It’s true that seasonal demand for certain foods and drinks—and the companies that produce them—is typically discounted well in advance by investors. Nonetheless, there’s evidence that interest in this category is picking up appreciably this summer.

My recent screening for turnaround candidates has picked up more than a few food and beverage companies that had fallen out of favor but are now attractive—and even showing signs of accumulation in some cases.

Despite the major indexes trading near the highs, most stocks have struggled.

For most of the rest of the market, the problem is oil. The price per barrel of crude oil skyrocketed to over $110 from under $60 before the war. And prices stayed elevated for more than three months. Oil is involved in everything. And that means inflation. And inflation means high interest rates.

But that’s in the past. The future is likely to be different.
Peace changes the dynamic. Without war, oil prices will fall. Interest rates will come down. That rate hike may be off the table. And stocks held back by inflation and high interest rates should be poised to move higher.

The pessimists have it all wrong. The resilient economy isn’t precarious. The restraints were precarious. When the falling oil prices unleash a stronger economy, it will change things. Let’s get ahead of the curve with stocks that will benefit.

Before we dive into this week’s covered call idea we need to move on from three stock positions coming out of June expiration, as the calls we sold expired worthless.

To execute these trades you need to:

Sell YOU stock

Sell PL stock

Sell VIAV stock

Moving on ...

Last week was a bit of a disjointed, volatile affair, so we’re being a bit more selective when it comes to stock selection and entry points. That said, the intermediate-term picture remains as bright as ever, with the trends for leading indexes, sectors and stocks pointed up and with impressive resilience and mostly-normal action even after many stocks posted massive gains in April and May. We’re leaving our Market Monitor at a level 8, aiming to give our winning stocks some rope and look for fresh buys on dips.

This week’s list is again heavy on growth names, though there are a few newer titles that haven’t appeared before. Our Top Pick is an out-of-the-way AI play that’s seeing humongous new orders and just completed a major acquisition.

Editor’s Note: There will be no issue of Cabot Stock of the Week next Monday. You will receive your next issue on Monday, July 6.

Rotation is in full swing, and that’s making for a healthier, less top-heavy market despite the S&P 500 and Nasdaq trading below their early-June tops. As the air has come out of the AI trade a bit, investors have simply moved money into the many unloved and undervalued sectors – financials, healthcare, utilities, materials. The latter sector is where today’s new portfolio addition comes from. It’s a little-known name Tyler Laundon dubbed his Top Pick in this month’s issue of his Cabot Early Opportunities newsletter. It’s a stock with tremendous upside and momentum.

Details inside.

After more than three months of dictating every move on Wall Street, the Iran war finally headed toward the exits last week — the U.S. and Iran agreed to a framework to end the conflict, reopen the Strait of Hormuz, and lift the U.S. naval blockade, sending oil tumbling back toward the mid-$70s. The other headliner last week was new Fed Chair Kevin Warsh’s first meeting on Wednesday: The Fed held rates steady, but its updated projections flipped hawkish, with the median policymaker now penciling in a rate hike rather than a cut before year-end — a shift that knocked stocks lower midweek before a sharp Thursday rebound.

After more than three months of dictating every move on Wall Street, the Iran war finally headed toward the exits last week — the U.S. and Iran agreed to a framework to end the conflict, reopen the Strait of Hormuz, and lift the U.S. naval blockade, sending oil tumbling back toward the mid-$70s. The other headliner last week was new Fed Chair Kevin Warsh’s first meeting on Wednesday: The Fed held rates steady, but its updated projections flipped hawkish, with the median policymaker now penciling in a rate hike rather than a cut before year-end — a shift that knocked stocks lower midweek before a sharp Thursday rebound.

After more than three months of dictating every move on Wall Street, the Iran war finally headed toward the exits last week — the U.S. and Iran agreed to a framework to end the conflict, reopen the Strait of Hormuz, and lift the U.S. naval blockade, sending oil tumbling back toward the mid-$70s. The other headliner last week was new Fed Chair Kevin Warsh’s first meeting on Wednesday: The Fed held rates steady, but its updated projections flipped hawkish, with the median policymaker now penciling in a rate hike rather than a cut before year-end — a shift that knocked stocks lower midweek before a sharp Thursday rebound.

It was a better week for markets and Explorer stocks. GE Vernova (GEV) came to life this week, up 21%. Coeur Mining (CDE) shares rebounded this week, soaring 13.8% following a recent announcement that it will be added to the S&P MidCap 400 Index.

And new Fed chairman Kevin Warsh signaled yesterday that he is an inflation hawk. Overnight, the Bank of Japan raised interest rates to its highest level since 1995. Officials signaled more hikes ahead to combat too-high inflation.

But our bull market seems to confirm that rising interest rates do not matter much.

The June issue of Cabot Early Opportunities is focused on three companies benefiting from powerful structural growth trends that are still in the early innings.

Whether it’s a newly independent materials company gaining exposure to nuclear and AI demand, a critical power infrastructure provider solving bottlenecks in next-generation computing, or a semiconductor supplier riding a surge in testing complexity, these businesses are seeing improving fundamentals that continue to pull in fresh money.

