In the June Issue of Cabot Early Opportunities we take note of the market’s string of all-time highs and accelerating pace of consumer spending.
Against that backdrop we present a batch of stocks that offer exposure to a variety of trends, from retail spending and auto maintenance to consumer lending, customer care for enterprises and even vaccine manufacturing.
SPACs – special purpose acquisition companies – had their moment. For about six months until this spring, they were the hottest thing in the market – hotter even than meme stocks. That ended, though, thanks to a combination of a few poor deals that made institutional investors pull back from supporting SPACs and regulatory crackdowns that have dramatically slowed new blank-check creation. In the Greentech space, however, that retreat means there are some opportunities to be found amid the market detritus. That’s our focus this issue. We sorted through the more than 850 active SPACs in the market, identifying 71 that are ESG focused and then whittling our selections down from there.
These mark our first additions to the Excelsior (“ever upward”) portfolio. Excelsior is our special opportunities portfolio for occasional dips into equities that don’t fit into our regular Real Money Portfolio approach and strategy. The Real Money Portfolio is meant to be fully invested at 12 holdings of equal starting size, a design allowing us to seek market-beating results while containing long-term risk. Our approach in the Real Money Portfolio for each selection is largely the same too – a collection of chart and technical screens bolstered by fundamental evaluations. Excelsior will tend to be riskier: we don’t have a recommended position size among its recommendations (that is, don’t anchor buying to the Real Money Portfolio sizing) and selections often don’t have the trading history to be vetted deeply by technical analysis–as is the case with our SPAC choices. Still, we see SPACs as a type of late-stage venture capital opportunity and there are some very exciting businesses coming to market in solar, EVs and materials. We also discuss ways to grab quick, easy profits in any SPAC. Enjoy!
No issue ranks higher than climate change on our clients’ lists of priorities. They ask us about it nearly every day. -Larry Fink, CEO of BlackRock, the world’s largest asset manager in his annual letter to CEOs.
A 19th Century Japanese print of Ben Franklin’s electrical experiment
This Friday is the expiration of June options, and for the time being it looks like the Profit Booster portfolio will have yet another spectacular month of returns as IGT, PGNY, RRC are trading well above the strike price of the calls we sold, while FNKO is at the strike, which is also a good situation.
The bull market rolls on (though never in a straight line, of course) and Cabot analysts continue to discover great new investments.
Today’s featured stock is an established company that manufactures a very wide variety of sensors for industry, with the automotive industry being number one. Growth prospects are good, and the stock is a bargain.
As for the current portfolio, Broadcom (AVGO) is upgraded to buy, and we’re taking profits in Barrick Gold (GOLD).
Our thoughts on the overall environment remain the same—growth stocks continue to slowly repair the damage, though most stocks aren’t out of the woods yet (many have moved right into some tough resistance), and there remains lots of selling on strength and rotation on a daily basis (cyclical stocks look iffy), so it’s tough to make much progress. All in all, we’re going to keep our Market Monitor at a level 6—we’re close to raising it, but the lack of upside breakouts and the continued chop keep us in a “trust but verify” mode. There are things to like, but we need to see more.
Interestingly, this week’s list is heavy on growth stocks, though finding buy points is tricky. Our Top Pick is DocuSign (DOCU), which has shown excellent accumulation since earnings, though we favor keeping it small and/or trying to get in on dips.
Here is your June Wall Street’s Best Digest issue 842.
Summer is upon us, and I hope you all are making plans to join us at our August 17-19 virtual Summit, entitled Smarter Investing, Greater Profits. You can register here.
The markets are still very bullish, reflected by our barometer, as well as our Market Views section. Energy, of course, is the biggest gainer so far this year. And style-wise, Value Stocks are leading the charge.
The economy continues to strengthen, with manufacturing improving, housing demand continuing to increase, and job creation rising.
Our Spotlight Stock this month is, indeed, sweet—that is, it’s a candy maker! The company made it through the pandemic, broadening its product lines, and showing how it’s managed to survive and prosper for 127 years. My Feature Article provides a bit more industry information, highlighting the continued growth of the confectionary business around the world.
Next, in our Growth section, you’ll find a variety of ideas, from the marijuana, retail, green, and educational sectors. In Growth & Income, our contributors sent recommendations from the chemical, media, food manufacturing, automobile sales, gun manufacturing, and beverage industries.
Our Value ideas feature businesses in the prison and agribusiness arenas. We offer an insurance stock in our Financial Section and a couple of pharmaceutical and medical equipment picks. In Technology, you’ll find a software company, and online platform business, an e-commerce firm, and a semiconductor company.
