Issues
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the May 2022 issue.
One of the enduring features of the stock market is that near-term share prices are driven by momentum and narratives. While this may yield huge money-making stocks on the way up, losses can be devastating on the way down. Fortunately for value investors, downturns driven by negative momentum and unfavorable narratives can create impressively attractive opportunities.
We discuss two groups of stocks that fit this bill: homebuilders and stocks with valuations below 5x EV/EBITDA. Our featured recommendation this month is homebuilder M/I Homes (MHO), which trades at a large discount to its liquidation value despite what may be a reasonably steady industry over the next several years.
We note our recent move of Vistra Energy (VST) from a Buy to a Sell.
One of the enduring features of the stock market is that near-term share prices are driven by momentum and narratives. While this may yield huge money-making stocks on the way up, losses can be devastating on the way down. Fortunately for value investors, downturns driven by negative momentum and unfavorable narratives can create impressively attractive opportunities.
We discuss two groups of stocks that fit this bill: homebuilders and stocks with valuations below 5x EV/EBITDA. Our featured recommendation this month is homebuilder M/I Homes (MHO), which trades at a large discount to its liquidation value despite what may be a reasonably steady industry over the next several years.
We note our recent move of Vistra Energy (VST) from a Buy to a Sell.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the April 2022 issue.
All companies are collections of assets. When companies are struggling, a new CEO can redirect how those assets are utilized – a valuable catalyst for a turnaround. We highlight three recent CEO changes and how they might help drive up the value of their companies.
While we have been slow and perhaps reluctant to consider cannabis companies, we find that the time has arrived to look more closely. We summarize our deep-dive into this emerging industry and its major participants, and suggest six companies with impressive growth yet trade at surprisingly low valuations.
Our featured recommendation this month is ZimVie (ZIMV), a company that was recently spun off from medical technology giant Zimmer Biomet. Its shares have been summarily sold by the market, creating what we believe is an attractive turnaround situation.
We note our second price target increase for Marathon Oil (MRO) and our move to sell shares of Baker Hughes (BKR).
All companies are collections of assets. When companies are struggling, a new CEO can redirect how those assets are utilized – a valuable catalyst for a turnaround. We highlight three recent CEO changes and how they might help drive up the value of their companies.
While we have been slow and perhaps reluctant to consider cannabis companies, we find that the time has arrived to look more closely. We summarize our deep-dive into this emerging industry and its major participants, and suggest six companies with impressive growth yet trade at surprisingly low valuations.
Our featured recommendation this month is ZimVie (ZIMV), a company that was recently spun off from medical technology giant Zimmer Biomet. Its shares have been summarily sold by the market, creating what we believe is an attractive turnaround situation.
We note our second price target increase for Marathon Oil (MRO) and our move to sell shares of Baker Hughes (BKR).
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the March 2022 issue.
In what could be a low-return market over the coming decade, stocks of relatively boring companies have a better chance to shine. We highlight five companies with grind-it-out growth, low share valuations and often-generous dividends that could produce significant market-beating returns.
We also discuss six appealing stocks we found by trolling through the 13F/D filings of like-minded institutional investors.
Our featured recommendation this month is Goodyear Tire & Rubber Company (GT). An investment in Goodyear is an opportunistic purchase of an average company whose shares have fallen sharply out of favor for what look like short-term reasons.
We note our recent price target increases for Wells Fargo (WFC), Marathon Oil (MRO) and Shell plc (SHEL).
In what could be a low-return market over the coming decade, stocks of relatively boring companies have a better chance to shine. We highlight five companies with grind-it-out growth, low share valuations and often-generous dividends that could produce significant market-beating returns.
We also discuss six appealing stocks we found by trolling through the 13F/D filings of like-minded institutional investors.
Our featured recommendation this month is Goodyear Tire & Rubber Company (GT). An investment in Goodyear is an opportunistic purchase of an average company whose shares have fallen sharply out of favor for what look like short-term reasons.
We note our recent price target increases for Wells Fargo (WFC), Marathon Oil (MRO) and Shell plc (SHEL).
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the February 2022 issue.
The market seems to be ignoring small- cap stocks. We highlight four high-quality small- cap companies with beaten down share prices. And, amidst the rubble of initial public offerings, we found three worthwhile companies whose shares trade below their IPO price. We also briefly comment on the market’s recent sell-down, and provide an update on the performance of our group of recommended stocks, which have held their value so far this year.
