Issues
This week’s pick has one of our favorite growth stories in the market.
While our focus is on long-term business fundamentals and underlying valuations, even we can be tempted to briefly set this aside for shorter-term bargains. And this time of year these bargains can appear, driven by artificial selling pressure.
In this issue, we look at six stocks that are promising candidates for a bounce.
In this issue, we look at six stocks that are promising candidates for a bounce.
The cannabis sector remains in a correction, with Canadian stocks in particular still struggling—even as Cannabis 2.0 promises new retail opportunities. But the fundamentals of the industry remain bright, and investors are now beginning to discriminate between the winners and the losers—with the best stocks showing substantial increases in buying volume recently.
The portfolio remains more than a third in cash, waiting for the sector’s main trend to turn up, and there are just two small adjustments today. The portfolio will sell half its position in Cresco Labs (CRLBF) and double its position in Innovative Industrial Properties (IIPR).
Full details in the issue.
The portfolio remains more than a third in cash, waiting for the sector’s main trend to turn up, and there are just two small adjustments today. The portfolio will sell half its position in Cresco Labs (CRLBF) and double its position in Innovative Industrial Properties (IIPR).
Full details in the issue.
The world is about to change in a major way. So much so that you may look back ten years or even five years from now and realize how profoundly different things are since 2019.
The rapidly advancing rollout of 5G will be a technological tipping point that crosses a threshold into the digital age where everything is connected to the internet. Today, only a few things are connected. In a few years, the whole world will be computerized.
5G is such a game changer that many companies and governments can’t afford to be left behind. The current Administration has labeled 5G a national security priority. It seems 5G is the news arms race.
Those are the stakes. And it’s coming fast. In this issue, I identify a company that is at the epicenter of the 5G rollout. It holds vital technology that is light years above the competition and is necessary to connect any device to 5G. Earnings and revenues should skyrocket as the rollout proceeds in haste.
The rapidly advancing rollout of 5G will be a technological tipping point that crosses a threshold into the digital age where everything is connected to the internet. Today, only a few things are connected. In a few years, the whole world will be computerized.
5G is such a game changer that many companies and governments can’t afford to be left behind. The current Administration has labeled 5G a national security priority. It seems 5G is the news arms race.
Those are the stakes. And it’s coming fast. In this issue, I identify a company that is at the epicenter of the 5G rollout. It holds vital technology that is light years above the competition and is necessary to connect any device to 5G. Earnings and revenues should skyrocket as the rollout proceeds in haste.
Current Market OutlookThe market finally hesitated a bit last week, and going through our weekend research, we did spot more leading names that had pulled back during the past five to 10 trading days. But as has been the case since the early-October lows, that weakness was tame (most dips were calm and controlled), with today’s burst of buying pushing many back up. (Encouragingly, even the lagging small-cap indexes are now trying to break out of multi-month ranges.) There’s still some shorter-term yellow flags, so we wouldn’t throw caution to the wind here (don’t forget to take some partial profits!), especially if you’ve put a bunch of money to work in recent weeks. But the fact that most stocks and indexes haven’t been able to retreat much despite those yellow flags is yet another stone in the bullish wall. We remain bullish.
This week’s list includes a broad mix of names, from old winners coming back to life to new names perking up to recently strong performers that have eased to good entry points. Our Top Pick is Axon Enterprise (AAXN), which has come back to life after a year-long rest. Start small and go from there.
| Stock Name | Price | ||
|---|---|---|---|
| Alnylam Pharmaceuticals (ALNY) | 143.58 | ||
| AAXN (AAXN) | 87.11 | ||
| Kansas City Southern (KSU) | 176.54 | ||
| Leggett & Platt, Incorporated (LEG) | 49.79 | ||
| Lithia Motors Inc. (LAD) | 146.30 | ||
| Luckin Coffee (LK) | 0.00 | ||
| Novocure (NVCR) | 0.00 | ||
| Palo Alto Networks (PANW) | 236.92 | ||
| Synnex Corp. (SNX) | 129.70 | ||
| Target (TGT) | 124.77 |
The market and leading stocks have hit a few potholes during the past couple of days, and given the recent run and some short-term measures, more selling wouldn’t be shocking. But bigger picture, the outlook remains sunny: The trends are up for the major indexes and many fresh leading stocks have emerged. We’ve done a bunch of buying during the past month, though we’re still holding 24% on the sideline as we see how these new buys act.
In tonight’s issue, we talk about our market view, give you our latest thoughts on all our recommendations and write about the two themes that we think are leading the market higher, at least for now. Throw in some new ideas and there’s something for everyone in tonight’s Growth Investor.
In tonight’s issue, we talk about our market view, give you our latest thoughts on all our recommendations and write about the two themes that we think are leading the market higher, at least for now. Throw in some new ideas and there’s something for everyone in tonight’s Growth Investor.
In this Month’s Issue of Cabot Early Opportunities I reveal a few tips to help you buy into IPOs at reasonable prices and we look at some compelling data that suggests the 150 to 180 day period after IPO just might be one of the ideal times to buy.
We also go inside five companies that look great right now, including a few software stocks, a consumer goods company and a MedTech stock that’s flying under the radar now, but not for long!
We also go inside five companies that look great right now, including a few software stocks, a consumer goods company and a MedTech stock that’s flying under the radar now, but not for long!
So far, November’s markets have been a nice respite from the volatility of October, and the Dow Jones Industrial Average actually gained about 900 points. Investors—for the most part—seem to be ignoring China tariffs, impeachment hearings, and Brexit. And why not? After all, the economy remains strong and sentiment—as you’ll see in our Advisor Sentiment Barometer, as well as in our Market Views—remains very bullish.
Updates
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.
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 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%.
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).
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.
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.
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.”
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.
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.
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.
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 30th. 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.
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 30th. 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.
Alerts
The market was mixed today, as the Dow rose 94 points, but the Nasdaq dropped 54 points and many growth stocks were hit hard.
An important stock sector reclassification has begun that can affect your shares prices. And we’re selling one stock from the portfolio.
Sharing the top five holdings of this ETF.
This chip maker beat analysts’ estimates by $0.08 last quarter and 19 analysts have raised estimates for the company in the past 30 days.
Eight analysts have increased their EPS estimates for this real estate company in the past 30 days; the company beat Wall Street’s earnings estimates by $0.37 in its most recent quarter.
This Canadian cannabis company began trading publicly earlier this month, and Aurora Cannabis (ACB.TO), a $4.5 billion company owns a significant portion of its shares.
A performance review of the Buy Low Opportunities Portfolio; and a new stock joins the Buy Low Opportunities Portfolio as a Strong Buy.
An earnings miss has made this wireless supplier a bargain, and analysts are projecting 15% annual growth for the company for the next five years.
I’m recommending the sale of two stocks today because they’ve gone up at a rapid pace that’s unsustainable. There is absolutely no bad news that’s driving this decision, and I am open to repurchasing both stocks in the future, especially if they have big price corrections.
Our second recommendation is a short on an auto parts retailer, as a result of so-so sales.
Eight analysts have raised their EPS estimates on this home improvement retailer in the past 30 days.
This financial company is forecast to grow by more than 30% annually for the next five years.
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.