All the details are in the June issue of Cabot Early Opportunities.

What a difference a week makes. After the prior Friday’s chip-driven rout, a volatile, headline-whipped week ultimately ended higher as growing optimism that a U.S.-Iran peace deal is finally within reach sent oil tumbling back toward $85 a barrel. And despite a modestly hot May inflation report and an Oracle-led wobble in AI names, by Friday the bulls had the upper hand as SpaceX pulled off the largest IPO in history.

After a huge run in April and May, the sellers finally made a stand with the major indexes and leading growth stocks, but the rebound since then has been classic, with growth stocks rebounding nicely and with the quick, sharp decline hitting short-term sentiment. So is it all up from here? Not necessarily—there’s still a decent chance of more short-term shenanigans as the good news is out and many growth stocks remain extended to the upside. Still, the recent rebound is a good sign this bull phase has much farther to run. We’ll bump up our Market Monitor back to a level 8.

This week’s list covers a lot of different areas of the market, including a few names that took their time to get moving after the March low. Our Top Pick just decisively broke out of a huge launching pad on great volume after some wobbles after earnings.

Has there ever been anything as overvalued as SpaceX (SPCX)?

Elon Musk’s rocket and space-based internet company reported $18.7 billion in revenue in 2025. That’s less than half the revenue declining electronics store chain Best Buy (BBY, $41.7 billion) generated last year, less than International Paper Company (IP, $23.6 billion), and barely more than Casey’s General Stores (CASY, $17.6 billion). Those three companies have a combined market cap of roughly $67 billion. As of this writing, SpaceX has a market cap of $2.7 trillion. That’s more than the combined market cap of Walmart (WMT), JPMorgan (JPM) and Visa (V). Together, those three companies generated $847 billion in revenue last year.

Small caps continue to hold up well. The S&P 600 Small Cap Index is up modestly since last Thursday and is trading just below the fresh all-time highs it hit earlier this week. The group’s resilience stands out, especially against a backdrop of narrowing leadership and ongoing rotation beneath the market’s surface.

The main macro development this week was the Fed’s June meeting and Chair Kevin Warsh’s press conference, which confirmed a shift in policy direction.

WHAT TO DO NOW: The market’s bounce has been a good one, and the intermediate-term outlook remains bright. That said, near term, there are still some crosscurrents (rotation into the broad market, Dow outperforming the Nasdaq) that tell us growth stocks could throw us another curveball in the coming week or two. Overall, then, we’re mostly standing pat, but we’re going to add a half-sized stake in Guardant Health (GH) here, leaving us with a still-good-sized cash position of 37% or so. Details below.

Stocks started this week with a huge rally as the Iran ceasefire deal appears to be the real thing.

Of course, it’s been months of supposed peace deals falling apart. It’s hard to believe. I’m sure that fact is holding the market back somewhat. But this one is different for a couple of reasons.

Stocks are starting off this week with a huge rally as the U.S. and Iran have reached a ceasefire deal.

We’ve been here before. These peace deals have fallen apart several times. I’m sure that fact is holding the market back somewhat. But this one is different for a couple of reasons. First, it’s the furthest a peace deal has gotten with both sides agreeing and independent verification from Pakistan. Second, this is what a peace deal would look like at this point if it’s real and lasting.

[Note: The Cabot Turnaround Letter weekly update won’t be published next Friday, June 19, due to the market being closed for the Juneteenth holiday.]

Before we get into the main topic for today’s newsletter update, a quick note on the portfolio is in order. I’m continuing our “spring cleaning” effort that we began last week by trimming a couple more of our holdings, but I’m also adding a new position to take the place of the recent deletions.

After two near-record-setting months, stocks are encountering their first real turbulence since March. It’s no surprise.

While stocks go up an average of 10% a year, they rarely do so in a straight line. And after the S&P 500 rallied nearly 20% in April and May and the Nasdaq shot up nearly 30%, a pullback of some kind – or possibly even a true correction – was to be expected. It seems it’s happening all at once.

Stocks look set to enter the summer near all-time highs, but leadership has narrowed, volatility has ticked up, and there’s been renewed scrutiny on the AI trade and valuation concerns in some of the market’s biggest winners.

At the same time, the macro backdrop remains a mix of resilience and intermittent turbulence. While economic data continues to hold up, energy prices remain elevated due to the ongoing Iran conflict – which has no end in sight – keeping upward pressure on inflation and yields.

Tech, commodity, AI, and Explorer stocks struggled this week as concern over capital expenditures increased. Mideast tensions intensified and inflation numbers came in yesterday at their highest rate in over three years, fueled by rising energy costs. The combination of anticipated higher interest rates and rising bond yields impacted the price of precious metals, with gold sliding below $4,200 an ounce and silver falling below $64 an ounce.

Stocks look to enter summer near all-time highs, but leadership has narrowed and volatility has ticked up thanks to renewed scrutiny on the AI trade and open-ended questions about valuations in some of the hottest areas of the market.

