Issues
Current Market OutlookGrowth stocks are still in mostly good shape, which is the good news. And while we see reasons for continued optimism, it’s also hard to be a raging bull right now. There’s quite a bit of rotation underway, and sentiment is still elevated. On top of that, the number of Nasdaq stocks making new lows is more than we’d like to see, which means cross-currents could become a factor in the near term. Still, the weight of evidence prevents us from being overly cautious; plus there are a fair number of nice-looking setups in individual stocks across several industries. With this in mind, we’re leaving our Market Monitor at level 6 for now.
This week’s list includes a mix of growth and cyclical themes, most of which have a solid story.
Our Top Pick is Nvidia (NVDA), an established semiconductor name with a growing presence in the soaring high-performance computing (HPC) market, and which has just broken out to new highs on strong volume.
| Stock Name | Price | ||
|---|---|---|---|
| ArcelorMittal (MT) | 30 | ||
| Brooks Automation, Inc. (BRKS) | 98 | ||
| Jabil Inc. (JBL) | 54 | ||
| JetBlue Airways Corporation (JBLU) | 20 | ||
| KBR Inc. (KBR) | 40 | ||
| Levi Strauss & Co. (LEVI) | 28 | ||
| NVIDIA Corporation (NVDA) | 614 | ||
| Snap-On Inc. (SNA) | 236 | ||
| Square, Inc. (SQ) | 245 | ||
| Vale S.A. (VALE) | 19 |
Recent crosscurrents in the market have seen changes among sector leadership, and today we have a broad selloff, but overall, the main trend of the market is up and thus I continue to recommend that you be heavily invested.
Today’s recommendation is an attempt to benefit from sector rotation, by targeting a sector that’s still down; if the sector turns up soon, today’s buyers should profit handsomely.
As for our current holdings, two stocks are upgraded to buy today, while two are downgraded to sell as we cut our losses short. The adage that applies: There’s nothing wrong with being wrong; what’s wrong is staying wrong.
Details inside.
Today’s recommendation is an attempt to benefit from sector rotation, by targeting a sector that’s still down; if the sector turns up soon, today’s buyers should profit handsomely.
As for our current holdings, two stocks are upgraded to buy today, while two are downgraded to sell as we cut our losses short. The adage that applies: There’s nothing wrong with being wrong; what’s wrong is staying wrong.
Details inside.
Editor’s Note: For most of its run, Chief Analyst Carl Delfeld has referred to the Cabot Global Stocks Explorer advisory by its short-hand name, “The Explorer.” So we figured we’d join him! We have decided to shorten the name of this publication to simply, “Cabot Explorer.” The product won’t change at all. This merely puts more emphasis on the purpose of this advisory, which is to “explore” for new, often hard-to-find stocks and sectors ready to break out - regardless of market. Enjoy!
Markets seem to be paying more attention to valuations and looking to confirmation from earnings that the economy is moving to growth mode. Stocks are likely to churn a bit for a while after their great uptrend in the last year. We’ll discuss today why SPACs have cooled a bit even as they spread to Asia, and present a new idea to watch which offers huge growth potential but may be a bit pricey.
Markets seem to be paying more attention to valuations and looking to confirmation from earnings that the economy is moving to growth mode. Stocks are likely to churn a bit for a while after their great uptrend in the last year. We’ll discuss today why SPACs have cooled a bit even as they spread to Asia, and present a new idea to watch which offers huge growth potential but may be a bit pricey.
Here is your April Wall Street’s Best Digest issue 840.
I love spring! You may not know this but I’m a Master Gardener, which means when the Bradford pears, Forsythia, and Redbud trees come into bloom, I am just a happy camper!
And this year, with the end of COVID almost in sight and the economy in recovery mode, I feel very optimistic. And as you can see from our Market Views and our Advisor Sentiment Barometer, our contributors are considerably bullish.
Our Spotlight Stock this month, exemplifies that optimism, as we are recommending one of the nation’s top home builders. Certainly, its shares have been driving upwards, but we feel there is much more room to grow.
In Growth, you’ll find a variety of ideas, from the airline, gaming, automobile, yacht, and online education sectors. In Growth & Income, our advisors offer recommendations from the shipping, restaurant, RV, and engineering industries.
Value stocks are finally finding their moments of sunshine, and here we like an aircraft manufacturer and an aerospace and defense contractor. Financial companies are also rebounding, like these asset manager, insurance, and banking businesses. In Healthcare, our contributors favor a technology and an animal healthcare company that is in the midst of a turnaround.
Our Technology offerings include an e-commerce and a semiconductor company. This month, you’ll also find several ideas in the Resources and Energy section. And in Low-Priced Stocks, we offer a couple more speculative companies, coming from the cannabis and marketing sectors.
In REITs and Preferred Stocks, our contributors find financial and self-storage interesting this month. And lastly, our Funds & ETFs section includes some income, small-cap value, and healthcare 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. And we’ve begun sending out invitations for our August 17-19 Summit, entitled Smarter Investing, Greater Profits. You can register here.
