The latest issue of Cabot Marijuana Investor is now available, with my current advice on the fourteen stocks in the portfolio.

The cannabis sector remains in a correction, but the new year brings the promise of a great rebound, and I want you to be in the stocks that will benefit most, so, while there hasn’t been much news over the past week, I do include full updates on each stock in the portfolio so you can best decide which stocks fit your own portfolio.

Also, the portfolio remains 25% in cash, waiting for the sector’s main trend to turn up.

Full details in the issue.

All Explorer positions except Grupo Televisa (TV) advanced this past week and the emerging markets timer (EEM) is positive in an uptrend and above both its 20-day and 50-day moving averages.

Today’s recommendation is a company showing some relative strength that offers a nice blend of emerging growth and Western management. It’s a business with a diversified portfolio of fuel distribution, sugar production, ethanol and electricity, rail transportation and warehousing as well as the distribution of natural gas.

As we steamroll toward the holidays, the market remains in great shape, and bigger picture, we continue to expect good things in 2020. Near-term, we are finally seeing a few signs of complacency, so some rocky trading is likely at some point; being choosy on the buy side makes sense. But we’re thinking bigger, aiming to hold our strong leaders with the goal of developing some bigger winners.

In tonight’s issue, we’re adding one half-sized position to the Model Portfolio; that will leave us with 19% in cash, which we’re looking to put to work as opportunities arise. We also review three initial lessons learned from this year, highlight some intriguing names that are setting up well and give you our latest thoughts on all our holdings.

In this Month’s Issue of Cabot Early Opportunities we take a closer look at recent recommendations and evaluate their Q3 earnings reports. I also show why I think the Small cap index is going higher in the near term. Finally, I feature five early-stage growth stocks going after totally different markets that look poised to deliver big gains in 2020 and beyond.

There is a brand new industry just coming of age.

New industries only come along once in a while and they almost always present an array of investments that will be superstars of tomorrow. We dream of going back in time and buying Microsoft (MSFT) or Starbucks (SBUX) or Netflix (NFLX) when they were new, upstart companies. But we might get another bite of a similar apple in 2020.

We’ve had a decent month in the markets—despite all the impeachment hoopla. It looks like the China trade issue is improving, housing starts and building permits are healthy, and unemployment remains low. Sounds like the making of a great holiday season!

We begin this issue with our Spotlight Stock, a company that has been in business for 67 years, residing in the defense and aerospace sectors. As I note in my Feature article, both of those arenas are experiencing fantastic growth, which bodes well for our Spotlight Stock.

Precious metal stocks (and their underlying commodities) have become a mixed bag, especially with some global uncertainties seemingly cleared up, but this stock is pushing ahead nonetheless thanks to some company-specific catalysts in addition to higher gold and silver prices.

The major indexes continue to hit new highs, all Cabot’s market timing indicators remain positive, and our portfolio is solid, overall, though I’m downgrading three stocks to Hold today for various reasons.

As for today’s new recommendation, it’s a very familiar name—a dividend-paying Wall Street Blue Chip—that Mike Cintolo says now has great growth potential because of its new business.



Details in the issue.

Current Market Outlook


As we steamroll toward the end of the decade, the overall market remains in good shape—the intermediate-term trend is firmly up, the number of stocks hitting new highs is expanding and many longer-term studies tell us that 2020 is likely to be another solid year. That said it’s not all peaches and cream out there—short-term, huge number of new highs often leads to some retrenchment, and we’re also seeing a bit more divergent action among individual stocks, with some growth titles hitting potholes while investors rotate elsewhere. None of that is “bad,” per se, but it is a reminder to honor and update your stops as time goes by, and to take a couple of partial profits if you score a decent profit.

This week’s list has a wide variety of newer names, from construction to precious metals to biotech to chips. Our Top Pick is Synaptics (SYNA), which has the makings of an intriguing turnaround as it’s riding a few powerful growth trends.

Stock Name	Price	Buy Range	Loss Limit
Aecom Technology (ACM)	0.00	42-43.5	39-40
GDS Holdings Limited (GDS)	80.15	47-48.5	43-44
Inphi (IPHI)	120.16	71.5-73.5	65-66
Pan American Silver (PAAS)	27.28	20-21	18-18.5
Planet Fitness (PLNT)	0.00	71.5-74	64.5-66
PTC Therapeutics (PTCT)	0.00	47-49	42.5-43.5
Reata Pharmaceuticals (RETA)	0.00	197-210	178-183
Shopify (SHOP)	585.00	368-383	335-345
Skyworks Solutions (SWKS)	0.00	107-111	96-98
Synaptics (SYNA)	0.00	63-66	55-56.5

Cannabis company earnings season is back. In the past two weeks, virtually all of our model portfolio companies have reported first-quarter results.

To save you the time of listening to lengthy earnings calls and plowing through press releases and filings, I recently did this for you to distill out the major trends that could benefit us as cannabis investors. Below are the top 10 sector trends in the space and what they mean for you, the cannabis investor.

The market’s record run is starting to show signs of fatigue. After powering higher since the March 30 lows, momentum has stalled and breadth has narrowed as a combination of rising yields, higher energy prices and renewed geopolitical uncertainty begins to weigh on sentiment.