Our featured recommendation this month is Polaris (PII), the leading North American manufacturer of powersports equipment including off-road vehicles, snowmobiles, motorcycles and boats. Investors are overly -discounting near-term issues, leaving the shares significantly undervalued.
We note our recent price target increase for Baker Hughes Company (BKR), from 26 to 31.
The market seems to be ignoring small- cap stocks. We highlight four high-quality small- cap companies with beaten down share prices. And, amidst the rubble of initial public offerings, we found three worthwhile companies whose shares trade below their IPO price. We also briefly comment on the market’s recent sell-down, and provide an update on the performance of our group of recommended stocks, which have held their value so far this year.
Our featured recommendation this month is Polaris (PII), the leading North American manufacturer of powersports equipment including off-road vehicles, snowmobiles, motorcycles and boats. Investors are overly -discounting near-term issues, leaving the shares significantly undervalued.
We note our recent price target increase for Baker Hughes Company (BKR), from 26 to 31.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the January 2022 issue.
This issue includes our Top Five Stocks for 2022, our annual market review and outlook for 2022, as well as our update on the bankruptcy and high-yield bond markets.
Our featured recommendation this month is Brookfield Asset Management Reinsurance Partners Ltd (BAMR). This recent spin-off has received little market attention yet offers considerable long term potential.
We note our recent ratings change that moved shares of GCP Applied Technologies (GCP) to a Sell with a +77% total return.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
This issue includes our Top Five Stocks for 2022, our annual market review and outlook for 2022, as well as our update on the bankruptcy and high-yield bond markets.
Our featured recommendation this month is Brookfield Asset Management Reinsurance Partners Ltd (BAMR). This recent spin-off has received little market attention yet offers considerable long term potential.
We note our recent ratings change that moved shares of GCP Applied Technologies (GCP) to a Sell with a +77% total return.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the December 2021 issue.
For most of the year, we have an intense focus on long-term business fundamentals and underlying valuations. However, as year-end approaches, artificial selling pressure can create large enough short-term bargains that even we find worthwhile. We discuss several sources of selling pressure that can turn others’ losses into your gains, and list six stocks that look most promising.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
For most of the year, we have an intense focus on long-term business fundamentals and underlying valuations. However, as year-end approaches, artificial selling pressure can create large enough short-term bargains that even we find worthwhile. We discuss several sources of selling pressure that can turn others’ losses into your gains, and list six stocks that look most promising.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the November 2021 issue.
Consumer staples stocks were pandemic beneficiaries, but now that the worst has passed, many of these stocks have been sold off fairly hard, even as the stock market continues to reach record highs. While investor concerns regarding negative year-over-year sales, tighter margins due to inflation, and the degree to which companies can raise prices have merit, we make our case for four stocks that have been discarded and now look like bargains.
Bank stocks have been strong performers following the pandemic stock market trough, including those we highlighted in late April 2020. Yet, not all have fully participated. We found four that have good fundamentals yet trade at price/earnings multiples below 10x, considerably lower than the peer average of 14.5x.
Consumer staples stocks were pandemic beneficiaries, but now that the worst has passed, many of these stocks have been sold off fairly hard, even as the stock market continues to reach record highs. While investor concerns regarding negative year-over-year sales, tighter margins due to inflation, and the degree to which companies can raise prices have merit, we make our case for four stocks that have been discarded and now look like bargains.
Bank stocks have been strong performers following the pandemic stock market trough, including those we highlighted in late April 2020. Yet, not all have fully participated. We found four that have good fundamentals yet trade at price/earnings multiples below 10x, considerably lower than the peer average of 14.5x.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the October 2021 issue.
Most investors, and the general public, seem to regard the transportation industry as somewhat dull. But transportation is a fundamental component of human existence, and companies must constantly strive for relevance, and must now navigate a secular shift in fuel sources. We discuss five transportation companies that are updating their strategic playbooks with hopes of turning around their prospects.
The market has a bias against stocks that trade at low prices, making this a go-to source of contrarian investment ideas. We make our case for five such stocks.
Most investors, and the general public, seem to regard the transportation industry as somewhat dull. But transportation is a fundamental component of human existence, and companies must constantly strive for relevance, and must now navigate a secular shift in fuel sources. We discuss five transportation companies that are updating their strategic playbooks with hopes of turning around their prospects.
The market has a bias against stocks that trade at low prices, making this a go-to source of contrarian investment ideas. We make our case for five such stocks.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the September 2021 issue.
