the past two months being a normal rest within a major bull market.

This month we’re jumping into a small MedTech company that represents a picks and shovels play on the cell and gene therapy market. It makes biopreservation media and storage solutions for cutting-edge treatments, including Kite’s (owned by Gilead) CAR T-cell therapies YESCARTA and TECARTUS.

It’s a high growth company with exposure to both clinical trial and commercial-stage therapies. Covid-19 therapies and vaccines are part of the mix too. And there is an M&A angle that’s increasingly relevant.



The stock appears to have huge upside over the coming years. And we’ll get an update from management almost immediately after you read my reports since the company reports Q3 earnings after the close today.



All the details are inside. Enjoy!

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the November 2020 issue.

We briefly discuss the soon-to-evaporate election cloud, the merits of holding value stocks when growth/momentum stocks tumble, and highlight one of our portfolio stocks that had some earnings issues along with several others that reported strong earnings that lifted their share prices meaningfully.



Earnings season is in full swing. Six portfolio companies report later this week. We encourage subscribers to visit the reporting companies’ websites to review their earnings-related slide presentations and listen to the post-earnings conference call. These are all available to the public under the “Investor Relations” tab. Sometimes what portfolio companies actually do can seem murky – a quick visit to their website can help clarify, and (at least to me, a certified investment geek) provide some fascinating reading.



Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the 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.

If you’ve ever searched for instructions for tackling do-it-yourself tasks, there’s a good chance you’ve turned to today’s recommendation for ideas.

With the election tomorrow, the biggest cause of uncertainty will soon be behind us, leaving investors able to focus once again on what’s important—growth and valuation.

In the meantime, it’s worth noting that the market’s technical strength deteriorated last week, turning our intermediate-term timing indicator negative once again. For that reason, among others, we have a couple of sell recommendations today.



As for today’s recommendation, it’s one of America’s most well-known companies, and selling for a bargain price as management steers the big old beast into what could be an exciting future.

Current Market Outlook


The market had been under some pressure since early October, but last week was a different animal, with the sellers coming out of the woodwork and cracking numerous leading stocks and major indexes. Longer-term, this is still a bull market, with the past two months being a (very) tedious up-and-down consolidation period following the huge March-August advance; we still think the next major move is up. Near-term, though, stocks are back in the soup, and while the headlines will be coming fast and furiously this week (earnings and the election), the onus is on the buyers to step up. Until that happens, we advise a cautious stance—holding a good chunk of cash makes sense, while keeping new positions on the small side and honoring your stops and loss limits. We’re pulling down our Market Monitor another notch to a level 5.

Meanwhile, it’s easiest to spot strength in a down market, so the next couple of weeks should be telling. This week’s list has a broad array of stocks and sectors on it, and our Top Pick is Pinduoduo (PDD), one of many resilient Chinese names that’s actually picking up steam while the market sags.

Stock Name	Price	Buy Range	Loss Limit
Bunge Ltd (BG)	57.98	56-58.5	49.5-51
Cloudflare (NET)	51.96	49-52	42.5-44.5
Five9 (FIVN)	144.12	136-140	124-127
Martin Marietta Materials (MLM)	270.94	263-273	238-243
Mattel, Inc. (MAT)	13.95	13-13.5	11.5-11.8
Novocure (NVCR)	112.15	110-115	99-102
Pinduoduo (PDD)	91.62	86-90	77-79
Pinterest (PINS)	58.56	53-56	45-47.5
Quanta Services (PWR)	66.45	62-65	55.5-57
Ultragenyx Pharmaceutical Inc. (RARE)	95.53	90-94	83-85

In the wake of surprisingly successful second-quarter results among large-cap banks, all eyes are turning to regulatory reform as the next catalyst to rising earnings estimates among bank stocks.

Amid all the debate around health care, and despite the on-again-off-again repeal-and-replace effort, small-cap healthcare is still the number-one performing sector this year. Our two medical device stocks are rated Buy, and both are trading at or near 52-week highs.

