The recent August expiration cycle was our second disappointing month in a row. And while 18 wildly successful months of trading out of 20 is a truly spectacular track record, when trades go wrong there is little doubt it’s painful in the moment. However, trading/investing isn’t about being a prisoner of the moment. It’s about building wealth over time, which the Cabot Profit Booster has been very successful at since its inception in early 2020.

The bull market remains intact, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.

Today’s featured stock is a solid grower whose products help millions of people with diabetes manage their condition in increasingly efficient ways.



As for the current portfolio, most of our stocks look good, and some are hitting new highs, but one has to go and the victim this time is Driven Brands (DRVN).



Details inside.

Current Market Outlook


The selling in growth stocks spread to the rest of the market last week, with most major indexes finishing lower, led again by growth-y indexes and funds. The good news is that, for now, the worst-case scenario has been avoided—many growth stocks tested key support in recent days (50-day lines, etc.) and almost all held up, with Friday and today seeing some solid bounces. Cyclical stocks have done a similar dance, with many pulling in, but few really cracking, and now the bounce is underway. Ideally, this rebound will develop some power—strong bounces off support often provide low-risk entry points—but, while we won’t wait weeks to see how it plays out, it’s too soon to conclude the recent selling wave is over. We remain more optimistic than not, and the past couple of days are certainly encouraging, but let’s see if some new and potential leaders lift off in classic fashion.

This week’s list is a mix of various different stocks, including a number of names we haven’t written up before. Our Top Pick is Chart Industries (GTLS), an under-the-radar name that’s set to see earnings soar as demand for its various energy infrastructure items (including many that play into the clean energy space) takes off.

Stock Name	Price	Buy Range	Loss Limit
Axon Enterprise, Inc. (AXON)	187	183-188	168-171
Builders FirstSource (BLDR)	50	49-51	44-45.5
Chart Industries (GTLS)	178	173-178	154-157
Elastic (ESTC)	157	153-158	135-138
PKI (PKI)	182	178-183	161-164
Rapid7 (RPD)	113	109-113	99-102
Regeneron Pharmaceuticals (REGN)	667	630-650	575-585
UPST (UPST)	203	185-195	157-162
WK (WK)	137	130-134	117-119
Zscaler (ZS)	251	240-247	220-225

In the August Issue of Cabot Early Opportunities we (mostly) return to our roots, focusing on technology and MedTech growth stocks, while adding a little flavor with a consumer stock we’ve been keeping an eye on.

Enjoy!

Stocks slipped a bit yesterday after minutes from the Federal Reserve’s last meeting showed officials increasingly in agreement about pulling back on the central bank stimulus. This was prompted by increasing evidence of mounting inflation. Markets are a bit choppy against this backdrop but earnings continue to be relatively strong, such as Sea Limited (SE) posting another superlative quarter yesterday. This week you will see I have divided Explorer stock updates into two categories: “trading” and “buy and hold,” as we turn to clean tech infrastructure for a new recommendation.

The market continued to test new highs last week as the S&P 500 gained 0.71%, the Dow climbed 0.87%, while the Nasdaq broke trend by closing 0.9% lower. That being said, we continue to see thin summer trading led by ongoing sector rotation. Growth waned last week and it was the cyclicals’ time to shine, with the financials leading the way.

While the market was weak this morning, the bull market remains intact, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.

Today’s featured stock is a low-risk dividend payer whose products you have probably bought—and probably never knowing the company’s name. More importantly, Tom Hutchinson says it’s cheap.



As for the current portfolio, most of our stocks look good, so the only changes is an upgrade of Five Below (FIVE) to Buy.

Current Market Outlook


Last week was generally one of rotation back out of growth and into the broader market, and today, that trend accelerated, with growth-oriented funds and indexes (like ARKK and IWO) gapping below multi-week support and longer-term moving averages, while many recent leaders tested their 50-day lines. This sets up a key test—if a lot of stocks go down the drain, it’ll clearly be a sign of cut back on growth titles, though if we see a strong bounce from here, it could actually set up some decent pullback/resumption entry points. Meanwhile, we’re seeing an increasing number of setups in the cyclical areas, which are coming to life after two-plus months of rest. Right here, we’re not making any dramatic changes, but be sure to honor your stops. The next few days could be telling.

As for this week’s list, it definitely has more of a turnaround/cyclical feel to it as those stocks find buyers. Our Top Pick is Paylocity (PCTY), a leader in what’s looking like a new group upmove for HRM stocks.