While the stock market continues to set new record highs, oil and gas exploration and production (E&P) companies have been left behind. Yet, at current commodity prices, which we believe are sustainable, several companies have shares that trade at surprisingly high free cash flow yields, some as high as 24%. We make our case for five stocks.
Related to this, our featured recommendation is Marathon Oil Company (MRO), a mid-cap oil-focused E&P company. Its strong fundamentals, including a high-quality asset base, strong free cash flow and a solid balance sheet, make it particularly attractive.
We highlight three former Cabot Turnaround Letter winners whose shares have retreated since our exit. These now look interesting once again.
In this issue we also discuss three one-off contrarian ideas that have considerable appeal.
During the month, we had a few ratings changes: we moved Berkshire Hathaway (BRK/B) to a Hold, and moved Albertsons (ACI) and Oaktree Specialty Lending (OCSL) from Buy to Sell.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
While the stock market continues to set new record highs, oil and gas exploration and production (E&P) companies have been left behind. Yet, at current commodity prices, which we believe are sustainable, several companies have shares that trade at surprisingly high free cash flow yields, some as high as 24%. We make our case for five stocks.
Related to this, our featured recommendation is Marathon Oil Company (MRO), a mid-cap oil-focused E&P company. Its strong fundamentals, including a high-quality asset base, strong free cash flow and a solid balance sheet, make it particularly attractive.
We highlight three former Cabot Turnaround Letter winners whose shares have retreated since our exit. These now look interesting once again.
In this issue we also discuss three one-off contrarian ideas that have considerable appeal.
During the month, we had a few ratings changes: we moved Berkshire Hathaway (BRK/B) to a Hold, and moved Albertsons (ACI) and Oaktree Specialty Lending (OCSL) from Buy to Sell.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the August 2021 issue.
With the stock market’s remarkable strength over the past five and ten years, most stocks have produced at least reasonable gains, such that even out-of-favor stocks aren’t down-n-out stocks. We look at attractive turnarounds among stocks with flat to negative five-year returns.
SPACs, or special purpose acquisition companies, are all the rage. While the group has rightfully earned the disdain of value investors, there are some post-SPAC companies worth a closer look. We highlight five.
Our featured Buy recommendation, Walgreens Boots Alliance (WBA), is viewed as a broken growth company. While its challenges are clear, its shares now trade at a bargain valuation, yet the company has sturdy finances and a new outsider CEO. This combination, combined with a sustainable (and growing) 4.1% dividend yield that pays investors to wait, makes it an attractive turnaround candidate.
During the month, we moved Macys (M) to a Hold and raised our price target on Duluth Holdings (DLTH) from 17.50 to 20.
Please join us for the our 9th Annual Smarter Investing, Greater Profits Online Conference, held on Tuesday, August 17 through Thursday, August 19. You can see presentations by all of our analysts, which will include updates in their areas of expertise and discussions of their best picks.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
With the stock market’s remarkable strength over the past five and ten years, most stocks have produced at least reasonable gains, such that even out-of-favor stocks aren’t down-n-out stocks. We look at attractive turnarounds among stocks with flat to negative five-year returns.
SPACs, or special purpose acquisition companies, are all the rage. While the group has rightfully earned the disdain of value investors, there are some post-SPAC companies worth a closer look. We highlight five.
Our featured Buy recommendation, Walgreens Boots Alliance (WBA), is viewed as a broken growth company. While its challenges are clear, its shares now trade at a bargain valuation, yet the company has sturdy finances and a new outsider CEO. This combination, combined with a sustainable (and growing) 4.1% dividend yield that pays investors to wait, makes it an attractive turnaround candidate.
During the month, we moved Macys (M) to a Hold and raised our price target on Duluth Holdings (DLTH) from 17.50 to 20.
Please join us for the our 9th Annual Smarter Investing, Greater Profits Online Conference, held on Tuesday, August 17 through Thursday, August 19. You can see presentations by all of our analysts, which will include updates in their areas of expertise and discussions of their best picks.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the July 2021 issue.
This month we look into major pharmaceutical stocks, which are selling at their widest discount to the market in decades. We discuss some reasons behind the market’s pessimism and why, for value investors with patience, the shares of five companies offer considerable appeal.
We also include our mid-year stock market update and mid-year bankruptcy review. Stocks have been remarkably strong so far this year and appear poised for more gains, yet we encourage value investors to remain selective and patient amidst the exuberance while keeping the long-term horizon in view.
Easy financial market conditions have helped shrink the number and size of bankruptcies to a fraction of their long-term average. We discuss this phenomenon and why investors in distressed securities should wait for conditions to become favorable again.
