The Dow Jones Industrial Average celebrated 125 Years yesterday as the index has increased an average of 7.7% each year. Markets continue to consolidate and churn with solid earnings offsetting concerns over inflation and valuations. This week Virgin Galactic (SPCE) took off while overall Explorer positions moved forward. Today’s new recommendation is a big data software stock that is in an uptrend on the back of some big government contracts. Enjoy!

It’s been fifteen weeks since the marijuana sector topped, sending the Marijuana Index down 55%. But as the picture of this correction gets clearer, every day I get a little more bullish about the possibility that the sector is ready to turn up again. Most of our stocks are exhibiting typical base-building behavior, though there’s no sign of real buying power yet.

But the fundamentals of the industry remain excellent, so there’s no question that eventually these stocks will get going again.



In the portfolio today there are only two small changes. IIPR moves to Hold, and TPB moves to Sell.



Full details in the issue.

It looks like this relentless bull market is finally stalling out. The market isn’t correcting, or really selling off in any substantial way. It has just stopped moving higher, for now. Given the returns in the past year and recent months, the market had to take a break. That pace couldn’t last.

Stock prices may be stuck in mud for the time being, but there are some fantastic income opportunities out there. Many high-dividend stocks are still well below pre-pandemic prices and offer some of the highest yields in a decade. In this month’s issue I highlight a phenomenal stock with a sky-high yield and a price that’s trending higher.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the June 2021 issue.

Good investing ideas can come from anywhere. One useful source is to borrow ideas from some of the best value-oriented investors. Their holdings can be found in the 13F and 13D regulatory filings which are required every quarter. In the letter, we briefly describe these filings, how we use them, and six stocks that look attractive from the many holdings we analyzed.



A slightly shocking source of turnaround ideas can come from the electric utility industry – about the last place that contrarians might look these days. We discuss three with interesting stories and strong upside potential.



Our feature Buy recommendation, Vistra Corporation (VST), comes from this illuminating search through the utility sector. Vistra is the nation’s largest independent power producer with an emerging retail business. Its shares were jolted by the winter storms yet look like an attractive turnaround situation.



We also mention our May 12th move from Buy to Sell on shares of Mohawk Industries (MHK).



Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.



I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.

This week’s covered call idea is a company that is growing fast, and is doing the good work of helping families overcome a problem.

First, a reminder that the market is closed for the Memorial Day holiday next Monday so we’ll publish our next issue on Tuesday, June 1.

This week, the broad market continues to give mixed messages, with growth stocks as a whole lagging, but some newer stocks giving bullish signals. One of those is today’s featured stock. It came public in March and on Friday it broke out to a new high!



As for the current portfolio, there are no changes. Everything is working at the moment!

Current Market Outlook


After a couple of horrid weeks for growth stocks, we’ve seen a ray of light lately, as many found solid support with some volume beginning to show up in some stocks as they rally, an early sign that big investors are engaged. Thus, we’ll chalk it up as a nice first step, and definitely a change from the recent carnage, but we still need to see more—many indexes are now doing more chopping than rising (the overall intermediate-term trend is basically neutral at this point), and most of the action in recent days has been among stocks that took the biggest hits (and thus still have a ton of overhead to chew through). Don’t get us wrong, we’re intrigued by what we see—it could prove to be the early stages of a change in character for growth stocks after three months in the outhouse—but the bulls still have more to prove before we meaningfully increase our exposure.

This week’s list remains mixed, with lots of turnaround and cyclical situations, but with a few growth-y issues too. Our Top Pick is Analog Devices (ADI), which has come back to life after a three-month rest thanks to great earnings, huge cash flow and a pending acquisition.

Stock Name	Price	Buy Range	Loss Limit
Acuity Brands (AYI)	180	176-181	162-165
Analog Devices (ADI)	163	159-164	145-148
Avery Dennison Corp. (AVY)	219	215-220	197-200
Blackstone Group (BX)	91	86-89	79-81
Children’s Place (PLCE)	95	90-93	80-82
EOG Resources, Inc. (EOG)	80	78-81	70-72
EPAM Systems (EPAM)	485	465-475	425-430
Owens Corning (OC)	105	101-104	92-94
Progyny (PGNY)	59	54.5-57.5	48-50
Roblox Corporation (RBLX)	89	85.5-89.5	73.5-76.5

Here is your May Wall Street’s Best Digest issue 841.

Earnings season is upon us! According to FactSet, this may be a quarter with the highest percentage of S&P 500 companies reporting a positive EPS surprise since FactSet began tracking this metric in 2008. So far, 91% of companies in the S&P 500 have reported, and 86% have reported a positive EPS surprise and 76% have reported a positive revenue surprise. These positive surprises were led by Consumer Discretionary stocks, whose earnings grew by 50.3%.



That’s good news for the markets—which despite a small downturn a week ago—continues to hold its own. The Dow Jones Industrial Average is up about 1,400 points since our last issue. Our advisors are still cautiously bullish, and overall investment sentiment remains the same.



Job openings are up, unemployment claims are down, and Q2 GDP is forecast at a rousing 8.2%. That sounds like a strengthening economy to me!



And, as you know, earnings drive stock prices, and that bodes well for the remainder of 2021.



We begin this issue with an equipment rental company that weathered the pandemic very well, and is now in a position to see a big growth spurt as the economy gets back on track. Next, our Growth stocks include companies from the furniture, crypto, aviation, cruise line, and gaming industries. In Growth & Income, you’ll find ideas from the chemical, fertilizer, RV, consumer products, and motorcycle sectors.



