Issues
In the wake of a rare down December, stocks have come roaring back to kickstart 2025, up more than 2% through the first three trading days. It’s early yet, but perhaps the bulls are taking control again after a sluggish end to an otherwise very productive 2024.
Still, there were enough yellow flags under the surface to close out the year that it’s worth taking a cautious approach for now. So today, we add a mega-cap, high-yield dividend stock that’s been a staple of Tom Hutchinson’s Cabot Dividend Investor portfolio for some time.
Details inside.
Still, there were enough yellow flags under the surface to close out the year that it’s worth taking a cautious approach for now. So today, we add a mega-cap, high-yield dividend stock that’s been a staple of Tom Hutchinson’s Cabot Dividend Investor portfolio for some time.
Details inside.
With the calendar flipping to 2025 and the long holiday weeks/weekends behind us, most traders will be back at their desks starting today. Let the fun begin!
With the calendar flipping to 2025 and the long holiday weeks/weekends behind us, most traders will be back at their desks starting today. Let the fun begin!
Happy New Year to everyone and wishing you all the best investing in 2025.
Let’s keep in mind this year the merit in legendary global investor Sir John Templeton’s sage advice:
“Diversify. In stocks and bonds, as in much else, there is safety in numbers.”
With this in mind, I see four big trends out there that offer us the opportunity to take a contrarian approach to make some money and lower risk.
Let’s keep in mind this year the merit in legendary global investor Sir John Templeton’s sage advice:
“Diversify. In stocks and bonds, as in much else, there is safety in numbers.”
With this in mind, I see four big trends out there that offer us the opportunity to take a contrarian approach to make some money and lower risk.
It’s been a good year for the market and an even better year for the Stock of the Week portfolio, with the average year-to-date gain on open positions of 52%. Let’s hope the good times keep rolling in 2025. While I doubt the S&P 500 and Nasdaq will be able to maintain their torrid pace of the last two years, there are scores of under-loved sectors and stocks out there, and the bull market remains intact, ready to propel them forward in the New Year. Today, we add a little-known growth stock that just got the stamp of approval from Cabot Top Ten Trader Chief Analyst Mike Cintolo.
Details inside. And Happy New Year!
Details inside. And Happy New Year!
This week and next week’s Monday morning Week in Review will be focused on position updates so that I can spend the last two weekends of the year with my family. Then starting the week of January 6th, it’s back to full blast for the Cabot Options Trader and Cabot Options Trader Pro service.
This week and next week’s Monday morning Week in Review will be focused on position updates so that I can spend the last two weekends of the year with my family. Then starting the week of January 6th, it’s back to full blast for the Cabot Options Trader and Cabot Options Trader Pro service.
First off, this being our last issue of the year, all of us at Cabot wish you and yours a very happy, healthy and prosperous New Year. We’ll be back with a regular update next Thursday after the calendar flips.
As for the market, it’s been a fantastic year, with leading growth titles letting loose on the upside, and we’re happy to have made hay while the sun is shining—the year isn’t quite done but it’s looking like our second-best returns of the past 18 years, when I took over. We’re glad to have done right by you.
That said, we always deal with the here and now, so we’re riding into year-end in a cautious stance, as growth stocks have wobbled and our Cabot Tides and Two-Second Indicators are waving yellow flags. We’re definitely flexible, as some of the recent selling may have cleared the decks for another leg up, but given the evidence, we want to see strength first before embarking on another major buying spree. In this issue, we highlight more than a few names we could jump into if things go well, while sharing more details on our remaining stocks and the recent action.
As for the market, it’s been a fantastic year, with leading growth titles letting loose on the upside, and we’re happy to have made hay while the sun is shining—the year isn’t quite done but it’s looking like our second-best returns of the past 18 years, when I took over. We’re glad to have done right by you.
That said, we always deal with the here and now, so we’re riding into year-end in a cautious stance, as growth stocks have wobbled and our Cabot Tides and Two-Second Indicators are waving yellow flags. We’re definitely flexible, as some of the recent selling may have cleared the decks for another leg up, but given the evidence, we want to see strength first before embarking on another major buying spree. In this issue, we highlight more than a few names we could jump into if things go well, while sharing more details on our remaining stocks and the recent action.
Cannabis stocks are set to close out the year with a punishing 14% decline. Cannabis investors need help from anywhere they can get it.
It looks like it could come from an unusual place in 2025. The future of the cannabis industry is now in the hands of President-elect Donald Trump.
If anyone told me a few years ago this would be the case, I might have asked them what they are smoking.
However, the reality is that during his presidential campaign, Trump endorsed all three of the main reforms that would legitimize the industry and boost cannabis share prices: Rescheduling, bank reform known as SAFER banking, and legalization of recreational use. Trump endorsed the first two outright. He implicitly endorsed legal rec-use because he supported the Florida referendum which would have made this change. At the very least, he has openly endorsed decriminalization.
It looks like it could come from an unusual place in 2025. The future of the cannabis industry is now in the hands of President-elect Donald Trump.