Stock Name	Price	Buy Range	Loss Limit
Avis Budget Group (CAR)	93	91-94	81-82.5
CPRI (CPRI)	58	57-59	52-53
Colfax (CFX)	49	48-49.5	44.5-45.5
Dexcom (DXCM)	506	488-508	445-455
Five Below (FIVE)	228	221-228	200-204
HubSpot (HUBS)	657	630-650	570-580
LTHM (LTHM)	25	23-25	19.5-20.5
Nucor Corporation (NUE)	124	117-122	103-106
Paylocity (PCTY)	251	242-248	214-218
Saia Inc. (SAIA)	247	237-244	217-220

Future Shock

Moral imperatives don’t drive the stock market, but they do drive peoples’ attitudes, which in the long run will move the market. The sixth report of the Intergovernmental Panel on Climate Change came out last week and is a sobering reminder that the world must decarbonize. Global sea level rise is accelerating and is advancing at a higher rate than at any time in the past 3,000 years. There is a growing belief the Amazon rainforest, Arctic ice and Gulf Stream are at tipping points that will worsen the effects of global warming. The most unnerving thought for me reading it: scientists are conservative in public projections like the report.



Stock investing plays its small role in the needed change: by pursuing profits in Greentech we’re putting capital to use supporting publicly traded companies–at the least buying and selling volume help create viable markets for raising additional capital for businesses. For our modest mission this issue, we have one new buy, one intriguing new watch and some ratings and sell-stop shifts in our existing portfolio.



As always, contact me anytime with questions or comments at brendan@cabot.net. Thank you for joining me on the path of climate profits.



All the best,



Brendan Coffey
Chief Analyst, SX Greentech Advisor

There are three changes to the portfolio today.

Prepare yourself for more ups and downs in our medtech & biotech stocks if this debate heats up. I’m not planning to step out of the space since I think this will pass and we can still do quite well with these types of stocks.

The overall market remains in good shape, with both of our trend-following indicators—the Cabot Tides (intermediate-term) and Cabot Trend Lines (longer-term)—currently pointing up. We’re still keeping an eye on small-cap indexes, which have still not eclipsed their late February peaks, as well as the Nasdaq, which has found repeated resistance near 8,000. But overall, there’s no question that the trends are up.

The new all time high is a significant milestone. Although the S&P 500 hasn’t hit new highs quite yet it is only just about .01% from the mark. The new high is significant because it negates any possibility that we have been in a bear market since September, when the previous high was established.

We have obviously lived through a very difficult period in the stock market recently, from which most of the portfolio stocks are recovering or have already recovered. Hopefully we will not see another similarly ugly stock market downturn for several years, but there are no guarantees.

Small-cap discretionary, energy, financials, industrials, technology and materials are all moving higher. That’s a healthy mix, and it’s helped push the S&P 600 Small Cap Index back up near overhead resistance.

As we enter the second quarter, emerging markets are on solid footing in a constructive uptrend as EEM remains just above both 50-day and 25-day moving averages. In light of this we are positive and increasing our allocation.

The tide is changing. The recent perception was that of sputtering economic growth in a market that was panicking about the possibility of a near-term recession. Many of our defensive positions have gone gangbusters in the past turbulent year but I’ll be watching the situation closely but for now I will bow to strong momentum.

You may have noticed that the price of West Texas crude oil is up about 48% since it bottomed in late December.

The overall market is still in fine shape, but there have been a growing number of yellow flags, including among growth stocks, which came under fire today. As a result, we are selling one position from the portfolio and downgrading another to Hold.

Three portfolio stocks report earnings.

Marijuana stocks remain under pressure (with a few exceptions), as firms struggle for growth and profitability.

Earnings forecasts are moving up for this bank, with 14 analysts increasing their estimates in the past 30 days.

This portfolio stock recently reported first quarter fiscal 2020 results, and while the stock has been a little volatile since reporting, the punchline is that all appears on track.

Crista updates us on three portfolio stocks.

This stock is the first of Cabot Profit Booster’s stocks to report earnings today after the close. Because of the earnings risk I wanted to update you on where we stand with the position, as well as the downside and upside potential the options market is pricing in for this event.

A merger and a spin-off for this drug company looks attractive.

This media company just raised its dividend by 2%, giving it an 8% annual yield, paid monthly.

In the past month, five analysts have increased their 2020 forecasts for this contract research organization.

This mega drug company is forecasted to grow at an annual rate of 14% over the next five years.

Crista updates us on some Earnings and has two rating changes

The top three sectors in this ETF are: Consumer Defensive (28.43% of assets), Communication Services (21.24%), and Financial Services (14.83%).

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.