Here is your January Wall Street’s Best Digest Top Picks issue 837.

Happy New Year to you all!



I hope your holidays were wonderful. I’m very hopeful for a much healthier New Year for all of us in 2021 and am also very thankful for the performance of the stock markets last year. The biggest winner was technology, with the Nasdaq returning a whopping 45%, followed by 18.4% at the S&P 500, and 9.7% at the Dow Jones Industrial Average.



And I’m thrilled to say, with this Top Picks issue and a calculation of 2020’s Top Picks, that our newsletter contributors really did hit it out of the park—with an average 180.19% return! Our Top 5 picks averaged 252.7%, with the #1 pick, Inovio Pharmaceuticals (INO)—chosen by Joseph Cotton of Cotton’s Technically Speaking—gaining 742.86%! Congratulations to them all!



And the crop of Top Pick recommendations for 2021 also look very attractive.



We begin with Growth stocks from the marijuana, electric vehicle charging, and space and air travel sectors. Our Financial choices include three banks and a jewelry company. In Healthcare, you’ll find a business of cell-based products, an insulin maker, COVID-related biotechs, and a couple of companies focusing on nervous system disorders.



Our Technology ideas come from the social media, search, travel, robotics, and artificial intelligence industries. The Real Estate Investment Trust section includes a marijuana REIT, as well as one that operates in the cell tower business. In High Yield, you’ll find a retail pharmacy and a tobacco company.



In Income, one of our contributors is focusing on Treasury bills instead of equities. And that conservative slant is also seen in our Resources and Energy section, where our advisors chose three gold companies, a pipeline business, and an electric utility. We’ve also included a few Low-Priced Stocks for you, coming from the energy, biotech, and lithium sectors.



Lastly, our Top Picks wrap up with a variety of Funds & ETFs in the income, cybersecurity, robotics/AI, and marijuana industries.



Our final recommendation this month is a non-Top Pick, an alternative energy company.



I’m looking forward to seeing how these Top Picks do this year, as well as bringing you lots more excellent recommendations from our more than 200 contributors. I look forward to hearing of your successes. Please reach out to me at nancy@financialfreedomfederation.com, with any questions and comments.

2021 is off to a good start thanks to strong earnings and continued investor enthusiasm for big technology companies and a new administration. The backstop from governments and central banks, as well as the consensus among investors that a strong economic recovery is coming this year, has for now pushed volatility out of the market.

The Explorer portfolio had a good week and today we add another SPAC merging with an established, fast-growing financial payments firm based in the United Kingdom.

Get this Investor Briefing now, How to Get and Stay Rich, and you’ll learn about how to gain and maintain financial independence—so that you have all the resources to make any decision you want. From advice about the best places to retire to how the long-term housing forecast may affect you … from the latest on interest rates to how to invest in BDCs … and from how your conservative investments make sense in a crisis to preparing yourself for the post-coronavirus era. How to Get and Stay Rich is your best guide to financial wellness, now and for the rest of your life.

January was another good month for the Cabot Profit Booster portfolio as we closed our two positions for profits:

Current Market Outlook


Sellers finally landed a few punches last week, with many tech-related growth stocks finding resistance and the big-cap indexes losing a little ground. Given the big run of late, lots of speculation and signs of greed, we have our antennae up for abnormal weakness—but so far, there hasn’t been much (if any), with the pullbacks in the indexes and individual stocks appearing normal and other timing indicators (number of new lows, etc.) looking fine. In fact, some solid entry points could appear with a bit more weakness! We are seeing continuing rotation into more cyclical areas and out of some growth names, but the trends of just about all indexes and leaders are up, so we remain mostly bullish.

This week’s list has stocks from many different nooks and crannies of the market. Our Top Pick is Guardant Health (GH), from the strong medical area, as it’s come under major accumulation this year. It’s a bit extended so start small and/or aim for dips.

Stock Name	Price	Buy Range	Loss Limit
Cimarex Energy (XEC)	49.1	44.5-47.5	39.5-41.5
Enterprise Products Partners L.P. (EPD)	23.3	22-23.5	19.5-20.5
Farfetch (FTCH)	58.8	56-58.5	51-52.5
Guardant Health (GH)	160.0	152-162	132-137
Halozyme Therapeutics (HALO)	48.3	45-48	40-41.5
Shake Shack (SHAK)	111.7	106-110	91-94
Sonos (SONO)	27.0	25-26.5	22-23
TG Therapeutics, Inc. (TGTX)	50.2	46.5-49.5	41-42.5
The Timken Company (TKR)	85.0	81-85	74-76
Upwork (UPWK)	40.7	37.5-40	33.5-35

The market’s main trend remains up, and thus I continue to recommend that you be heavily invested.