If anyone told me a few years ago this would be the case, I might have asked them what they are smoking.
However, the reality is that during his presidential campaign, Trump endorsed all three of the main reforms that would legitimize the industry and boost cannabis share prices: Rescheduling, bank reform known as SAFER banking, and legalization of recreational use. Trump endorsed the first two outright. He implicitly endorsed legal rec-use because he supported the Florida referendum which would have made this change. At the very least, he has openly endorsed decriminalization.
First and foremost, this is our last issue of 2024—next Tuesday is one of our two weeks off all year—so we want to wish you and yours a very Merry Christmas, Happy Holidays and a healthy and prosperous New Year.
Also, before we dive into this week’s idea I wanted to address our December expiration cycle trades. Both NCLH and KD stocks finished above their strike prices, which means we walked away from those trades with our full profits.
Also, before we dive into this week’s idea I wanted to address our December expiration cycle trades. Both NCLH and KD stocks finished above their strike prices, which means we walked away from those trades with our full profits.
First and foremost, this is our last issue of 2024—next Monday is one of our two weeks off all year—so we want to wish you and yours a very Merry Christmas, Happy Holidays and a healthy and prosperous New Year. We’ll be back at it with a fresh Top Ten issue on January 6.
As for the market, things finished up with a nice rally last Friday, but that doesn’t undo the action of the prior couple of weeks as a whole, which saw many leaders take hits and many major indexes crack their intermediate-term uptrends. To be clear, we remain flexible, and if the buyers pounce on the recent weakness for a few days, we think there will be lots of “resumption” patterns among individual stocks. Still, given the near- and intermediate-term selling we’ve seen, we want to see buyers show up in a meaningful way first before putting a bunch of money back to work. We’ll leave our Market Monitor at a level 5.
This week’s list is once again very growth-y, which we do find encouraging. Our Top Pick showed exceptional power in November and has now rested for three weeks, offering up a solid entry point, though we advise starting small given the environment.
As for the market, things finished up with a nice rally last Friday, but that doesn’t undo the action of the prior couple of weeks as a whole, which saw many leaders take hits and many major indexes crack their intermediate-term uptrends. To be clear, we remain flexible, and if the buyers pounce on the recent weakness for a few days, we think there will be lots of “resumption” patterns among individual stocks. Still, given the near- and intermediate-term selling we’ve seen, we want to see buyers show up in a meaningful way first before putting a bunch of money back to work. We’ll leave our Market Monitor at a level 5.
This week’s list is once again very growth-y, which we do find encouraging. Our Top Pick showed exceptional power in November and has now rested for three weeks, offering up a solid entry point, though we advise starting small given the environment.
Jerome Powell went full Grinch last week, sparking a brief market selloff after saying the Fed would cut rates at a slower pace than expected in 2025. Prior to that, there were some obvious cracks beneath the market’s surface, so Powell’s downer of a press conference served more to expand the selling than cause it. But the nice rebound in the last two trading days shows the bulls are still mostly in charge, which means it’s a good time to add a mid-cap water stock that Tyler Laundon just introduced to his Cabot Early Opportunities audience.
Details inside. Happy Holidays!
Details inside. Happy Holidays!
Updates
The market has been fantastic. But it was driven higher by technology. Now, technology is rolling over. Will the market roll over too, or will the neglected sectors pick up the slack?
Earnings season is over, so there were no companies that reported earnings this past week. However, we do have at one last company on a slightly different fiscal schedule reporting next week – Walgreens Boots Alliance (WBA), who will announce results on the 27th.
WHAT TO DO NOW: Today is an ugly day for growth stocks, with sellers driving many stocks lower as the Nasdaq and some mega-cap winners wobbled. That said, the evidence is basically the same—very mixed and divergent on an intermediate-term basis, with some names doing well but much of the market chopping sideways. We think holding a good-sized chunk of cash makes sense given that risk is elevated, but we’re also holding on to our stocks and giving them some room to wiggle around. In the Model Portfolio, we’re watching things closely, but will sit tight tonight, holding our 30% cash position.
With the Juneteenth Holiday this week and our last update just three business days ago (and right after the FOMC meeting), there is very little to talk about today. So, I’ll keep things short and sweet and we’ll jump right into company-specific updates, of which there are hardly any.
In other words, enjoy a break in the action! They rarely last long.
In other words, enjoy a break in the action! They rarely last long.
The market is at all-time highs. But most stocks are undervalued.
That’s the strange but true reality in today’s Magnificent 7/AI-centric bull market. Yes, if you’ve invested in the seven largest mega-caps or a handful of artificial intelligence-related stocks (Broadcom (AVGO), Palantir (PLTR), Super Micro Computer (SMCI), Taiwan Semiconductor (TSM), etc.), you’ve done quite well. But most other sectors have lagged.
That’s the strange but true reality in today’s Magnificent 7/AI-centric bull market. Yes, if you’ve invested in the seven largest mega-caps or a handful of artificial intelligence-related stocks (Broadcom (AVGO), Palantir (PLTR), Super Micro Computer (SMCI), Taiwan Semiconductor (TSM), etc.), you’ve done quite well. But most other sectors have lagged.
