Issues
After a very strong April and May, the market and most growth stocks have been bobbing and weaving for most of June, with this week’s selling almost a continuation of what we saw a couple of weeks ago. For now, then, we’re staying somewhat close to shore, with a few stocks rated Hold and being selective on the buy side. That said, we’re also overall bullish until proven otherwise, with most of the intermediate-term evidence pointed up, so we’re giving our strong names a chance to build bases and putting money to work as opportunities arise. Tonight we’re making one small new addition, though are still keeping one-third of the portfolio on the sideline.
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.
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.
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.
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 ...
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.
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.
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.
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.
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.
Updates
[Note: The Cabot Turnaround Letter weekly update will be published next Thursday, July 2, in advance of U.S. markets being closed on Friday in observance of Independence Day.]
As if we needed reminding, Thursday’s lead headline in the Financial Times tells us all we need to know about the ongoing reality of supply-shock inflation: “Iran tells ships in Strait of Hormuz to turn back.”
As if we needed reminding, Thursday’s lead headline in the Financial Times tells us all we need to know about the ongoing reality of supply-shock inflation: “Iran tells ships in Strait of Hormuz to turn back.”
June has been a return to form for stocks in 2026, with value outperforming growth the way it did in the first quarter before the April and May AI-fueled boom. This month, value stocks are up roughly 3% while the S&P 500 is down 2.5% and the Nasdaq is off more than 4%. That mimics the first-quarter outperformance by value stocks, which added 2.5% from January through March while the S&P and Nasdaq tumbled 4.5% and 7%, respectively.
Small caps just passed their Fed test – and continue to hold up well.
The S&P 600 SmallCap Index is up about 2.5% since last Thursday’s close and up 4.2% since last Wednesday’s close (the day of the FOMC meeting). The index is trading at an all-time high this morning.
The S&P 600 SmallCap Index is up about 2.5% since last Thursday’s close and up 4.2% since last Wednesday’s close (the day of the FOMC meeting). The index is trading at an all-time high this morning.
A sharp selloff in chip stocks rattled markets this week but the AI buildout and AI demand are moving at a breakneck speed and the cost to run AI models seems to be going down.
In short, confusion reigns as AI costs are weighed against potential returns. The backdrop is that stocks of most of the chip companies have had crazy runs so a sharp pullback was inevitable. Taiwan and South Korean stocks have been particularly volatile.
In short, confusion reigns as AI costs are weighed against potential returns. The backdrop is that stocks of most of the chip companies have had crazy runs so a sharp pullback was inevitable. Taiwan and South Korean stocks have been particularly volatile.
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.
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.
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.
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.
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.
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.
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.
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.
Alerts
Today’s Daily Alert features a unique stock in the capital goods space from Benjamin Shepherd’s Wall Street.
“The global economic downturn hit heavy-equipment makers really hard. But now most of them are back on their feet and going strong. We especially like Westport, Conn.-based Terex Corp. (TEX $29 NYSE), whose recovery...
“The global economic downturn hit heavy-equipment makers really hard. But now most of them are back on their feet and going strong. We especially like Westport, Conn.-based Terex Corp. (TEX $29 NYSE), whose recovery...
Today’s new recommendation is a momentum stock from Cabot Top Ten Trader Editor Michael Cintolo. Wait for the stock to drop into his buy range before pulling the trigger.
“Long-term, we’re not big fans of GameStop Corp. (GME $31 NYSE); while the company has been doing its best to nose into...
“Long-term, we’re not big fans of GameStop Corp. (GME $31 NYSE); while the company has been doing its best to nose into...
SBUX was recommended by Blue Chip Growth at $52.41 in Dividend Digest issue 720, dated June 6, 2012.
“I want you to take profits today in Starbucks Corp. (SBUX $58 Nasdaq). My top priority is making sure that our Blue Chip Growth Buy List is populated by nothing less than the...
“I want you to take profits today in Starbucks Corp. (SBUX $58 Nasdaq). My top priority is making sure that our Blue Chip Growth Buy List is populated by nothing less than the...