The 10‑year Treasury yield has climbed from roughly 4.23% in mid‑April to 4.48% as of mid-morning today (matching the March high, and highest level since last July), meaning that financing costs are going up just as inflation concerns resurface. April’s CPI and PPI inflation reports both came in hotter than expected.

The market hit another new high this week. But earnings season is mostly over, and the war just won’t go away.

While there is still headline risk, investors are looking beyond the war. The earnings season has been great. According to FactSet, the average S&P 500 earnings growth rate, with 89% of companies having reported, is 27.7%.

If you have the feeling that this year’s boom in the tech sector—and the corresponding record highs in the major averages—isn’t being felt on a market-wide basis, you’re not imagining it.

As it turns out, the record lift in the Nasdaq and S&P is being driven by a troublingly small number of stocks. The result of this narrowing market is that value-focused investors like us have been forced to exercise patience while waiting for the boom to visit our corner of the market (more on that in a minute).

WHAT TO DO NOW: Big picture, the market and most leaders look great, and our market timing indicators are in fine shape. Near-term, though, there’s little doubt things have gotten a bit giddy, with many names and indexes extended to the upside. Tonight, we’re placing Cava (CAVA) on Hold as that stock has been caught up in some group weakness; we’ll hold our 45% cash position for now, but stay tuned, as we’d like to add some new names (or add to existing names) in the near future.

What a difference a month can make! What an April! The S&P rose 9.6% in April, making it the best single month for the market in six years. It hit an all-time high on Friday.

Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of some skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings. And for good reasons.

The results are in for the month of April. It was fabulous. The S&P rose 9.6%, making it the best single month for the market in six years. It hit an all-time high on Friday.

Sure, the war isn’t over. But the market doesn’t really seem to regard it as a war anymore, more like a blockade situation with the possibility of minor skirmishes. While there is still headline risk, investors have moved beyond this war and are focusing on earnings.

Now before you call me crazy concerning today’s newsletter headline, hear me out.

Even though large-cap names have garnered more than a fair share of attention among investors this year, I think a case can be made that companies with big capitalizations have a lot more room to run higher before they can be truly regarded as “overbought” or “played out.”

The market is digesting the push and pull of higher oil prices, a deeply divided Federal Reserve, prospects for a prolonged blockade of the Strait of Hormuz and fading momentum from the AI trade that helped push markets to all‑time highs earlier this month.

Despite the crosscurrents, the overall tone still tilts bullish, supported by investor comfort (for the time being) with the geopolitical tension, resilience in the U.S. economy, and improving visibility into earnings growth over the coming quarters.

Yesterday, four tech giants, Alphabet, Amazon, Meta and Microsoft, representing 22% of the S&P 500’s market value, reported strong quarterly earnings that highlighted the importance of AI.

You might think the above companies and their AI brethren are “asset light” companies but you would be very wrong.

It’s been a glorious April following a miserable March for the market. What happens in May may determine which direction stocks are headed for the rest of the year.

That’s probably overstating things a bit, but May should be crucial for the reasons we discussed last week: namely, the fate of the Iran war, but also the bulk of first-quarter earnings season and the introduction of a new Fed chair.

What war? This market is moving on. We may not be out of the woods yet, but investors are looking beyond the Iran war.

Stocks have already made up all losses from a rough March and then some. The S&P 500 had fallen 7.7% in the month of March by the 30^th. Since then, the index has rallied over 13%. The S&P is now at a higher level than before the war began and is hitting new all-time highs.

One of our stocks has lackluster performance and pattern of lower lows and lower highs, it’s time for us to move on and sell. Our capital will be better invested in the new pick, and I have several viable candidates on my watch list!

This low-priced stock has had its ups and downs, but takeover possibilities are attractive.

The second a Hold for now.

Both of these stocks had excellent quarters; the first remains a Buy

The major indexes were mixed on Friday, with the Dow rising 119 points and the Nasdaq falling 20 points, though many growth stocks took it on the chin as money rotated toward beaten-down names. As a result, we have one sale and two rating changes.

The markets came under heavy selling pressure today, as investors finally began to grapple with the possible effects of genuine trade war, one that included not just China, but many U.S. allies as well. As a result, we are selling two positions and moving two positions to hold.

The major indexes were mixed on Friday, with the Dow rising 119 points and the Nasdaq falling 20 points, though many growth stocks took it on the chin as money rotated toward beaten-down names. As a result, we have one sale and two rating changes.

This biotech stock was recently upgraded to ‘Outperform’ by Evercore ISI Group: In-Line.

On June 21, 2018, the world learned the shocking news that Intel Corp.* (INTC – yield 2.3%) CEO Brian Krzanich was required to step down from his position at Intel due to a relationship with an employee that violated company policy.

Markets pulled back yesterday and the Dow, S&P 500 and Nasdaq all closed lower. A couple of our holdings were hit particularly hard, so I wanted to send a quick update on two of our positions even though I’m not recommending any action.

Analysts are forecasting higher earnings for this medical device company, which has recently announced to acquisitions, boosting its product offerings.

This morning, the company reported third quarter earnings per share of $0.41 vs. the consensus estimate of $0.42 (August year-end), and revenue of $1.2 billion vs. the expected $1.29 billion.

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.