This market just continues to forge ever higher. The S&P 500 closed at new all-time highs four times last week. The index is now up 15% YTD, and we’re not even at the halfway point.
Just when it looked like the rally was petering out, the market is having a great June so far. The S&P is up about 5% in June after making four consecutive record closes last week. The index is now up 14% so far this year, and it’s not even half over.
Ammo Inc (POWW) beat on revenue of $40.42M but its EPS of $0.01 per share missed expectations by $0.03. The company experienced sequential revenue growth in the ammunition segment and maintained robust margins in the GunBroker marketplace, but total revenues and gross profit margin were both down year-on-year, influenced by a shift in sales mix and macroeconomic pressures. The year ended with substantial operational cash flow and an improved net working capital position including $55.6M in cash, positioning the company for future growth.
Small caps are off ever so slightly over the last five sessions, though yesterday’s CPI data and Jerome Powell’s press conference/FOMC meeting helped the asset class bounce back from what was a fairly ugly looking four-day slide. The big-picture takeaway here is that the asset class is suffering from the same type of bad breadth malaise that’s keeping a lid on much of the broader market.
Good enough.
That was the resounding sentiment on Wall Street after Wednesday morning’s inflation print came in slightly better than expectations … but still stubbornly above 3% year over year. The headline CPI number for May, 3.3% year over year, was just below the 3.4% economists anticipated; the month-over-month increase (0.2%) was also a bit lighter than expected (0.3%).
That was the resounding sentiment on Wall Street after Wednesday morning’s inflation print came in slightly better than expectations … but still stubbornly above 3% year over year. The headline CPI number for May, 3.3% year over year, was just below the 3.4% economists anticipated; the month-over-month increase (0.2%) was also a bit lighter than expected (0.3%).
Inflation cooled for the second straight month in May, the U.S. labor market seems back to pre-pandemic levels, and the economy is expanding at a low but steady pace.
Therefore, the Fed is holding back on interest rate cuts. Probably the right move. Keep the ammo dry for when it is really needed. This was a solid week for Explorer stocks with all making gains except for a small pullback in Super Micro (SCMI).
Therefore, the Fed is holding back on interest rate cuts. Probably the right move. Keep the ammo dry for when it is really needed. This was a solid week for Explorer stocks with all making gains except for a small pullback in Super Micro (SCMI).
Since Halloween, the last seven times I have made a call in Cabot Cannabis Investor to buy the AdvisorShares MSOS 2X Daily (MSOX) in sector weakness, the exchange-traded fund has gone up 68% on average over the next one to seven weeks.
The last time I made a trading call to buy the cannabis sector was on May 29.
Since that was less than two weeks ago and the maximum time to profit after trading calls is seven weeks, I am not too concerned about the flat performance of cannabis stocks since then.
The last time I made a trading call to buy the cannabis sector was on May 29.
Since that was less than two weeks ago and the maximum time to profit after trading calls is seven weeks, I am not too concerned about the flat performance of cannabis stocks since then.
Alerts
Like most of our bullish-leaning positions, our AMGN trade has moved sharply higher since the onset of 2024. We are up over 18% on the trade since we initiated it on January 5, 2024.
We’re going to continue with our strategy of taking relatively quick, modest gains on slower-growth names while holding on to our faster, more aggressive positions in hopes of larger gains.
WHAT TO DO NOW: Remain bullish, but weed your garden if you have some laggards. The primary evidence is still bullish and most leading stocks look fine, but there are some yellow flags emerging under the market’s hood. We’re still following the main trend, but today we’re going to sell two small positions that are struggling—Duolingo (DUOL) and ProShares Russell 2000 Fund (UWM), leaving us with around 31% in cash. We could put some of that cash to work if things settle down, but right now we’ll hold onto it and see how things shake out. Details below
For those who are new and wish to enter a trade, all of the details are listed in the alert (as always) for those wanting to initiate a position. As always, if you have any questions, please do not hesitate to email me at andy@cabotwealth.com.
In Income Trader, we’ve managed to lock in a return of 40.1% in BITO. Not many can say they’ve made money in BITO, or any other crypto-related asset, since the beginning of June 2022. Just another reason why more and more individual investors are flocking to the tried-and-true, mechanically driven, income wheel approach.
For those who are new and wish to enter a trade, all of the details are listed in the alert (as always) for those wanting to initiate a position. As always, if you have any questions, please do not hesitate to email me at andy@cabotwealth.com.
I will be exiting our Microsoft (MSFT) trade today. I will discuss the trade in greater detail in our upcoming weekly issue.
Like most of our bullish-leaning positions, our VZ trade has moved sharply higher since the onset of 2024. We are up over 22% on the trade since we initiated it on January 4, 2024.
Microsoft (MSFT) is due to announce earnings today after the closing bell.
Portfolios
Strategy
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.