Today, we are recommending a leading app developer.

The stock is near a 52 week high, but I think there is ~50% additional upside over the next year.



This company’s characteristics include:

•85% revenue growing in its most recent quarter

•A reasonable valuation (P/E of 19x annualized earnings)

•Company insiders own over 12% of shares outstanding

•Recent insider buying




All the details are inside this month’s Issue. Enjoy!

Beyond the incessant trumpeting of current events by every orifice of the media, a future awaits. And it’s right around the bend. Beneath the current noise, tectonic plates are moving below the surface, and the world is changing.

Identifying these underlying shifts is a great way to find winning investments. And there is a particular shift that is affecting the market far more than any other, the rapid pace of technological advancement. It is the greatest force driving the market and its dominance is likely to grow.



When investors focus on the world beyond the virus and the elections they will ask what’s next. What is next for the market is what is next for technology. And 5G is central to that discussion.



5G will drive the next phase of technological innovation and launch the world into a new digital age. In this month’s issue, I highlight a major player in the technology space that will benefit directly and massively from the rollout. It’s still cheap, pays a good dividend and is on the cusp of an epic year.

This week, Cabot Profit Booster features a top new-economy recommendation in the fast-growing social media space whose stock is just short of its all-time high.

Current Market Outlook


The first week of the year was extremely volatile, but all in all the action ended up positive, with major indexes kissing fresh all-time highs and many leading stocks ending up nicely on the week. Overall, then, not much has changed—the primary evidence remains positive, so we’re content to ride things higher, but there’s little doubt the environment is hot and heavy (basically the opposite of what we saw 10 months ago), so you should continue to keep your feet on the ground (trail stops, take partial profits when available) and be discerning with your buys (aiming to enter after a bit of rest or some sharp shakeouts to support areas).

Because of this, most of our buy ranges are a bit below current prices (looking for pullbacks), though we still see some solid setups. One is Snap (SNAP), which is a clear leader in the internet space and has just returned to its highs after its first test of the 10-week line since its October blastoff.

Stock Name	Price	Buy Range	Loss Limit
8x8, Inc. (EGHT)	35.5	32.5-34.5	27.5-29
LPL Financial Holdings (LPLA)	116.8	108-112	97-99
The Mosaic Company (MOS)	26.8	25-27	21.5-22.5
Palo Alto Networks (PANW)	364.6	345-360	310-320
Progyny (PGNY)	44.9	40.5-43	36.5-38
Snap Inc. (SNAP)	54.4	53-55	47-48.5
Spotify (SPOT)	344.2	335-347	297-304
Sunrun (RUN)	95.8	87-91	74-77
Vale S.A. (VALE)	18.6	17.4-18.2	15.8-16.2
Zillow (Z)	143.2	134-140	119-122

First, note that due to next week’s holiday (and the market being closed), your issue will be delivered one day later, on Tuesday, January 19.

Today, the market’s main trend remains up, and thus I continue to recommend that you be heavily invested. However, I also see a lot of potential for corrections from this dizzy height, so I’m selling one stock today (TSM) and downgrading two to hold (NUAN and QCOM).



As for today’s recommendation, it’s a low-risk dividend-paying stock we actually owned for two months last year—and did well with. And I think the portfolio can benefit from it again now.



Full details in the issue.

As we move into a new year, the market shrugs off the chaos engulfing Capitol Hill and the GOP losing its majority in the U.S. Senate. Expect higher federal spending and debt in the next couple years, though it should be mentioned that we have already added $8 trillion to the national debt over the past four years. There were a few bright spots but Explorer stocks in general drifted a bit lower over the last week.

Today we have a new recommendation of a company of at the forefront of the technology revolution.

In the closing days of 2020, when many people were focused on preparing for the holidays, a small software company went public through a SPAC IPO. The event occurred on December 23.

Part customer relationship management (CRM) platform, part lead generation and marketing platform, the company’s software helps home services companies grow and manage their businesses, and it streamlines the move-in and post-move journey for homeowners.



The stock represents a compelling way for investors to gain exposure to evolving consumer and business trends related to the housing market and home services, especially home inspection, moving, insurance and utility services. After a pandemic-affected 2020 growth could top 60% in 2021, then remain well above 30% for the foreseeable future.



All the details are inside. Enjoy!

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the January 2021 issue.

With the turning of the calendar, we list eleven long-term secular trends that we see shaping the world for years to come. We also include four additional trends that investors may think are enduring yet which we have less certainty about their ability to continue indefinitely.