There’s also been more focus on the evolving macro landscape, which features a resilient U.S. economy but stubbornly high energy prices due to the ongoing Iran conflict, and somewhat elevated yields. We’re now looking at a higher likelihood of a Fed rate hike, with the odds of a hike by December now well over 50%.

The high-flying AI stocks got crushed on Friday. But those stocks started this week higher. Where do we go from here?

The technology-heavy Nasdaq index fell 4% on Friday, and the S&P 500 fell for the week for the first time in 10 weeks. A couple of things spooked investors. The AI trade turned sour after Broadcom (AVGO) reported earnings that included slightly lower revenue projections for its AI chips than were expected. Also, a blowout jobs report strengthened the case for a Fed rate hike by the end of the year.

A major economic narrative that took shape in recent years was the decline and (presumptive) inevitable death of the so-called “petrodollar,” as a growing number of countries diversified their foreign exchange reserves away from the U.S. dollar and toward gold and alternative currencies like the Chinese yuan.

VeriSign (VRSN)

from Unconventional Wealth

Internet addresses—also known as domains—are examples of virtual real estate, each of which can be bought. The early Internet moguls realized this and gobbled up high-quality names.

For example, Download.net was originally bought in 1996. Adam Dick acquired it for $3,000 in 2001 off eBay and sold it...

This application software company is also a “buy” at Citigroup on its potential from faster automatic emergency braking adoption. The analyst’s price target is a very attractive $62. The shares are trading down right now, as the lockup period is expiring, creating a discounted opportunity.

Mobileye N.V. (MBLY)
from New Technology Superstars

Shares...

The top five holdings of this healthcare fund are Johnson & Johnson (JNJ, 11.23% of assets); Pfizer, Inc. (PFE, 7.53 %); Merck & Company, Inc. (MRK, 6.21%), Gilead Sciences, Inc. (GILD, 5.46%); and Amgen Inc. (AMGN 4.65%). It rewarded shareholders with a 25% return in 2014.

Health Care Select Sector SPDR...

This clothing manufacturer’s fundamentals have declined, so it is now a “sell”. Our buy recommendation was recently upgraded by Global Hunter Securities from “neutral” to “buy” and raised its price target to $18.

Sell: HanesBrands (HBI)
from Upside
Updated from Investment Digest 756, April 16, 2014

HanesBrands (HBI) was downgraded to Sell. The Quadrix®...

Buy: Federal Signal (FSS)
from Upside

Founded in 1901, Federal Signal (FSS) is built around three attractive businesses serving government and commercial customers in more than 100 countries. The environmental solutions business (59% of sales for the nine months ended September) makes street sweepers and vacuum trucks. The safety and security division...

This Asian fund is rated five stars by Morningstar. Its top five holdings are: Taiwan Semicon Man Twd10 (2330.TW; 8.12% of assets); AIA Group Ltd (AAIGF.HK, 5.13%); Naspers Ltd Class N NAPRF.JO, 3.64%); China Constr Bank CICHF, 3.46%) and Industrial & Commer IDCBF, 3.45%).

Fidelity China Region Fund (FHKCX)
from The Complete...

This medical device company beat earnings estimates in its recent quarter, posting $0.29 per share, five cents higher than expected.

CR Bard Inc. (BCR)
from DRIP Investor

Jump-starting growth is a difficult thing for any company, let alone a billion-dollar enterprise. However, CR Bard (BCR) has done just that. The company, a maker...

This newly-formed company from two stalwarts surpassed analysts’ revenue estimates and was just upgraded to “outperform” by Northland Capital.

Qorvo (QRVO)
from Nate’s Notes

As anticipated, the merger between TriQuint and RF Micro Devices was completed at the end of 2014, and the new company, Qorvo, has begun trading under the ticker symbol...

This oil services company has seen its stock plunge to bargain levels, due to sinking oil prices. The shares now trade below book value; the company has a healthy balance sheet, and the shares were just upgraded to “sector outperform” by Howard Weil.

Basic Energy Services, Inc. (BAS)
From The Cheap Investor

Basic...

Low interest rates and a growing economy are good omens for home building stocks, and their stocks have recently seen a boost from better-than-expected earnings in the industry.

Toll Brothers (TOL)
from The Internet Wealth Builder

Toll Brothers (TOL), a U.S. luxury homebuilder, reported its fiscal 2014 earnings on December 12. Earnings continue...

International growth should bode well for this discounted solar stock, which is expected to see triple-digit growth.

JA Solar Holdings Co. Ltd. (JASO)
from Top Stocks under $10


Among the beaten-up solar names, JA Solar Holdings Co. Ltd. (JASO) stands out as a high-quality solar-module producer for some the toughest, most-arid and hottest...

This 3D printing company is seeing healthy double-digit growth by expanding its applications into new arenas.

Stratasys (SSYS)
from The 100% Letter


After a tough year it’s time to by 3D printing stocks again. And my favorite stock in the group is Stratasys (SSYS).

Stratasys is a $4 billion market cap company based in...

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.