This remains a “buy weakness” market. Sure, there are plenty of reasons for concern – which is almost always the case. But the positives continue to outweigh the negatives. So, I’m moderately bullish on stocks, particularly the ones that insiders favor.

Let’s start with three negatives.

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.

The peace rally is again being overshadowed by more technology ugliness.

The selloff in artificial intelligence that began after Broadcom’s (AVGO) earnings at the beginning of the month is gaining steam early this week. Technology had been red-hot and lifted the market in April and May. Now, it’s spoiling the peace party.

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.

It’s time for our 2015 Top Picks! We start off the season with an information technology company that is pioneering a sea-change in taking customer service to the next level.

ServiceNow (NOW)
from Cabot Market Letter


ServiceNow is a small-ish ($670 million in revenue in 2014) software provider that’s likely to grow many...

This small-cap stock ($630 million market cap) is capitalizing on the fast-growing Latino media market, and also pays a small dividend.

Entravision Communications Corp. (EVC)
from Weiss Stock Ratings Heat Maps

Entravision Communications Corp. (EVC,Weiss Ratings A-) is a diversified media company servicing Latino audiences and communities with its 58 primary television stations,...

With litigation behind it and an improving economy set to boost its profits, this mega-bank looks attractively discounted.

Bank of America (BAC)
from Ian Wyatt’s Million Dollar Portfolio

Bank of America (BAC) is the second-largest U.S. Bank. With total assets of nearly $2.2 trillion, the bank trails only JP Morgan (JPM).

BofA has retail...

Bonanza Creek Energy (BCEI)
from Energy Strategist

Bonanza Creek Energy (BCEI) looks better placed to make it through the oil crash than most, with plenty of upside in the event of higher prices.

Bonanza Creek is a small-cap shale driller focused primarily on the Wattenberg Field in Colorado’s Niobrara shale play, with secondary...

Analysts are forecasting a target price of $46.56 for this IT outsourcing company’s stock.

CGI Group (GIB)
from Internet Wealth Builder


CGI Group (GIB) shares moved higher following the mid-November release of strong fourth quarter and 2014 fiscal year end results (to Sept. 30). Although revenue for the quarter was only up by...

This fund’s mission is to invest at least 80% of its net assets in Japanese equities. It’s top five holdings include Misumi Group Inc (MSUXF, 5.72% of assets); Terumo Corp (TRUMF, 5.43%); Asics Corporation (ASCCF, 5.40%); Ryohin Keikaku Co Lt (RYKKF, 5.17%); and Nidec Corp (NNDNF, 5.14%).

Hennessy Japan Investor (HJPNX)
from...

This generic drug company just beat estimates by $0.20 per share, and is expected to see sales growth of 76% next year.

Lannett Company, Inc. (LCI)
from BI Research


Lannett Company, Inc. (LCI) recently landed the #8 spot on Forbes’ annual list of America’s 100 Best Small Companies. The Company is a generic...

This real estate advisory and investment services firm just bought real estate consultant IVI International and launched a global brand positioning strategy. Estimates are rising, and our contributor just raised his price target on the stock.

CBRE Group (CBG)
from Barclay’s Capital Equity Research
Updated from Investment Digest 752, December 18, 2013

We are...

This scientific instrument company just increased its dividend by $0.25 a share, currently yielding 1.1%. Investors should also benefit from its share repurchase programs.

FEI Company (FEIC)
from PAD System Report

FEI Company (FEIC) was just boosted to a “3” for year ahead performance. The stock has recovered to the mid-80s, even though...

Depressed oil prices have created an opportunity to buy this stock at discounted levels.

Goodrich Petroleum (GDP)
from Top Stocks Under $10


An opportunity in Goodrich Petroleum (GDP) lurks, especially since the magnitude of its decline (3x the average oil and gas decline) on no actual company news, and since Citibank technicians called...

This Internet real estate marketplace has been attracting increasing institutional interest with current institutions adding almost 5 million shares to their existing holdings. The company is experiencing tremendous growth, and analysts are expecting that to continue.

Zillow (Z)
from New Technology Superstars

Zillow (Z), the largest residential real estate marketplace, added a number...

This global entertainment company is still delivering double-digit growth and just boosted its dividend by 34%, and now pays $1.15/share annually to its shareholders.

The Walt Disney Company (DIS)
from DRIP Investor

The Walt Disney Company (DIS) is one of my favorite long-term investments. The firm has strong market positions in a host...

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.