The markets have been a bit choppy of late, with the Dow Jones Industrial Average rising to 29,000 at the beginning of the month, then retreating and rising again. It looks like Fall may be a little volatile. As you’ll see in our Advisor Sentiment Barometer and Market Views, sentiment remains bullish, with a hint of caution.

That stands to reason, as we’ve been on a fairly unstoppable uptrend for quite some time. So, a period of catching our breath is not necessarily a bad thing. Especially, as the economy continues to hold its own, with consumer credit, job openings and the CPI all steadily improving. Unemployment, of course, remains the biggest challenge, but hopefully, the eventual end of COVID-19 will restore some semblance of normality to our hospitality and entertainment industries, which have suffered the most.

In the meantime, our contributors have continued to find some very interesting stock picks. We begin this month’s issue with our Spotlight Stock, a REIT with above average yield, and a Dividend Aristocrat. In my Feature article, I further explore the REIT industry and explain why it’s almost always a good time to hold a REIT or two in your portfolio.

The markets have been a bit choppy of late, with the Dow Jones Industrial Average rising to 29,000 at the beginning of the month, then retreating and rising again. It looks like Fall may be a little volatile. As you’ll see in our Advisor Sentiment Barometer and Market Views, sentiment remains bullish, with a hint of caution.

That stands to reason, as we’ve been on a fairly unstoppable uptrend for quite some time. So, a period of catching our breath is not necessarily a bad thing. Especially, as the economy continues to hold its own, with consumer credit, job openings and the CPI all steadily improving. Unemployment, of course, remains the biggest challenge, but hopefully, the eventual end of COVID-19 will restore some semblance of normality to our hospitality and entertainment industries, which have suffered the most.



In the meantime, our contributors have continued to find some very interesting stock picks. We begin this month’s issue with our Spotlight Stock, a REIT with above average yield, and a Dividend Aristocrat. In my Feature article, I further explore the REIT industry and explain why it’s almost always a good time to hold a REIT or two in your portfolio

The market’s uptrend is under a bit of pressure and the Fed’s dovish stand on interest rates is a sign of weakness that is unlikely to impress Wall Street. Nevertheless, Sea Limited (SE) has regained its momentum and NovoCure (NVCR) is up 35% over the past two weeks. And our emerging markets timer (EEM) is positive. This week we go to Australia for a new fintech idea that has been on a tear, but fortunately has pulled back for a decent entry point.

In September’s Issue of Cabot Early Opportunities we continue our search for companies that have some of that special sauce that can take them from good to great. We serve up a mix of software, consumer and MedTech names, as well as a Top Pick that’s growing like a weed despite participating in a seemingly stodgy industry. Enjoy!

Fertilizer companies aren’t the sexiest names on Wall Street, but the sector has shown an ability to trend when conditions are right, and that time looks to be here.

Current Market Outlook


The market has been thrashing around during the past few trading days, with big gaps up and down, dramatic reversals and news-driven moves. But overall, nothing has really changed from our point of view—most growth leaders are still under pressure after suffering abnormal selling the prior couple of weeks, which, coming after a prolonged upmove, raises the odds that further potholes are ahead. Of course, it’s not all bad—today was a stick save for the major indexes (most bounced nicely off their 50-day lines), and while the broad market has pulled back, many areas are doing so normally. All told, we remain flexible, and are open to the possibility that the recent dip was more of a shakeout than the start of a rough patch, but the burden of proof is on the bulls to step up. Until then, we prefer being cautious.

The good news is that our stock screens continue to pick up on some potential fresh leaders should the market find its footing. Our Top Pick this week is Novocure (NVCR), an innovative player in the cancer market that’s come to life after a year-long rest. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
10X Genomics (TXG)	121	116-120	103-105
DouYu (DOYU)	16	15.2-16.2	13-13.7
The Gap, Inc. (GPS)	17	16.5-17.5	14.5-15.2
Guardant Health (GH)	103	98-102.5	88-90
The Mosaic Company (MOS)	18	17.2-18.2	15.4-16
MyoKardia (MYOK)	124	116-121	103-106
Novocure (NVCR)	98	93-98	81-84
Snap Inc. (SNAP)	24	22.5-24	20-21
Taiwan Semiconductor (TSM)	80	78-81	71-73
Target (TGT)	148	145-149	132-134

After a sharp two-week correction that targeted growth stocks in particular (and high-flyers like TSLA and ZM above all), the market may or may not be ready to resume its uptrend. For now, however, I’m keeping it simple and staying heavily invested.
Today’s recommendation is a stock that’s been in the news recently and might be viewed as the next Tesla, but I don’t like that comparison, as there are numerous differences. In any case, it has great potential and I think you’ll like the story.

As for the current portfolio, something’s got to go to keep the portfolio at or below 20 stocks and the victim this week is Zscaler (ZS), which has brought us a fine profit in five months and is now at risk of giving some back.


Full details in the issue.