Our Resources & Energy section are chock-full of midstream, rare earth, precious metals, and utility businesses. And our Low-Priced Stock this month is a company that makes memory products for the computer industry. We also offer sever income ideas in our Preferred Stocks, Income, REITs, and High Yield segment.
Lastly, our Funds & ETFs section includes dividends and healthcare picks.
Please don’t hesitate to send me your feedback and questions. My new address is nancy@financialfreedomfederation.com.
Markets are a bit subdued with low summertime volatility, though some Explorer recommendations are doing very well in the power sectors of cyber and space. Today we take a look at Brazil, which is struggling with high unemployment, Covid-19 and political instability though we offer a new recommendation in a high-growth sector with a clear uptrend in share price.
It’s time to think about investing on the other side of the pandemic.
When the environment normalizes, investors will find the best opportunities in the same place they did before – technology. Growth in technology exponentially eclipses all other industries. And the pace of growth will accelerate as new and game-changing technologies are on the cusp of transforming the world as 5G continues to roll out.
Sure, the cyclical sectors are coming back. There will also be solid growth in other industries. But nothing will compare to the immense growth in technology. The sector will rule the market for many years to come.
Recent stumbles in the sector create an opportunity for the great normalization ahead. In this issue I highlight two portfolio positions perfectly positioned to benefit in both the long and short term.
With June expiration coming next Friday, June 18, the Cabot Profit Booster portfolio is in great shape as all four of our existing positions are either at the strike price that we sold (RRC) or well above it (FNKO, IGT, PGNY).
This week my attention turns to selling a July call against an emerging oil and natural gas star that just broke out to new highs last week.
U.S. stock markets continue to suffer, wiping out year-to-date gains that had previously culminated in all-time-high prices on the S&P 500, Dow Jones Industrial Average and NASDAQ indexes. If you’re looking for “the bright side” of this dour news, take heart that none of these market indexes have retraced their early-2018 lows.
Following last week’s big decline, the market has shown some resilience, and we continue to see a growing number of stocks showing great resilience. Even so, our Cabot Tides green light from two weeks ago has disappeared and the longer-term Cabot Trend Lines remain down, so we continue to advise a cash-heavy posture as we patiently wait for confirmation the buyers have taken control. We have no changes in the Model Portfolio tonight.
The weakness that was troubling the market before last Wednesday’s unanticipated holiday worsened when markets opened again Thursday, and the major indexes are back at their correction lows. I was optimistic when the market strengthened two weeks ago, for now it’s time to stay defensive. That means selling half of one our holdings. But on a positive note, some sectors are still working well, and I’m moving both our REITs back to Buy.
U.S. stock markets continue to suffer, revisiting lows from October and November. We could see modest improvement through year end, but I don’t expect a strong stock market rebound until at least January.
Trade war uncertainties have nipped our young buy signal in the bud, but the situation is highly fluid, so we’ll be making portfolio choices on a stock-by-stock basis.
With our mix of conservative, growth-oriented and high-yield investments, our portfolio continues to do well. Most of our non-Safe Income stocks are still on Hold, so it’s time to start thinking about becoming more aggressive, if the market becomes more constructive. But we don’t want to get ahead of the market, so no rating changes for now.
Remain defensive, but stay tuned as we could get a Cabot Tides buy signal as early as tomorrow if the market cooperates. Tonight, we’ll stand pat with our huge (90%-plus) cash position, but we’ll send out a bulletin if we get a green light.
Following the second 10% U.S. stock market correction of 2018, stocks are trying to get their footing. We’re witnessing some large daily price swings, especially among energy stocks, which are being buffeted by falling oil prices.
I think we can all use a break from this market, and there’s no new fundamental news related to any of our positions. So today I’m just going speak for a few minutes on the state of the market and small caps.
The shares of this healthcare information services company were just upgraded by Guggenheim to ‘Buy’ and seven analysts have increased their EPS estimates for the company in the past 30 days.
Small caps have been lagging, and have failed to return to their 2018 highs, for too long. If the asset class can get back in gear, we’ll have more things working in the market for early-stage investors.
Small caps have been lagging, and have failed to return to their 2018 highs, for too long. If the asset class can get back in gear, we’ll have more things working in the market for risk-tolerant investors (that’s us!).
Yesterday, the House Judiciary Committee approved the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act), which has Democratic Presidential candidate and former prosecutor Kamala Harris as one of its sponsors.
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.
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.
Current Market Outlook