Earnings season, which brings quarterly financial reports to light, has begun. Initial quarterly reports have spawned some volatile action in individual stocks. Some of the wide swings are warrantied and some aren’t. I sort through the maze and offer my advice on nine companies in the updates.

The iShares EM Fund has bolted higher since July 10, giving us a robust and unambiguous Buy signal. We have two portfolio moves tonight.

The broad market strengthened over the past week, led by a rebound in tech stocks. Other leading sectors included real estate, energy and, for a second week, materials. Utilities also rebounded, as interest rates pulled back. The only industry group that hasn’t advanced over the past five days are the financial stocks.

We seem to be experiencing a more active stock market than that of a typical summer. The adage “sell in May and go away” hasn’t seemed to fit in 2017. There’s been lots of price action among oil refiners and marketers, food retailers, steel, technology and investment companies.

On average, our portfolio rose by 3.2% this week. That pleases me because it was twice as much as the small cap index. Across our 11 positions, we have an average gain of 32%, which is 22.7% better than you’d have done if you just bought the Russell 2000 every time I recommended one of our current stocks.

Relief and a rally returned to the stock market on Wednesday, July 12, as Fed Chair Janet Yellen assured Congressional members and investors that her Federal Open Market Committee would not “normalize” interest rates by raising rates at predetermined time intervals.

Put a little money back to work. Our trend-following indicators are still bullish, and we’ve seen the Nasdaq and growth stocks show renewed strength in recent days. The market isn’t completely out of the woods, but there’s enough evidence to do a little new buying.

The broad market remains in a holding pattern. Some stocks are breaking out to new highs, but others are breaking down. The Nasdaq regained some ground this week, but the divergences between the major indexes remain. There’s no reason to panic, but we are making a couple of moves to reduce risk this week.

Just in case any of my subscribers wants to invest in energy companies, but feel bad that perhaps those companies are cheating America, there are three things I’d like to point out about ExxonMobil (XOM).

The turmoil in stock prices continued last week. The S&P 500 index declined only 0.4%, but consumer discretionary, energy and technology stocks suffered larger losses. Money flowed into several value sectors, including industrial, financial and materials stocks. Is the bull market in growth stocks over?

In the past couple of months, coverage of the shares of this cybersecurity stock was initiated at Mizuho.

Analysts expect this grocer to grow by double-digits next year.

Growth stocks were hit hard today, though they found some support in the afternoon. Bigger picture, we remain optimistic that the market’s next big move is up, as our long-term Cabot Trend Lines are still bullish. Near term, however, the market has clearly lost some steam. Near term, however, the market has clearly lost some steam and we are selling one position today as a result.

Rather than wait until Thursday, I would like to let you know that I’m moving one stock to a sell following its 7% decline Tuesday following disappointing news that electric vehicle subsidies in China are being cut 50%.

The top five holdings of this defense fund are: Boeing Co (BA, 20.27%); Northrop Grumman Corp (NOC, 11.93%); General Dynamics Corp (GD, 9.19%); TransDigm Group Inc (TDG, 6.27%); and Spirit AeroSystems Holdings Inc (SPR, 4.99%).

Technology stocks are the leaders, gaining an average 18.7% so far in 2019.

The shares of this auto parts supplier were recently upgraded at Guggenheim to ‘Buy’.

Two stocks in the portfolios have reported earnings and there is news on one other.

Secondly, we are taking some profits.

Three analysts have raised their EPS estimates for our first pick today, and secondly, we are taking some profits.

Coverage of the shares of this enterprise cloud computing company were recently initiated at Mizuho, with a ‘Buy’ rating, and at Stephens & Co. and Atlantic Equities, with an ‘Overweight’ rating.

While the long-term prospects for this industry remain very bright, and I’m thrilled to be your guide to these opportunities, the short-term risks are now high. Which means that someday, there will be a correction, and some investors, particularly those who bought at the top, will lose a lot of money. And I don’t want you to be one of them.

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.