Moving on to Financials, a sector that is quickly recovering, our contributors are recommending several banks, a research, and a FinTech company. In Technology, we offer a hardware, speaker components, and a semiconductor stock. Our Resources & Energy ideas include companies from the mining and production, as well as utility sectors.



We give you one Low-Priced Stock this month, heralding from the communications industry. And in High-Yield and REITs, you’ll see ideas in the communications and mortgage REIT sectors.



Lastly, our Funds & ETFs section includes some income, as well as growth ideas.



Don’t forget to register for my monthly webinars, along with Kate Stalter, my partner on the Wall Street’s Best Stocks and Wall Street’s Best ETF newsletters. The next one is June 8 at 2 p.m. And I hope to see you (virtually, at least!) at our August 17-19 Summit, entitled Smarter Investing, Greater Profits. You can register here.



Please note, our publication date for Wall Street’s Best Digest is changing to the second Thursday of the month, so please watch your inbox for our next issue in just a few weeks.



Please don’t hesitate to send me your feedback and questions. My new address is nancy@financialfreedomfederation.com.

Big picture, this year’s growth stock correction still looks normal, and encouragingly, we are now seeing some names bounce decently after the destruction of the prior two weeks. However, just going with the evidence, there’s still a lot of work to do, with few stocks in position to breakout and little in the way of upside power.

There will be another sustained rally (or two) down the road, but right now, we’re mostly biding our time, holding a lot of cash and fine tuning our watch list for whenever the buyers retake control.



In tonight’s issue, we dive into some precedent analysis that gives us confident in the big-picture point of view, and also highlight three new-ish additions to our watch list. In the Model Portfolio, we’re standing pat, but we could nibble if things continue to stabilize in the days ahead.

The market hates uncertainty and it is getting it by the bucket-full right now. If you need a simple explanation for this volatility, that’s it.

The Cabot Emerging Markets Timer is solidly negative, and the U.S. indexes have joined in the decline.

After a mixed performance last week, the market opened significantly lower yesterday, and the Dow and S&P 500 both hit their lowest level since the start of October. One of Cabot’s long-term market timing indicators just turned negative, which tells us it’s time to get more defensive. As a result, we are doing some selling today and moving two position to Hold.

I’m moving another five stocks from Strong Buy to Hold. It’s a normal seasonal pattern in the market that any stock that’s trading at its low point for the year during the fourth quarter will then remain low through the very last days of 2018 due to tax-loss selling. And unfortunately, the stock market has decided to present us with another correction, so most stocks are down in recent weeks.

The big news this week is that we: (1) recovered some of last week’s losses and (2) have a notable acquisition in the small cap cloud software space.

The market has been bouncing decently during the past four trading days, but our Cabot Tides remain clearly negative and most growth stocks are still in steep corrections. Longer-term we’re still optimistic the bull market will eventually resume, but until then, we’ll be patient. No rating changes to the portfolio tonight.

We’ve had a fierce six-day selloff, but the market has managed to find support and is rebounding this week. But I still advise caution as things are still dicey. Most of the positions in our portfolio are on Hold, but we’re adding one more to that list and selling half of one our weaker positions.

As earnings season unfolds, I’ll be very interested to learn more about the broader capital expenditure landscape. Americans haven’t experienced such a strong economy in many years. And frankly, younger adults have never experienced a strong economy!

I want to cover three things today: (1) possible reasons behind the stock market swoon, (2) what to expect over the next couple of months, and (3) what opportunities to look for both within and beyond our current portfolio.

The headline-making meltdown in U.S. stock markets on Wednesday, when the Dow fell 3.2% and the S&P shed 3.3%, made it clear that investors aren’t just worried about emerging markets.

The yield on the 10-year Treasury hit its highest level in seven years and remains elevated as this week progresses. This interest rate surge has created some unusual ripple effects across growth stocks, utilities, financials, and energy stocks. Thankfully our diversified portfolio is doing well so far and we have no rating changes, but the overall market might lead to some defensive moves in the future.

Stocks are churning in place, appearing unsure of how to proceed this month. The Dow Jones Industrial Average finally retraced its January 2018 record high. Will it advance promptly or establish a trading range? If we look back to recent patterns on the S&P 500 index, which retraced its January high in August, and we presume that the Dow might follow suit, then we’re in for some sideways trading on the Dow.

I’ve made my contempt for the media rather clear in my weekly commentaries at Cabot Undervalued Stocks Advisor, and in my frequent radio appearances.

The top five holdings in this fund are: Nestle SA (NESN, 2.27% of assets); Roche Holding AG Dividend Right Cert. (ROG, 1.47%); Novartis AG (NOVN, 1.30%); Toyota Motor Corp (7203, 1.11%); and HSBC Holdings PLC (HSBA.L, 1.06%).

There’s been a lot going on lately as earnings season has heated up. With many of the stocks covered in the September and October Issues of Cabot Early Opportunities we have a few updates to get into.

Two more portfolio stocks report good earnings.

The top three sectors in this Value fund are: Technology (22.69% of assets), Healthcare (13.25%) and Financial Services (12.44%).

Three more portfolio stocks report good earnings.

Three portfolio stocks report third-quarter results.

The shares of this mega-tech company are now available in a Direct Stock Purchase Plan.

Two stocks blastoff after reporting earnings.

This ETF is a bet on declining interest rates. It has a current annual yield of 2.33%, paid quarterly.

Additional thoughts on one portfolio stock after reporting

This software company that’s changing the world through digital experiences moves from Hold to 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 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.