At the same time, it’s important (as ever) to monitor your individual stocks and prune any from your portfolio that no longer deserve to be there. In our portfolio, Berkeley Lights (BLI) is being pruned this week, for a small loss.



As for today’s recommendation, it’s a fast-growing consumer streaming service that came public in 2018 and has hit new highs recently—and you may be familiar with it.

Get this Investor Briefing now, All You Need to Prepare for a Happy—and Rich—Retirement, and you’ll learn about the the best ways to prepare for a prosperous retirement. From when to start taking Social Security to choosing low-risk stocks during the pandemic … from the best fixed-rate bonds to REIT investing for retirement … and from understanding retirement plans to the best investments for after retirement. All You Need to Prepare for a Happy—and Rich—Retirement, is your best guide to ensuring a wealthy and enjoyable retirement through financial independence and security.”

The market remains very strong, with the trends of the major indexes and the vast majority of stocks pointed up, both of which keeps us mostly bullish. But really, we’re looking at things mainly on a stock-by-stock basis now; some names are extremely extended and vulnerable to air pockets, while others are just a few weeks into what look like new, sustained advance. With that in mind, we’re actually taking partial profits on one stock today, while averaging up in another — all in all, we’ll still be around 18% in cash.

Elsewhere in tonight’s issue, we write about some of our favorite cookie-cutter stories out there at the moment; we own one great one, but we’d like to have another. And we also review all our stocks, present some new ideas and talk a bit how to handle the speculative, super-hot names in the proper fashion.

It was another good week for small caps, and the S&P 600 Small Cap Index keeps grinding higher. The 1% gain over the past week has the index well above its moving average lines and just slightly behind large caps in terms of year-to-date performance.

Many of our stocks are nearing their fair values, but I recommend that you continue to hold them. As I introduce more undervalued stocks in the coming weeks, you may replace some of your fully valued stocks with the new stocks.

Remain bullish, but keep your eyes open. The overall market looks fine, but remains extended to the upside, which makes finding lower-risk entry points more difficult. We continue to advise holding your uptrending stocks to give them a chance to turn into bigger winners.

The stock market remains hot, and while a pullback is always possible, the trend is firmly up. A lot of stocks are overextended short-term though, including some in our portfolio, so don’t be afraid to take partial profits where you have them, and be selective on the buy side.

We’re going through a highly unusual period in the history of the stock market during which earnings estimates keep rising for a broad spectrum of companies. That’s because we’re experiencing a growing economy, deregulation and lower income tax rates, all of which contribute to rising corporate profits.

I spent a good portion of this past week working on my 2018 Small-Cap Outlook. We’ll be publishing that soon, but I wanted to share a few thoughts from it today, starting with my year-end target for the S&P 600 Small Cap Index.

The iShares EM Fund (EEM) is well on top of its moving averages, which keeps the Emerging Markets Timer remains firmly positive. We have one change tonight.

The U.S. economy is showing modest growth with improvement in capacity utilization, home sales and industrial production, and the bull market continues with Dow closing above 26,000 yesterday.

The stock market remains very strong, and a third of S&P stocks hit new 52-week highs on Friday. The Dow traded over 26,000 for the first time ever yesterday, although all the major indexes then pulled back to end the day lower. Interest rates continue to rise, causing more pain for REITs and utilities, and earnings season has begun in earnest.

Cabot analyst Tyler Laundon writes the introduction to this week’s update. Unsurprisingly, it related to small-cap stocks, which is Tyler’s focus in Cabot Small-Cap Confidential. One rating change.

Our portfolio has soared over the past week right along with the market. Our average gain is 3.2%, and our stocks are beating their benchmark by around 20%.

Remain bullish, but be a bit choosy on the buy side. The market has had a good run but the normal January crosscurrents are pushing around some of last year’s winners. The portfolio now has 10 stocks and a cash position near 16%.

The broad market is in fine shape, with most major indexes at or near their highs and all Cabot’s market-timing indicators bullish.

Two analysts have raised their earnings estimates for this drug company in the past 30 days.

Our second recommendation is a little profit-taking.

Zacks rates our first idea today—a gold miner—‘Strong Buy’ based on rising volume and earnings estimates.

Every now and then one of our stocks is the target of a short report by a myriad of research houses that try to make the case that a company is garbage and its stock is wildly overvalued.

Goldman Sachs just upgraded this tech company’s shares to ‘Buy’.

This connected device company is expected to grow by 39.4% next year.

One of our portfolio stocks reported strong second-quarter (2Q) results this morning, benefiting from higher fares and fuller planes.

Three analysts have raised the EPS estimates of this medical device company in the last 30 days.

The marijuana sector’s charts have been weak overall since the sector’s March top.

This sleep-focused company has risen nicely and is getting near sell territory.

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.