In 2000 a small company began selling a proprietary surgical adhesive to seal up arteries. Over the next two decades that company would acquire several highly specialized products for patients undergoing heart surgery.

Today, the company is hitting its stride as surgeons and patients (and the FDA) see how much better its solutions are.

This month’s Issue has all the details.

Renewable energy stocks have never lived up to their considerable promise, having peaked more than 16 years ago. And yet, there’s rarely been a bigger gap between the stocks’ value and the industry’s growth in the wake of the Inflation Reduction Act. Renewable energy projects – solar in particular – have taken off since President Biden signed that bit of eco-friendly legislation, in August 2022. Most solar companies are reporting record revenues these days. But the stocks haven’t followed suit, trading at 2018 levels.

That seems like a pretty extreme divergence between the industry and its companies’ share prices. So in this month’s issue of Cabot Value Investor, we add a solar company that’s capitalizing on the global investment in alternative energy, but is still woefully undervalued, trading at a mere 0.18x record sales.

Details inside.

This morning, from Normandy to Washington, D.C., there will be ceremonies honoring the 80th anniversary of D-Day. Now, we are amidst a different type of struggle, and semiconductor chips are at the heart of it all. And today’s new Explorer recommendation is one of the more important cogs in that global struggle.

It was a down week for the market as the Dow initially led the indexes lower early in the week, then was followed by the Nasdaq later in the week. Though on a positive note, the market rebounded nicely from its lows on Friday afternoon.

By week’s end the S&P 500 was down marginally, while the Dow and Nasdaq both lost 1%.

It was a down week for the market as the Dow initially led the indexes lower early in the week, then was followed by the Nasdaq later in the week. Though on a positive note, the market rebounded nicely from its lows on Friday afternoon.

By week’s end the S&P 500 was down marginally, while the Dow and Nasdaq both lost 1%.

It was a down week for the market as the Dow initially led the indexes lower early in the week, then was followed by the Nasdaq later in the week. Though on a positive note, the market rebounded nicely from its lows on Friday afternoon.

By week’s end the S&P 500 was down marginally, while the Dow and Nasdaq both lost 1%.

After a sharp correction in early April, the market posted a nice, but not powerful, rebound for four weeks but the past two weeks have definitely hurt the near-term evidence, whether you look at the overall market or leading stocks, where some abnormal action has appeared. There’s still more positive evidence than not, but at this point it’s very much a mixed bag, with some stocks acting fine, some coming under the gun and lots of up-and-down action. We’ll leave our Market Monitor at a level 7, but it’s vital to be in the right names and sectors.

This week’s list has many resilient names, including a few that have been out of the spotlight for a while. Our Top Pick is a small medical device outfit that, thanks to a good-sized acquisition of late, looks like a major player in the spinal surgery area, with new products and technology selling well.

Most stocks have barely budged the last two and a half years, but the Magnificent Seven and a handful of large-cap artificial intelligence-related leaders have picked up the slack, resulting in a 22% gain in the S&P 500 since the start of 2022. So, we’ve tried to play the hits here at Stock of the Week, adding a couple Mag. Seven names to the portfolio and several AI plays. All of them are up double-digit percentages (and one triple-digit winner!) in little more than a year. Now, with the market’s tides starting to shift away from AI and the Mag. Seven and toward other, long unloved sectors, we pivot toward one of the new favorites – retail – by adding a recent recommendation from Mike Cintolo to his Cabot Growth Investor readers.

Details inside.

The market’s rally has run into trouble, with our Cabot Tides and Two-Second Indicator effectively back on the fence. When it comes to growth stocks, most are acting more resiliently than the broad market, but even there it’s hit and miss, with lots of air pockets though many names that are acting well, too. Because of the divergent action, we’ve had a flurry of moves since the last issue, paring back or selling three names, but putting money to work in two names (including a new addition last week). All told, we’ll still have about 27% in cash and have a few stocks that look great, but are also keeping a close eye on a couple that remain iffy.

In tonight’s issue, we go over all our thoughts on the market and our various moves, as well as write about the solar sector that may be getting going after a long slumber, as well as small caps in general, which could finally get going ... if interest rates behave themselves.

Cannabis stocks remain unloved by investors. This makes the group buyable because catalysts are on the horizon.

The tricky part now is that it is more difficult to predict that we may see a catalyst near term, or even when the next one will occur. Patience is required.

Here is a look at the four main potential catalysts.

Sizing up a merger arb opportunity requires more than just garden variety equity analysis. In his famous letter to Berkshire Hathaway shareholders in 1988, Warren Buffett laid out four questions to answer regarding arbitrage situations:

1. How likely is it that the promised event will indeed occur?
2. How long will your money be tied up?
3. What chance is there that something still better will transpire – a competing takeover bid, for example?
4. What will happen if the event does not take place because of anti-trust action, financing glitches, etc.?

Today, we add a new Cabot Turnaround Letter recommendation that we think comes close to answering all four.

In an effort to keep the Profit Booster portfolio as diversified as possible, today we are adding an emerging broker play that is coming off a strong quarter, and just last night announced a large buyback.

This market is officially flirting with ugly. The S&P is now down about 7% from the 52-week high and not far from correction territory, down 10% from the high.

