In the October Issue of Cabot Early Opportunities we continue to snap up shares of high-growth software stocks, while adding a couple of consistent growers in the landscaping and waste management arenas to round out our market exposure.

Enjoy!

Greentech’s made some modest strides the past week and is indicating some bullishness for the first time in three months. There’s still some work to be done to shake the bears loose, but we’re encouraged by recent action. We still believe the market is weighed down by a lack of progress on the proposed infrastructure and long-term spending bills. We’ve said a few times recent history shows clean energy doesn’t need Federal support to thrive, but the promise of still-murky regulatory action has investors wary of making commitments.

Before we dive too deep into this week’s idea I have decided to sell our PureStorage (PSTG) stock position, which will leave us without a stock or option positions, as the stock has not been participating in the recent market rally. This could prove to be a mistake, but I would prefer to lock in our small profit, while at the same time raise some cash for upcoming trades.



Moving on …



The market added to recent gains last week, as the S&P 500 had its best week since July. The S&P 500 rose 1.8%, the Dow climbed 1.6%, and the Nasdaq added 2.2%.



The rally came on the back of better-than-expected earnings from several well-known stocks. The big banks dominated the earnings calendar and the sector’s pandemic-era trading boom fueled the continued bullishness.

Markets rallied strongly last week, with growth stocks in particular showing strength, so the odds are improving that the recent correction is over and new highs are ahead. If so, today’s recommendation of a data-warehousing company will likely thrive.

As for selling, I have no recommendations today, just one downgrade to hold. And I’ll be following Tesla carefully, reading the quarterly report on Wednesday, and watching the stock’s reaction.



Details inside.

This year has been about as choppy and tricky as we can remember, so nothing the market would throw at us from here would come as a surprise. That said, there’s no question the snapback of the past couple of weeks has been very encouraging—the major indexes have rebounded beautifully, with many regaining their 50-day lines, and individual stocks (especially growth stocks) have done great, with more and more moving back to (or out above) their prior highs. We also like that the bounce has been broad, with the on-again, off-again, rotational action taking a backseat to outright buying. Obviously, the market isn’t totally out of the woods, as most indexes are still range-bound and earnings season is upon us, which will often change the trajectory of things. But we always go with what we see, and the odds are increasing that the September/early October correction is over. We’re moving our Market Monitor back up to a level 7, and could go higher than that if the good vibes continues.

This week’s list represents the broad advance of late, with stocks of all different spots and stripes making the cut. Our Top Pick is Zscaler (ZS), which has lifted to new price and relative performance highs after a six-week pullback.

Stock Name	Price	Buy Range	Loss Limit
Atlassian (TEAM)	415	392-405	360-365
Cameco Corporation (CCJ)	26	25-27	21.5-22.5
Continental Resources (CLR)	52	49-51	42.5-43.5
Datadog (DDOG)	157	152-158	135-138
MGM Resorts (MGM)	48	47-48.5	42.5-43.5
Range Resources (RRC)	24	21.5-23	18.5-19
Snowflake (SNOW)	338	322-333	286-292
Tesla, Inc. (TSLA)	870	845-865	760-770
XENE (XENE)	31	29.5-31.5	25-26
Zscaler (ZS)	301	292-302	262-268

Here is your October Wall Street’s Best Digest.

In the past month, the markets have been seesawing—mostly due to Washington shenanigans—but the overall long-term picture continues to be bright. The rise in housing prices seems to be mitigating, the unemployment rate dropped to 4.8%, and FactSet expects the S&P 500 companies to produce earnings growth of more than 27% for this quarter. So, the fundamentals appear to be in place for a longer bull run, although as I often say—it’s a stock-picker’s, not a dartboard, market.



And with that in mind, our contributors have found some very interesting companies for you this month.

In a market facing inflation, a Taiwan potential takeover, rising oil prices, Explorer stocks had a good week, especially Cloudfare (NET), up twenty points for the week and Sea (SE) is back up to 350, up 7% yesterday. We need to remain confident and my pick today is a niche player in corporate aviation markets.

Today, we are recommending a South African company that trades in the U.S. It looks highly compelling:

• High insider ownership (insiders own ~45% of shares outstanding)
• Strong momentum (stock is near 52 week high)
• 100%+ revenue growth
• Reasonable valuation: P/E ratio of 13x
• Low share count (only 5.4MM shares outstanding)
• No debt

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

There are a lot of reasons why it’s easier to make more money if you already have money. But I will just focus on one undisputable fact, the rich have access to opportunities and investments that most of us do not.

Private equity (PE) or venture capital (VC) is a shining example of such privileged access. PE or VC is money provided to young and growing businesses that otherwise wouldn’t have access to sufficient capital. For ages, these highly profitable investments had been the sole domain of the very wealthy who were able to make fortunes by lending to growing companies at very favorable terms for themselves.



But times are changing.



As financial markets have grown in sophistication, private equity investing is no longer the exclusive domain of the wealthy. There are securities trading on the market today that enable regular investors to mimic the very same money-making strategies employed by the rich and famous.



In this issue, I highlight one of the very best such securities on the market. It has a phenomenal track record with a high dividend yield and a catalyst to move higher in the near future. These companies also tend to thrive in a strong economy and at this point in the economic cycle.

The three leading indexes pushed higher this past week as the S&P 500 rose 0.78%, the Dow gained 1.22%, and the Nasdaq added 0.08%.



Following a choppy and volatile start to the week, on Thursday politicians kicked the debt-ceiling can down the road, which seemed to make investors happy, at least for the day. Unfortunately, that investor excitement was short-lived as the September jobs report on Friday came in at 194,000 new jobs added, well under the expectation of 500,000. The market managed to close Friday only slightly lower despite the bad news.

The market has undergone a radical personality transformation since I released the July issue last week. I’m not hitting the panic button, yet. But it is certainly a situation I will closely monitor.

Emerging and international markets are holding their own as U.S. markets hit new highs in the wake of modest interest rate cuts by the Fed.

The Federal Reserve is expected to lower interest rates this week, with a likely announcement on July 31. The stock market has fully priced in a rate reduction, which means if the Fed fails to lower rates, investors can expect the market to fall for a few days.

Our portfolio is outperforming the index by roughly 100%, on average. But we’re not the only ones. Many targeted mutual funds are also demolishing the Russell 2000 Small Cap Index.

Remain bullish, but continue to take things on a stock-by-stock basis. Some potholes based on earnings, rotation and news flow are certainly possible, but overall, the bull market is in good shape and most leading stocks act well.

Shares of this conglomerate have declined to a very discounted value, but once the current volatility lessens, a case for a turnaround will be likely.

Remain defensive. The market took another leg lower today, though our four remaining stocks in the Model Portfolio hung in there.

This eyecare company is forecasted to grow by 16% next year.

We’re taking another incremental step to focus our portfolio today by selling one more stock.

We’re taking another step to adjust our market exposure today.

This streaming company is looking like a bargain at these prices.

The market continued its crash today, with the major indexes losing a bunch more ground on virus-related economic fears.

The rolling market crash of the past three weeks is continuing today.

In the largest insider purchase of this year, the Non-Executive Chairman of the Board, John Gibson, recently bought US$497k worth of stock, paying US$39.11 for each share.

As you pour over stock websites and ponder which stocks you might like to buy in the coming weeks, think hard about how badly these companies might be harmed by the cessation of public gatherings.

We’ve just been through a harrowing period in the stock market and the path forward remains uncertain.

This vaccine maker just announced that it has initiated development of two product candidates for the treatment and prevention of coronavirus disease (COVID-19).

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.