Today The Bowser Report Editor Cindy Bowser recommends selling Majesco Entertainment Co. (COOL), which was recommended at $2.19 in Investment Digest issue 719, dated May 16, 2012.
“We only recommended COOL last April. It was $2.50/share at the time. When we recommended the company, it was reaching new grounds in video games sales due primarily to...
“We only recommended COOL last April. It was $2.50/share at the time. When we recommended the company, it was reaching new grounds in video games sales due primarily to...
Dan Sullivan and Steve Mais of The Chartist recommend this small-cap mutual fund.
“Vanguard Small Capitalization Index Fund Investor Shares (NAESX) The investment seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks. The fund employs an indexing investment approach designed to track the performance...
“Vanguard Small Capitalization Index Fund Investor Shares (NAESX) The investment seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks. The fund employs an indexing investment approach designed to track the performance...
Nathan Slaughter of The 100% Letter writes that industry tailwinds could boost this company’s sales almost 40% by 2016.
Delphi Automotive (NYSE: DLPH) is one of the nation’s largest automotive suppliers. If you drive a Ford Explorer or Toyota Camry (or most other makes and models for that matter) odds are...
Delphi Automotive (NYSE: DLPH) is one of the nation’s largest automotive suppliers. If you drive a Ford Explorer or Toyota Camry (or most other makes and models for that matter) odds are...
The Turnaround Letter Editor George Putnam likes the chances for this low-priced produce icon.
“Chiquita (CQB) has many of the features that we like to see in a turnaround candidate. First and foremost, it has a powerful brand. The Chiquita brand dominates the banana market, and it is probably the most...
“Chiquita (CQB) has many of the features that we like to see in a turnaround candidate. First and foremost, it has a powerful brand. The Chiquita brand dominates the banana market, and it is probably the most...
In today’s Daily Alert, Cabot Stock of the Month Editor Timothy Lutts sees big opportunity in this Chinese casino stock.
“Just as Las Vegas boomed years ago, Macau is booming today for the same reason; it’s the only place in China where gambling is legal! All the big names in the...
“Just as Las Vegas boomed years ago, Macau is booming today for the same reason; it’s the only place in China where gambling is legal! All the big names in the...
Today we have a thoroughly researched new recommendation of a small-cap biotech stock from The Medical Technology Stock Letter.
“While we are proud of the MTSL Portfolio performance YTD, most our Recommended Stocks currently trade above their respective buy limits. Unlike most Wall Street analysts, we find no need to continue...
“While we are proud of the MTSL Portfolio performance YTD, most our Recommended Stocks currently trade above their respective buy limits. Unlike most Wall Street analysts, we find no need to continue...
Today, Upside Editor Richard Moroney recommends a growth stock from the trucking industry.
“Roadrunner Transportation Systems, Inc. (RRTS) is our third recommendation in the trucking sector -- a space we like for its solid fundamentals and growth outlook, partly reflecting an improving U.S. economy. The company offers freight delivery, logistics and...
“Roadrunner Transportation Systems, Inc. (RRTS) is our third recommendation in the trucking sector -- a space we like for its solid fundamentals and growth outlook, partly reflecting an improving U.S. economy. The company offers freight delivery, logistics and...
Today The Investment Letter Editor David Jennett recommends a new play on economic growth in the U.S.
“I have been on a quest to reduce our cash position over the past few months and the continued good news about the economy has me thinking that this portfolio needs to carry more...
“I have been on a quest to reduce our cash position over the past few months and the continued good news about the economy has me thinking that this portfolio needs to carry more...
In today’s Daily Alert, Personal Finance Editors Benjamin Shepherd and Roger Conrad recommend a play on Indian economic and industrial growth.
“Sterlite Industries India Ltd. (SLT) is the largest miner of non-ferrous metals in India and one of the largest in the world, producing aluminum, copper, zinc and lead with mines...
“Sterlite Industries India Ltd. (SLT) is the largest miner of non-ferrous metals in India and one of the largest in the world, producing aluminum, copper, zinc and lead with mines...
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.