Growth stocks have changed character over the past week, with abnormal action and breakdowns appearing. The good news is that a major top doesn’t appear to be in place; the general market is still hanging in there for now, and the long-term trend of most leaders is still up. But, taking things on a stock-by-stock basis, we’ve pared back a bunch and are actually holding more than half the portfolio in cash. That’s probably too high (we’d like to put some to work in fresher leaders), but we’re content to patiently wait for buyers to support the market.

In tonight’s issue, we review all our stocks, dive into the two main factors to your investment returns and go over many fresher names that could help lead the market’s next upmove.

Today, we are profiling a Canadian SaaS company that is trading for a “value” multiple.

This company has sticky, recurring revenue. Other characteristics include:

• Strong historic revenue growth (25% CAGR)
• Over 40% insider ownership
• strong balance sheet (a significant net cash position)
• A cheap valuation

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

For the first time since the summer began, the market is faltering. The rally that thrust the S&P 500 60% higher in little more than five months is cracking.

The end of summer is being greeted by cranky investors who see a market that has run up to new all time highs despite the risks of Covid and the election. Of course, a huge rally of this magnitude needed a breather. The pullback is normal, healthy and overdue.



It is impossible to say how far stocks will fall. But, unless there is some very bad news, I don’t expect a prolonged or deep selloff. The market is still looking ahead to a positive environment where the pandemic is fading away and the economy is quickly recovering.



In this uncertain environment, I found a rare stock. It is a company that benefits from the undeniable trend toward technological proliferation. It has solid earnings growth and stock performance. But it provides these benefits with remarkably low volatility.



The stock is off the high after a rare pullback and selling at a cheap price. Historically, it has less than a quarter of the volatility of the overall market. It’s a great forward-looking investment for this uncertain environment.

The S&P 600 Small Cap Index bounced off rock-solid support at the 820 level late last week, and over the last few sessions has migrated back to its 50-day moving average line at around 837.

The Emerging Markets Timer is doing just fine, as the iShares EM Fund has rebounded from its May 17–18 dip.

The S&P declined 1.8% last Wednesday, its worst drop since September. We’ve seen a decent rebound in most of our stocks since, but the market needs to behave for the next couple of weeks to keep the bullish case intact. Long-term, the market’s trend remains up.

Updates on all our stocks, no ratings changes, and 10 stocks that look likely to rise 5% in the near term.

The year’s first major bout of market volatility hit this week. It’s about time. I’m moving two of our stocks to Hold.

This Weekly Update includes summaries for three Cabot Benjamin Graham Value Investor companies that reported quarterly financial results or other noteworthy news during the past week, plus questions from subscribers along with my answers.

Trim your sails a bit and see how the market handles itself going forward. Today’s whopping decline isn’t the end of the world for growth stocks, but the broad market is more worrisome, with the Cabot Tides now neutral and our Two-Second Indicator turning negative.

The major indexes pulled back late last week, then rallied Monday after Saudi Arabia and Russia said they would extend oil production cuts. Crude prices surged to their highest level in two weeks, and energy stocks led the market higher. Things cooled off again on Tuesday, as housing starts disappointed and the U.S. dollar fell to its lowest level since before the election.

It’s no secret that I’ve favored energy, financial and construction materials stocks for many months. That’s because many stocks in those sectors are expected to achieve very strong, multi-year profit growth.

It’s been a wild week, much more so than a high-level look at the small-cap index would imply. According to the index, we’re just moving sideways with a little wiggle here and there. But when you look within our portfolio—wow! This was anything but a quiet week. Stocks were jumping all over the place as earnings reports came out.

In this Weekly Update, I include summaries for 10 companies that reported quarterly financial results or other noteworthy news during the past week. I also include questions from subscribers along with my answers.

The Emerging Markets Timer is in great shape, as the iShares EM Fund has pushed out to new highs in recent days. We’re holding on tight to our winners, but we are downgrading one stock to Hold tonight.

This automotive supplier beat analysts’ EPS estimates by seven cents last quarter.

Awareness of cannabis is definitely up, but there are still major friction points, which will continue at least until the U.S. government legalizes marijuana as it has just legalized hemp.

This chemical company’s stock was also recently recommended by Zacks, who cited the company’s rising earnings.

This infrastructure company’s stock was also recently recommended by simplywallstreet.com, due to its strong fundamentals, growth potential, and undervaluation.

Next, we are taking significant profits on a previous sale.

Our first idea is a mining company that is showing strong results; buy on weakness.

Seven analysts have raised their EPS estimates for this tech company in the past 30 days.

This food distributor has also just been recommended by Zacks, who cited the company’s earnings growth, asset utilization, and upward EPS revisions as attractive.

One stock reports strong fourth quarter and moves from Strong Buy to Hold.

Two recommendations today—an energy company with an improving future, and some profit-taking.

Our second recommendation will be taking some profit.

This gold company is expecting double-digit growth next year.

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.