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).

Some 100 gigawatts of solar power projects were completed last year, and after some virus-related issues, there’s every reason to expect even faster deployment of solar in the future. That should help today’s recommendation, a provider of residential solar electricity via solar panels and battery storage

Current Market Outlook


The Nasdaq and leading stocks had a huge reversal today, with many names that had gone vertical suffering some heavy-volume selling, representing another shot across the bow. Still, as we’ve written before, one day does not a trend make; the trend of the Nasdaq and growth stocks remain up, while the broader indexes and cyclical sectors are positive but mostly range-bound. As has been the case earlier in the rally, what happens from here will be key--continued distribution would be a sign that the current run could be ending, likely followed by a well-deserved digestion phase, but strong support in the near future would likely tell us this was just another brief stumble on the way to higher prices. Stepping back, most of the evidence remains positive, so we’re still bullish, but the next few days will be key.

As opposed to the last two weeks, this week’s list is back to having a leadership, growth-ier feel to it. Our Top Pick is Alibaba (BABA), which has always had the makings of a liquid leader, and is helping to lead the group rally in Chinese stocks as it lifts out of a two-year rest.

Stock Name	Price	Buy Range	Loss Limit
Alibaba (BABA)	254.81	244-254	220-225
Bill.com Holdings (BILL)	88.76	81-85	73-75
Kinross Gold (KGC)	8.19	7.2-7.6	6.5-6.7
Marvell Technology Group (MRVL)	36.88	35-37	31.5-32.5
Pacira Biosiences (PCRX)	54.85	54-56	47.5-49
Redfin (RDFN)	40.40	34.5-36.5	30-31.5
Roku, Inc. (ROKU)	150.46	147-154	128-132
Splunk (SPLK)	207.67	192-198	175-178
Sunrun (RUN)	38.40	27.5-29.5	23.5-24.5
XP Inc. (XP)	44.59	43-46	38-39.5

The market remains in good health and trending higher, and our stocks as a whole have been benefitting thoroughly. However, it’s possible that today we may be seeing the beginning of a correction in the leading Nasdaq glamour stocks. Time will tell.

In the meantime, owning a diversified portfolio of high-potential stocks is the best prescription for your financial health, and today’s featured stock is a good one, a leader in the industry of nationwide homebuilders.



As for the current portfolio, there are no changes, though there is one stock I’m downgrading to hold as I keep a close eye on it.



Full details in the issue.

U.S. markets are trading cautiously with the latest uncertainty surrounding the coronavirus pandemic. Chinese markets have surged over the last week and I’ll outline a trading idea to take advantage of the momentum. Our emerging market (EEM) signal is decisively positive as our portfolio moves ahead, led by our Alibaba (BABA) position, up 18% this week, and Sea Limited (SE) continuing its incredible run. Today, we discuss changes afoot in Hong Kong with a new recommendation that is an undervalued throwback blue chip that is also a high-quality proxy for Asian growth.

While everyone is focused on the near-term risks and inconveniences of this pandemic, lasting changes are being forged. Major events have a way of reshaping the American psyche and changing behavior. This pandemic ordeal is forever altering aspects of our culture, creating an a unique opportunity for investors.
In this month’s issue I highlight a stock that directly benefits from the fact that people will continue to do more things from home than they did before the pandemic. It sells popular packaged food brands. Business is booming and should stay good for a long time.


A former slow-growth stock is being transformed into a fast-growing, high-yielding investment that is ideal to hold through the crisis and beyond. Investors are just beginning to realize the opportunity. But you can still get in cheap.

Today we are profiling a logistics company that is far under the radar of most investors, despite strong revenue growth, 100%+ earnings growth in its most recent fiscal year, and a mid-single-digit P/E.

Further, management and directors own 44% of the company’s stock, ensuring that investors are well aligned.



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

Any doubts surrounding the work-from-home secular theme were dispelled by the pandemic, as remote platforms are now more prevalent than ever, and it should stay that way—recent surveys point out that up to three quarters of companies anticipate remote work being part of their long-term strategy, and Harvard just today said it’s going fully online in the fall.

Current Market Outlook


Coming into last week, the market was at a key juncture, with many indexes testing their key 50-day lines and even the Nasdaq testing its 25-day line, which has contained its post-bottom advance. Happily, those tests were passed, and now we see the Nasdaq at new highs and other indexes getting some daylight above their 50-day lines. Of course, there are still a few issues out there, as the environment remains relatively bifurcated and there are few stocks at great entry points after 15-plus weeks on the upside; sentiment is also getting a touch euphoric. Thus, you should continue to keep your feet on the ground and not pile into stuff sticking straight up in the air, but you should also respect the primary, bullish evidence and stick to a heavily invested stance.

This week’s list has a bit of a secondary feel to it, though all the names have enticing stories and charts. For our Top Pick, we’re going with Ultragenyx (RARE), one of many biotech stocks that’s showing renewed strength.