Please don’t hesitate to send me your feedback and questions. My new email address is nancy@financialfreedomfederation.com.
I love spring! You may not know this but I’m a Master Gardener, which means when the Bradford pears, Forsythia, and Redbud trees come into bloom, I am just a happy camper!
And this year, with the end of COVID almost in sight and the economy in recovery mode, I feel very optimistic. And as you can see from our Market Views and our Advisor Sentiment Barometer, our contributors are considerably bullish.
Our Spotlight Stock this month, exemplifies that optimism, as we are recommending one of the nation’s top home builders. Certainly, its shares have been driving upwards, but we feel there is much more room to grow.
In Growth, you’ll find a variety of ideas, from the airline, gaming, automobile, yacht, and online education sectors. In Growth & Income, our advisors offer recommendations from the shipping, restaurant, RV, and engineering industries.
Value stocks are finally finding their moments of sunshine, and here we like an aircraft manufacturer and an aerospace and defense contractor. Financial companies are also rebounding, like these asset manager, insurance, and banking businesses. In Healthcare, our contributors favor a technology and an animal healthcare company that is in the midst of a turnaround.
Our Technology offerings include an e-commerce and a semiconductor company. This month, you’ll also find several ideas in the Resources and Energy section. And in Low-Priced Stocks, we offer a couple more speculative companies, coming from the cannabis and marketing sectors.
In REITs and Preferred Stocks, our contributors find financial and self-storage interesting this month. And lastly, our Funds & ETFs section includes some income, small-cap value, and healthcare 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. And we’ve begun sending out invitations for our August 17-19 Summit, entitled Smarter Investing, Greater Profits. You can register here.
Please don’t hesitate to send me your feedback and questions. My new email address is nancy@financialfreedomfederation.com.
Today, we are recommending a call center outsourcing company.
At first blush, it doesn’t sound like a sexy opportunity.
But after you learn the details, it quickly becomes a lot more interesting:
All the details are inside this month’s Issue. Enjoy!
At first blush, it doesn’t sound like a sexy opportunity.
But after you learn the details, it quickly becomes a lot more interesting:
- The call center industry is consolidating, and this company would be a perfect acquisition candidate for a several strategic competitors
- Sophisticated private equity investors own 60% of the company will likely run an auction to sell the company within 13 months
- The stock is incredibly cheap on an absolute basis (3.5x FCF) and relative to peers (3.6x EBITDA vs. peers at 10.0x)
All the details are inside this month’s Issue. Enjoy!
While the direction of the market is highly unpredictable in the short term, it’s a safe bet that this economy will continue to recover after the covid recession. It is also highly likely that interest rates will continue to rise.
Interest rates tend to move higher as the economy emerges from recession and gains traction. It’s already happening. The benchmark 10-year Treasury bond yield has already risen sharply this year. Yet, rates are still well below pre-pandemic levels, and the economy is about to ignite. There will also be trillions in stimulus dollars causing inflationary pressures and upward pressure on rates.
Certain dividend stocks and income paying securities endure despite rising rates. And certain special securities can actually thrive. In this issue, I highlight an investment that loves rising rates. In fact, profits increase directly as a result. The stock pays a stratospheric 8.4% yield and pays dividends every month.
In this issue, I highlight an investment that loves rising rates. In fact, profits increase directly as a result. The stock pays a stratospheric 8.4% yield and pays dividends every month.
Interest rates tend to move higher as the economy emerges from recession and gains traction. It’s already happening. The benchmark 10-year Treasury bond yield has already risen sharply this year. Yet, rates are still well below pre-pandemic levels, and the economy is about to ignite. There will also be trillions in stimulus dollars causing inflationary pressures and upward pressure on rates.
Certain dividend stocks and income paying securities endure despite rising rates. And certain special securities can actually thrive. In this issue, I highlight an investment that loves rising rates. In fact, profits increase directly as a result. The stock pays a stratospheric 8.4% yield and pays dividends every month.
In this issue, I highlight an investment that loves rising rates. In fact, profits increase directly as a result. The stock pays a stratospheric 8.4% yield and pays dividends every month.
This Friday is the expiration of our six April Covered Call positions. I would categorize these six positions as a good, but somewhat mixed bag, as only one trade looks like it will expire for its full profit potential (ANF), while four (TRIP, SUM, AMKR, AZEK) are in good shape but may need attention in the week to come, and one (ZI) which is mostly trading at a breakeven. As is always the case, I will update on where we stand with these expiring positions Thursday afternoon or Friday morning.
Current Market OutlookIt certainly hasn’t been a buying panic, but last week was another step in the right direction, with growth stocks avoiding selling pressure even as they approach (or in some cases, sneak out to) new highs—a marked change in character from the prior few weeks. There’s still some iffy pieces of evidence out there, including sentiment (complacent), volume (extremely light) and even some of the broad market (materials and energy stocks are beginning to lose some steam), but overall it appears that the sellers have run out of ammunition for the time being. If the buyers can really show up, we could see some solid breakouts going ahead. For now, we’re leaving our Market Monitor at a level 6, but another good week may change that.