The selling intensified over the last week after the Fed struck an unexpectedly hawkish tone at last week’s meeting. The gist of the Fed’s message is that rates may well go higher and will stay higher for longer. The statement pours cold water on the notion that rates will be cut in the near future and reinforces the realization that higher rates are here to stay.

Cisco Systems (CSCO) announced a huge $28 billion deal for security software specialist Splunk (SPLK). Regardless of concerns over the economy, rising interest rates, the incipient tech-driven Cold War II, rising government focus on anti-trust and other macro issues, there will always be blockbuster deals. We dig into the deal in our comments below on Cisco.

This week there were no earnings reports or ratings changes.

The highlight of my week so far just might be waking up this morning and realizing I can count the remaining days in September just using my fingers. That’s not because the weather hasn’t mostly been beautiful in Rhode Island. It has. It’s because, as you know, the market has struggled this month.

The surprisingly strong market of 2023 has been sputtering. The S&P 500 moved lower in August and is lower so far in September. But there’s no alarming selloff. The index is 3.6% lower than it was at the end of July. It’s mostly just a pause so far.

As readers may know, we are generally not the biggest fans of private equity. Our biggest concern is that, while earlier private equity and venture capital funds were remarkably successful in identifying and capturing highly profitable investments for their clients, more recent vintages, going back perhaps 10-20 years, have mostly produced large profits for the fund managers. News that many Johnny-Come-Lately funds will actually lose significant money on the Instacart IPO highlights this problem. High-quality and early movers will likely post enormous profits.

The market is always uncertain. No one ever really knows in which direction the next 5% or 10% move will be. But this is a much higher level of uncertainty than usual.

The good year so far has been a surprise. Most pundits were forecasting more gloom and doom at the beginning of the year. But the S&P 500 is up 15% YTD. It rallied on the promise of a soft landing and then got a further boost as artificial intelligence spending promises to be a strong growth catalyst for the market’s largest sector for years to come. After sputtering for the last six weeks, where does it go from here?

After the close Friday, we learned that the Senate banking committee has scheduled a vote on key cannabis sector banking reform on September 27.

Of course, we do not know that the committee will stick to its schedule. But it is likely, so I will assume that will be the case. This timing suggests a possible course of action for cannabis holdings.

This week there were no earnings reports or ratings changes.

WHAT TO DO NOW: Remain cautious. Most stocks, sectors and indexes are still stuck in the throes of a corrective phase, though we do like some things like our resilient Aggression Index and (relatedly) some sturdy action among growth stocks. While we could add another small position if the market firms up a bit, we’re comfortable with the stocks we have in the Model Portfolio and our positioning right now. Thus, we’ll stand pat tonight and practice more patience—our cash position is in the low 40% range.

There have been a number of conferences going on lately, so today’s update is partially focused on what our attending companies had to say.

There were no really big reveals, but also no change in tone from the management teams I listened to – and certainly nothing edging toward the more negative side of the scale.

Big picture, I’d say leadership teams continue to be somewhat conservative. Given that we only have a couple weeks left of Q3 they should have a pretty good handle on how the quarter should shake out (and the year for that matter).

Cabot Options Institute Quant Trader is focused exclusively on creating consistent returns using high-probability options strategies including bear call spreads, bull put spreads, iron condors and more. Whether you have questions about the strategies, or even about setting up your account, or how to make your own trades, Andy will answer all of your questions

After over a month of teetering back and forth, with no real opportunity to take profits, our QQQ bear call spread finally hit our stop loss. The trade marks our first loss since April 11. Our win ratio now stands at 31/36 trades, or 86.1%. And our total returns over the past year sit at over 130%.

WFC has provided us a nice source of income since we introduced the big bank to the portfolio. We’ve managed to bring in 18.98% of options premium/income in just under one year using the Income Wheel strategy while the stock itself has only made half of that return at 9.19%.

The bullish momentum continues to benefit all our portfolios. None of this should be a surprise as all of our portfolios are inherently long delta.

Our BITO June 30, 2023 puts are essentially worthless, so we can lock in some decent profits and immediately sell more puts.

SPY has pushed into another short-term overbought state coupled with a gap higher today. As a result, we are going to once again add a bear call spread to the mix.

We jumped into a half-sized position in Airbnb (ABNB) in January 2022 then filled the second half in August of last year. Since we’ve been in the position ABNB has never done well. And while I fully believe in the business model I have concerns about the stock’s potential over the next 3-6 months.

We currently own the AAPL January 17, 2025, 135 call LEAPS contract at $48.00. You must own LEAPS in order to use this strategy.

We’ve held one-third of a position in Xponential Fitness (XPOF) after having sold the first third last September for a 28% gain and the second third just last month for a 39% gain.

We need to sell more premium in WBA and MMM today. I will be selling more premium in several of our positions throughout the various Fundamentals portfolios, including a few brand-new positions in our Growth/Value and Buffett portfolios.

I’ve decided to lock in my second profitable trade for the week. With 28 days left until expiration, I want to take off our July IWM iron condor for a profit.

The short-term measures we spoke about last week when we sent our SPY bear call spread out have subsided a bit. As a result, I want to lock in our SPY bear call spread that we placed just seven days ago for a nice profit.

PFE rallied over the past expiration cycle and as a result, our June 16, 2023, 40 calls were “called” away last week. We made 4.4% on the income trade. Per our Income Wheel guidelines, we will remain mechanical and sell puts in PFE today.

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.