Contrarian investors can benefit from considering these trends. Sometimes the most appealing stocks are those that superficially go against them.



The current recommended list includes 14 names, with Merck (MRK) and U.S. Bancorp (USB) added this month. Earning season is starting soon, so we’ll get updates on how these companies are faring and provide our commentary and analysis on them.



Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the 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.

The Cabot Profit Booster portfolio had a spectacular 2020, aided by great stock picks from Cabot Top Ten Trader Chief Analyst Mike Cintolo, “juicy” call premiums which we sold via our covered call strategy, and a generally strong market. Now that the calendar has flipped to 2021, we will stick to the plan, and manage our open positions with an eye out for risk, while continuing to sell covered calls on the best of stocks. This brings me to today’s recommendation …

The market sold off broadly this morning, and it certainly needed it. The market has been too strong for too long! But the main trend remains up and thus I continue to recommend that you be heavily invested.

Today’s recommendation is a search technology company with fast growth and great growth prospects, first recommended by Mike Cintolo.



As for our current holdings, I have two sell recommendations today, B&G Foods (BGS) and Zoom Video (ZM).



Full details in the issue.

As you can tell by glancing at the portfolio summary table at the bottom of this update, the market is healthy. I’m putting two stocks back on Buy today.

When I do research for this weekly update, I review the consensus earnings per share (EPS) estimates for each portfolio stock. The consensus estimate represents the average of all the estimates of the Wall Street analysts who do research on the company. This past week, estimates surged more than I’ve ever seen, involving a majority of our portfolio stocks, and involving much more than the typical one- or two-penny per share increases.

The iShares EM Fund (EEM) has raced past its 25-day (upper) moving average, giving us a solid buy signal from the Cabot Emerging Markets Timer that is supported by similarly strong performance from the Golden Dragon ETF.

There were again no significant movements among our stocks in the past week, but many of our stocks went up to their fair values.

Trading remained muted this week, with markets closed Monday for New Year’s Day. Wall Street began to return to work yesterday, and got the New Year off to a good start with solid gains in all the major indexes. On the flip side, some conservative high yield investments, like utilities and preferred shares, declined.

There has been very little going on in our portfolio this week. After last week’s 3.5% average gain, our stocks have moved only -0.5% this week, on average.

We did not see any significant price movement among our recommended stocks in the previous week.

The overall market remains in good shape, as our trend-following market timing indicators remain clearly bullish, and the Two-Second Indicator, while not positive, continues to show some improvement.

With only four low-volume trading days elapsed since our January issue was published, there’s not much new to report from the markets. The exception is the interest rate front.

This stock rose $6 in after-hours trading on December 22, subsequent to the company’s announcement that “in response to inquiries from interested parties, it has initiated a formal process to explore strategic alternatives for the Company focused on maximizing shareholder value.”

Small caps bounced off their 50-day line last week and are nearing all-time highs. It’s anybody’s guess what will happen in the days ahead as many people will have stepped away from the market, so don’t be surprised if there is some odd trading in some of our stocks. There’s usually some inefficient trading, especially with the microcap stocks, during these periods.

The iShares EM Fund (EEM) has popped back above its 50-day line, which is a plus, but the Emerging Markets Timer remains basically neutral, having made no net progress over the past two months.

The following four brokerages have recently maintained their ‘Buy’ ratings on this tech stock: B. Riley, Nomura, and Stifel Nicolaus. As well, Raymond James upgraded the shares to ‘Outperform’.

The shares of this fitness center company were just added to the Russell 1000 index.

The shares of this semiconductor stock were just initiated at Wedbush with an ‘Outperform’ rating.

The top three sectors in this fund are: Technology (45.76% of assets), Industrial (40.52%), and Healthcare (12.33%)

Here are the latest rating changes on this tech stock.

In the past 30 days, 22 analysts have increased their EPS estimates for this beauty retailer.

This tech stock beat analysts’ earnings estimates by $0.04 last quarter, and the company is expected to grow at a 33.2% annual rate over the next five years.

Early Tuesday morning Biopharmaceutical giant AbbVie (ABBV) announced plans to acquire Ireland-based Allergan plc (AGN) for $63 billion. The market hates the deal and AbbVie stock plummeted over 16% on the day. Let’s take a look at the deal and see what’s going on.

The shares of this computing company were just upgraded by Barclay’s to ‘Overweight’.

The major indexes took a hit today, with the Dow losing 179 points and the Nasdaq sinking 121 points.

This silver company is expected to grow at an annual rate of 46.9% over the next five years.

This small bank is looking more and more like a takeover candidate.

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.