Issues
After reaching record highs this past month, volatility set in and we had a few days of losses following the Fed meeting, as well as Trump’s latest Chinese tariff action. But yesterday, markets calmed, regaining some of their losses. Advisor and consumer sentiment remain very bullish, as you’ll see in our Advisor Sentiment Barometer and Market Views.
The broad market has now begun a well-needed correction, which is likely to go on at least a little longer, and our job is to adjust our portfolio, on a continuing basis, so that we are always invested in a diversified portfolio of stocks that fit your investment needs.
This week that means selling three stocks. But it also means that there are buying opportunities in some of our stocks.
As for the new recommendation, I’m leaning conservative once again, with a low-risk petroleum infrastructure stock that has great recurring business and is decently valued as well.
Note: Because of the Cabot Investors Summit, which will bring all the Cabot analysts together in Salem late next week, the next issue of Cabot Stock of the Week will come out a day early next week, on Monday.
This week that means selling three stocks. But it also means that there are buying opportunities in some of our stocks.
As for the new recommendation, I’m leaning conservative once again, with a low-risk petroleum infrastructure stock that has great recurring business and is decently valued as well.
Note: Because of the Cabot Investors Summit, which will bring all the Cabot analysts together in Salem late next week, the next issue of Cabot Stock of the Week will come out a day early next week, on Monday.
Since we’re in the midst of a sudden stock market correction, I decided to feature three stocks today that seem to offer the best opportunities while their prices are temporarily low.
Be brave! If you saved up portfolio cash with which to buy low at moments like this, now is the time to buy something! You don’t have to spend it all in one day, of course.
If you are new at buying low during stock market corrections, and you’re feeling excited and scared and tentative and unconfident, send me an email. You’re going to be okay, and I’d love to hear about your experience. Learning to buy low is an important step toward increasing your future stock portfolio success.
Be brave! If you saved up portfolio cash with which to buy low at moments like this, now is the time to buy something! You don’t have to spend it all in one day, of course.
If you are new at buying low during stock market corrections, and you’re feeling excited and scared and tentative and unconfident, send me an email. You’re going to be okay, and I’d love to hear about your experience. Learning to buy low is an important step toward increasing your future stock portfolio success.
Current Market OutlookThe market had become vulnerable to a short-term pullback in recent weeks, and now the normal post-Fed wobbles have turned into an abnormal selloff after the new round of Chinese tariffs, with today’s market plunge decisively cracking the intermediate-term uptrends of the major indexes and many leading stocks. Bigger picture, this is still a bull market until proven otherwise, but after some huge runs, many stocks that have been running for months likely need time to repair the damage. Interestingly, the fresher stocks (those that got going in May, June and July) are mostly hanging in there, and we’re not opposed to nibbling on them if you have some cash on the sideline. But at this point, your focus should be more on preserving capital (honoring stops, holding cash, cutting back on new buying) and waiting for bottoms to be formed. Our Market Monitor is back down to a level 4.
This week’s list is full of those fresher names, if you feel like taking a stab at a name or two. Our Top Pick is Inphi (IPHI), a high-potential stock that’s holding up well after earnings.
| Stock Name | Price | ||
|---|---|---|---|
| Agnico Eagle Mines (AEM) | 79.05 | ||
| Anaplan (PLAN) | 47.52 | ||
| Casey’s General Store (CASY) | 165.73 | ||
| Inphi (IPHI) | 120.16 | ||
| MasTec, Inc. (MTZ) | 66.65 | ||
| PagSeguro Digital (PAGS) | 35.09 | ||
| Pinterest (PINS) | 35.86 | ||
| SunPower (SPWR) | 12.26 | ||
| Survey Monkey (SVMK) | 19.97 | ||
| Twitter (TWTR) | 40.37 |
Today’s recommendation is a software and infrastructure company specializing in communications. It just reported Wednesday night, and results were better than expected, which is great for two reasons.
First, the latest numbers support my thesis that this company has what it takes to grow over the long haul.
And second, we don’t need to stress about the company reporting right after we buy in! We have the latest data. And it looks good.
All the details are inside this month’s Issue.
First, the latest numbers support my thesis that this company has what it takes to grow over the long haul.
And second, we don’t need to stress about the company reporting right after we buy in! We have the latest data. And it looks good.
All the details are inside this month’s Issue.
By their nature, turnaround stocks involve a fair amount of risk. One way to help reduce that risk is to find out-of-favor stocks that offer high dividend yields. This puts hard cash in your pocket while you wait for the turnaround to take effect.
In this issue, we list six additional out-of-favor stocks that have high dividend yields which we believe are sustainable and also have turnaround potential:
In this issue, we list six additional out-of-favor stocks that have high dividend yields which we believe are sustainable and also have turnaround potential:
In the last issue we thought growth stocks could easily have a few hiccups, and that’s generally what we’ve seen, with many well-known, extended titles hitting some turbulence. And, looking at the entire market, it lost some steam over the past three weeks, with the news-driven selling of the past two days doing some damage.