Stock Name	Price	Buy Range	Loss Limit
Alarm.com (ALRM)	71.33	64-67	57-58.5
Biohaven Pharmaceutical Holding (BHVN)	75.71	68-72	60-62.5
Chegg (CHGG)	74.21	68-71.5	60-62
Cloudflare (NET)	39.32	35-37.5	30.5-32
Nu Skin Enterprises Inc. (NUS)	46.07	42.5-45	37.5-39
Thor Industries (THO)	104.76	98.5-102.5	89-91
Trade Desk (TTD)	468.02	415-435	365-380
Ultragenyx Pharmaceutical Inc. (RARE)	87.63	83-88	72-75
Upwork (UPWK)	15.93	13-14	11.5-12
Zscaler (ZS)	126.22	108-113	95-98

Continue to lean bullish, but also keep some powder dry as we wait for growth stocks to kick into gear. The overall market remains in great shape, and with the trends pointed up, we expect higher prices down the road. However, growth stocks aren’t participating, with many still under pressure. Our one change tonight is that we’re placing Proofpoint (PFPT) on Hold.

Today I want to talk about energy stocks, because I’m seeing a growing correlation between quality and share price performance. Also, Royal Caribbean (RCL) moves from the Growth Portfolio to the Growth & Income Portfolio, and Tesoro (TSO) joins the Buy Low Opportunities Portfolio.

The Emerging Markets Timer is still negative, although investors are edging back into the sector, moving the MSCI Emerging Markets Fund (EEM) higher over the past week. Our only portfolio move today is to buy a half position in Vale (VALE) bringing the portfolio to 40% invested.

We head into the holiday with a trimmed-back portfolio after locking in partial profits on three positions, courtesy of the Trump Bump. It feels to me like the market is ready for a modest pullback given the intense buying since the election (early trading today supports this assertion).

We don’t have any rating changes today—we’ve sold three underperforming stocks this month, so our portfolio is in fighting shape. If you’re underinvested, focus on our Buy-rated recommendations, and try to start new positions on pullbacks.

I’m excited about all of the recent price action in the stock market! For many months—or several years?—investors’ stock portfolios alternated between treading water and surviving market corrections. Finally, the markets seem to have been set free, adding bullish stock movements into the mix.

Today I move two stocks back to Buy: Aspen Aerogels (ASPN) looks like a relatively low-risk buy given a very big recent pullback, and Primo Water (PRMW) has begun to act like it should after announcing a big acquisition. Other than that, all guidance remains the same. That means we have five of our 10 stocks rated Hold.

I have recommended selling nine stocks in November because of high stock prices and a turnover in the market caused by the election of the new President, and in this update, I suggest where you should invest the proceeds of your sales. Also, three Cabot Benjamin Graham Value Investor companies reported quarterly financial results or other noteworthy news during the past week.

Put a little money to work. Our Cabot Tides turned positive yesterday, so both the intermediate- and longer-term trends of the market are now pointed up. That said, there remain many crosscurrents and growth stocks are generally struggling.

I now recommend selling Pattern Energy (PEGI), a yieldco that is facing a multitude of short- and medium-term challenges, and I’m putting Pembina Pipeline (PBA) on Hold today. On the plus side, we’re sitting on a two-month, 21% gain in Prudential Financial (PRU) and are going to book some profits today, while holding the rest for further gains. Lastly, because of its recent strength, I’m putting US Bancorp (USB) back on Buy, but I recommend waiting for a pullback.

Financial stocks, as a group, are undervalued, with strong expected earnings growth, bullish price charts and prospects of upward earnings revisions as interest rates rise. Today’s Portfolio Changes: BigLots (BIG) moves to a Hold, and D.R. Horton (DHI) increased its dividend.

We’re going to reel in a few profits during this post-election stock market surge in the event the honeymoon is short-lived. Along those lines, today I recommend you sell your remaining stake in Mitek (MITK), as well as sell half your position in LeMaitre Vascular (LMAT) and NanoString (NSTG).

This tech company beat earnings estimates by $0.06 last quarter, but an announced acquisition caused shares to tumble a bit, creating a buying opportunity.

This technology company is forecasted to grow its earnings at an annual rate of 30% over the next five years.

Listed are the top five holdings for this small cap fund in this article.

This business services process provider beat analysts’ estimates by $0.11 last quarter, and with its recent acquisition, earnings should continue their upward track.

Analysts expect this 17.37% annual growth over the next five years for this financial market company.

The market was slammed today as a quiet open turned into a huge wave of distribution. In the Model Portfolio, we are selling two positions as both plunged through long-term moving averages.

This turnaround stock has new management and its shares are a discounted opportunity.

Now in its seventh year, MJBiz.com has over 1,000 exhibitors and more than 26,000 attendees, an increase of 137% from the year before. It’s BIG!

Analysts are forecast 25% annual growth for this construction aggregate company over the next five years.

Analysts expect this managed services firm to grow at 30% annually over the next five years.

This domain provider’s shares were recently upgraded by Baird to ‘Outperform’.

One of our stocks moves to Strong Buy.

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.