This week’s list has a bunch of good-looking charts, most of which have a solid growth story. Our Top Pick is United Therapeutics (UTHR), which recently staged a big-volume breakout on news.
| Stock Name | Price | ||
|---|---|---|---|
| Acuity Brands (AYI) | 173 | ||
| ASML Holding (ASML) | 630 | ||
| Boot Barn (BOOT) | 67 | ||
| Boston Beer Company (SAM) | 1,261 | ||
| The Goodyear Tire & Rubber Company (GT) | 18 | ||
| Pinterest (PINS) | 84 | ||
| Sally Beauty (SBH) | 21 | ||
| SiteOne Landscape Supply (SITE) | 182 | ||
| United Therapeutics (UTHR) | 199 | ||
| Yeti Holdings (YETI) | 84 |
While there are still symptoms of a broad unfolding market top, and the market as a whole is soft today, the main trend is still clearly up and thus I continue to recommend you be substantially invested.
In fact, in our recommended portfolio all our stocks look fine; there are no recommended changes today.
As for today’s recommendation, it’s a technology company that’s a household name, but still small enough to grow very fast.
Details inside.
In fact, in our recommended portfolio all our stocks look fine; there are no recommended changes today.
As for today’s recommendation, it’s a technology company that’s a household name, but still small enough to grow very fast.
Details inside.
Updates
Growth stocks snapped back today after yesterday’s blood bath, and our trend-following market timing indicators remain positive. Thus, we’re sticking with a heavily invested position, though are keeping a close eye on growth stocks and their reactions to earnings during the next couple of weeks.
There are no rating changes in today’s update.
We’re going to be laser focused on earnings for the next three weeks given that 11 of our positions will report within that time frame.
Emerging market stocks have been attempting to bounce after a sharp selloff in late June, but haven’t been able to hold up to investors’ fears of a trade war between the U.S. and China.
Crista has three portfolio changes today.
Markets remain strong. The major stock market indexes all ended last week in the black and, after a brief pause Monday, advanced strongly yesterday. Earnings season has began and only rating change today moving a position to hold.
Earnings Season – Second quarter earnings season began late last week. Your brokerage firm probably provides quarterly earnings estimates on a thousand stocks. Call your advisor or use their website chat box to find out where to locate the quarterly earnings estimates.
Talk of trade wars continues to dominate stock market news but investors appear increasingly willing to shrug off related concerns. They do in the U.S. at least, where stocks are faring far better than in both the European Union and emerging markets.
If you own shares of Walt Disney (DIS), it’s time to decide whether you’re planning to hold it forever because you’re in love with the stock, or whether you’d rather trade it for an undervalued growth stock, thereby lowering your portfolio risk and increasing your chances of achieving capital appreciation.
The market’s bounce off support last week was encouraging, and while we remain in a news-driven, choppy environment, our current cash level is too high given the mostly positive evidence. Thus, tonight, we’re adding two new stocks leaving us with a cash position of 20%.
Markets ended last week with a strong performance, despite the mid-week holiday, which typically reduces trading. For now, I have no portfolio changes. If you’re looking to a do a little buying, we have plenty of options in every tier of the portfolio.
It’s earnings season! Hoo-boy, I’d better clear my calendar. Just a guess, but I think we’re going to see fantastic quarterly results from financial stocks that will catch investors with their…er, let’s just say “catch investors by surprise”. Financial stock share prices might have a very good couple of weeks!
Alerts
Yesterday was the worst day of the year for cannabis stocks, with HEXO (no longer in our portfolio) leading the way down with a plunge of 22.5% after the company announced that revenue for the fiscal fourth quarter, ended July, would be $14.5 to $16.5 million, well short of analysts’ expectations of $24.8 million.
This oil and natural gas company is selling some assets, and our contributor thinks this may result in a hefty one-time special dividend.
This space tech company beat analysts’ earnings estimates by $0.19 per share last quarter.
This week’s update is both early and much shorter than normal.
The market has been changing faster than the weather here in the northeast. And like any big change it’s been a bit tough to navigate.
Coverage of the shares of this software company was recently initiated at William Blair with an ‘Outperform’ rating.
This energy company recently reported a significant rise in earnings.
This company, whose founder invented the MRI, just celebrated its 50-year anniversary.
We are replacing a fund in which 57% of assets are comprised of real estate with one that focuses on technology (36.54% of assets), industrials (23.91%) and healthcare (21.97%).
The cannabis sector has been trending down since the end of March, giving back its spectacular gains from the start of the year, and until now I’ve remained optimistic about our stocks, partially because of their outstanding fundamental growth metrics but also because Cabot’s two main trend-following indicators for the market were positive.
The shares of this cloud-based software company were recently initiated at RBC Capital and upgraded at Wedbush with an ‘Outperform’ rating.
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.