Bigger picture, our views haven’t changed at all -- this is a bull market that’s likely to move meaningfully higher in the months ahead. We remain heavily invested (88% in the Model Portfolio), but we’re watching things closely to see if this is more of a shakeout or the start of a sustained selling wave.
In tonight’s issue we write about one sector that appears to be breaking free of very long launching pad, with most components doing the same. (Our favorite name in the sector reports earnings tonight.) And we also run through all of our stocks, sharing our thoughts on many of them pre- and post-earnings.
Bigger picture, our views haven’t changed at all -- this is a bull market that’s likely to move meaningfully higher in the months ahead. We remain heavily invested (88% in the Model Portfolio), but we’re watching things closely to see if this is more of a shakeout or the start of a sustained selling wave.
In tonight’s issue we write about one sector that appears to be breaking free of very long launching pad, with most components doing the same. (Our favorite name in the sector reports earnings tonight.) And we also run through all of our stocks, sharing our thoughts on many of them pre- and post-earnings.
The markets keep sailing along, although at a slower pace. The Dow Jones Industrial Average gained about 400 points since the last issue. The economy remains strong, with both new home and pending house sales rising. Unemployment continues to decline. Overall, a nice, sound economy.
And as you’ll see in our Market Views section, our contributors continue to be bullish.
After a fantastic showing for our 2019 Top Picks last month, our contributors are continuing to find some great stocks with big potential for you.
And as you’ll see in our Market Views section, our contributors continue to be bullish.
After a fantastic showing for our 2019 Top Picks last month, our contributors are continuing to find some great stocks with big potential for you.
The market continues to slowly slog higher in the dog days of the summer. It’s a time of year when investors are more focused on squeezing more fun out of the last days of the summer than investing. Markets seem to behave the same way they did when investors stopped paying attention. In this case it likely means a higher crawl until Labor Day.
Of course, an outside event can always change things. We’ll see what happens with today’s Fed rate decision. But unless something rocks the boat, markets will probably remain on autopilot for the next month or so.
Of course, an outside event can always change things. We’ll see what happens with today’s Fed rate decision. But unless something rocks the boat, markets will probably remain on autopilot for the next month or so.
The broad market remains in fine health, with the major indexes trending higher and sentiment measures still bullish. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks that fit your investment needs.
Last week’s recommendation was an undervalued cyclical business, and this week we swing back to a fast-growing cloud software stock with strong momentum and big upward potential.
Last week’s recommendation was an undervalued cyclical business, and this week we swing back to a fast-growing cloud software stock with strong momentum and big upward potential.
Updates
The results are in for the month of April. It was fabulous. The S&P rose 9.6%, making it the best single month for the market in six years. It hit an all-time high on Friday.
Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of minor skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings.
Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of minor skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings.
Now before you call me crazy concerning today’s newsletter headline, hear me out.
Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”
Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”
The market is digesting the push and pull of higher oil prices, a deeply divided Federal Reserve, prospects for a prolonged blockade of the Strait of Hormuz and fading momentum from the AI trade that helped push markets to all‑time highs earlier this month.
Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.
Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.
Yesterday, four tech giants, Alphabet, Amazon, Meta and Microsoft, representing 22% of the S&P 500’s market value, reported strong quarterly earnings that highlighted the importance of AI.
You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.
You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.
It’s been a glorious April following a miserable March for the market. What happens in May may determine which direction stocks are headed for the rest of the year.
That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.
That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.
What war? This market is moving on. We may not be out of the woods yet, but investors are looking beyond the Iran war.
Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.
Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.
The other day I was paid a visit by a roving ISP salesman who was pitching his company’s fledgling internet service over the local monopoly’s. We struck up a conversation and he asked what I did for a living. When I told him, his eyes lit up and he asked, “Got any good stocks you can recommend?”
Without thinking I blurted out, “Anything AI-related. You can’t go wrong.” The advice was only semi-facetious, for there’s undeniably a degree of truth behind it. My instinctive response to that question also prompted me to consider the question: just how long can the broad market continue its “all things AI” run without broader sector participation
Without thinking I blurted out, “Anything AI-related. You can’t go wrong.” The advice was only semi-facetious, for there’s undeniably a degree of truth behind it. My instinctive response to that question also prompted me to consider the question: just how long can the broad market continue its “all things AI” run without broader sector participation
Note: I’m out of town this week, so I’ll be a bit briefer on the update today—but I’m still checking my laptop a couple of times a day if you have any questions or comments. I’ll be back at my desk come Monday. Cheers.
WHAT TO DO NOW: Remain optimistic. The market and some leaders have hesitated, but all of our market timing indicators are bullish, and most stocks we own or are watching are working. Last Friday, we bought a half-sized stake in Nebius (NBIS) and added a 3% additional stake in ProShares S&P 500 Fund (SSO); earlier this week, we sold our small remaining position in GE Aerospace (GE); and tonight, we’ll buy a half-sized position (5% of the portfolio ) in Cava (CAVA). We’ll still have 46% in cash or so after these moves.
WHAT TO DO NOW: Remain optimistic. The market and some leaders have hesitated, but all of our market timing indicators are bullish, and most stocks we own or are watching are working. Last Friday, we bought a half-sized stake in Nebius (NBIS) and added a 3% additional stake in ProShares S&P 500 Fund (SSO); earlier this week, we sold our small remaining position in GE Aerospace (GE); and tonight, we’ll buy a half-sized position (5% of the portfolio ) in Cava (CAVA). We’ll still have 46% in cash or so after these moves.
Despite all the headline noise lately we’re marching deeper into first‑quarter earnings season with the market’s path of least resistance still pointing higher.
Optimism around the extension of the tentative ceasefire in the Middle East has reduced geopolitical anxiety to a seemingly manageable level. The U.S. economy continues to show resilience, and the corporate earnings outlook points toward meaningful growth in the coming quarters and years.
Optimism around the extension of the tentative ceasefire in the Middle East has reduced geopolitical anxiety to a seemingly manageable level. The U.S. economy continues to show resilience, and the corporate earnings outlook points toward meaningful growth in the coming quarters and years.
The old saying, “History doesn’t repeat itself, but it rhymes,” is an apt one for the stock market these last two years.
In early 2025, the S&P 500 raced to new all-time highs before peaking in late January/early February, only to get dragged down in March and April by a geopolitical crisis (tariffs/Liberation Day), before rallying in a V-shaped pattern as the severity of the crisis abated.
In early 2025, the S&P 500 raced to new all-time highs before peaking in late January/early February, only to get dragged down in March and April by a geopolitical crisis (tariffs/Liberation Day), before rallying in a V-shaped pattern as the severity of the crisis abated.
The market turned on the afterburners. The S&P 500 made up all the March losses and catapulted to a brand new high in a remarkably short time. It’s a market that sure looks like it wants to go higher. But stocks are being held back this week by more war uncertainty.
The current ceasefire with Iran expires on Wenesday night. Talks may not happen, and war talk is growing. The resumption of the war will almost certainly prompt a decline in the market. Aside from that near-term threat, investors are clearly looking past this war. Hopefully, it won’t last much longer.
The current ceasefire with Iran expires on Wenesday night. Talks may not happen, and war talk is growing. The resumption of the war will almost certainly prompt a decline in the market. Aside from that near-term threat, investors are clearly looking past this war. Hopefully, it won’t last much longer.
The market came roaring back to new highs last week after a tough March. But the war isn’t over yet, and there could be more bouncing around in the weeks ahead.
Investors are clearly already looking past this war, as there is a high degree of optimism that hostilities will soon end. There is probably still a big rally or two left in the tank when the war actually ends. Sure, there is still headline risk in the meantime. But the war is clearly fading as the biggest market catalyst and giving way to earnings.
Investors are clearly already looking past this war, as there is a high degree of optimism that hostilities will soon end. There is probably still a big rally or two left in the tank when the war actually ends. Sure, there is still headline risk in the meantime. But the war is clearly fading as the biggest market catalyst and giving way to earnings.
Alerts
Nomura just upgraded the shares of this financial behemoth to ‘Buy’ and two analysts have increased their EPS estimates for the company in the past 30 days.
The top five holdings of this fund are: Apple Inc (AAPL, 1.59%); Microsoft Corp (MSFT, 1.51%); Amazon.com Inc (AMZN, 1.22%); Facebook Inc A (FB, 0.92%) and JPMorgan Chase & Co (JPM, 0.82%).
One of our stocks reported this morning and results came in just shy of expectations. The bottom line is that the stock is selling off hard and is back down to its 200-day line, and in the zone of support that’s held for the last four months.
Alexion Pharmaceuticals (ALXN) reported positive results in a Phase 3 clinical study of ALXN1210 this morning, for treatment of Paroxysmal Nocturnal Hemoglobinuria (PNH).
Two of our stocks reported their latest quarterly results yesterday and both disappointed; one is now rated Sell.
Signet Jewelers (SIG) fell dramatically upon news surrounding the fourth-quarter earnings release. The fourth-quarter numbers were not the problem, but there were additional announcements.
The shares were recently upgraded to ‘Buy’ at Gabelli & Co. and 12 analysts have increased their EPS estimates in the past 30 days.
Our first idea, an aerospace and oilfield service supplier handily beat earnings estimates and received a new ‘Buy’ rating.
Our other two recommendations are profit-taking on two previous ideas.
The market’s strength last week and today’s calm action was enough to turn our Cabot Tides back to a positive stance, flipping the intermediate-term trend back to bullish. Given that the Model Portfolio isn’t holding a ton of cash, we’ll start slow with one new addition tonight.
This company of non-physician-owned medical centers just made a strategic agreement with a major hospital chain.
Portfolios
Strategy
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 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.