Our feature Buy recommendation, Organon & Company (OGN), is a recent spin-off from Merck. Investors have discarded the shares due to revenue concerns, but the bargain valuation and our more optimistic outlook make the shares appealing.
It was a busy month in the portfolio. We raised our price targets on Signet Jewelers (SIG), Molson Coors Beverage Company (TAP) and General Motors (GM), and moved four stocks to Sell: Biogen (BIIB), BorgWarner (BWA), The Mosaic Company (MOS) and Jeld-Wen Holdings (JELD).
Please join us for the our 9th Annual Smarter Investing, Greater Profits Online Conference, held on Tuesday, August 17 through Thursday, August 19. You can see presentations by all of our analysts, which will include updates in their areas of expertise and discussions of their best picks.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
This month we look into major pharmaceutical stocks, which are selling at their widest discount to the market in decades. We discuss some reasons behind the market’s pessimism and why, for value investors with patience, the shares of five companies offer considerable appeal.
We also include our mid-year stock market update and mid-year bankruptcy review. Stocks have been remarkably strong so far this year and appear poised for more gains, yet we encourage value investors to remain selective and patient amidst the exuberance while keeping the long-term horizon in view.
Easy financial market conditions have helped shrink the number and size of bankruptcies to a fraction of their long-term average. We discuss this phenomenon and why investors in distressed securities should wait for conditions to become favorable again.
Our feature Buy recommendation, Organon & Company (OGN), is a recent spin-off from Merck. Investors have discarded the shares due to revenue concerns, but the bargain valuation and our more optimistic outlook make the shares appealing.
It was a busy month in the portfolio. We raised our price targets on Signet Jewelers (SIG), Molson Coors Beverage Company (TAP) and General Motors (GM), and moved four stocks to Sell: Biogen (BIIB), BorgWarner (BWA), The Mosaic Company (MOS) and Jeld-Wen Holdings (JELD).
Please join us for the our 9th Annual Smarter Investing, Greater Profits Online Conference, held on Tuesday, August 17 through Thursday, August 19. You can see presentations by all of our analysts, which will include updates in their areas of expertise and discussions of their best picks.
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the June 2021 issue.
Good investing ideas can come from anywhere. One useful source is to borrow ideas from some of the best value-oriented investors. Their holdings can be found in the 13F and 13D regulatory filings which are required every quarter. In the letter, we briefly describe these filings, how we use them, and six stocks that look attractive from the many holdings we analyzed.
A slightly shocking source of turnaround ideas can come from the electric utility industry – about the last place that contrarians might look these days. We discuss three with interesting stories and strong upside potential.
Our feature Buy recommendation, Vistra Corporation (VST), comes from this illuminating search through the utility sector. Vistra is the nation’s largest independent power producer with an emerging retail business. Its shares were jolted by the winter storms yet look like an attractive turnaround situation.
We also mention our May 12th move from Buy to Sell on shares of Mohawk Industries (MHK).
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Good investing ideas can come from anywhere. One useful source is to borrow ideas from some of the best value-oriented investors. Their holdings can be found in the 13F and 13D regulatory filings which are required every quarter. In the letter, we briefly describe these filings, how we use them, and six stocks that look attractive from the many holdings we analyzed.
A slightly shocking source of turnaround ideas can come from the electric utility industry – about the last place that contrarians might look these days. We discuss three with interesting stories and strong upside potential.
Our feature Buy recommendation, Vistra Corporation (VST), comes from this illuminating search through the utility sector. Vistra is the nation’s largest independent power producer with an emerging retail business. Its shares were jolted by the winter storms yet look like an attractive turnaround situation.
We also mention our May 12th move from Buy to Sell on shares of Mohawk Industries (MHK).
Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.
I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.
Updates
This week’s note includes our comments on earnings from Nokia (NOK). Next week, the deluge starts, with earnings from as many as ten companies.
This week’s note includes our comments on earnings from Walgreens Boots Alliance (WBA) and Wells Fargo & Co (WFC). Next Thursday, we get earnings from Nokia (NOK). The deluge starts the following week with eight companies scheduled to report.
There were no earnings this past week, but earnings season is just around the corner. The beleaguered Walgreens Boots Alliance (WBA), without a permanent CEO, kicks off our season with its Thursday, October 12 report, followed the next day by Wells Fargo (WFC) and Citigroup (C).
This week there were no earnings reports or ratings changes.
This week there were no earnings reports or ratings changes.
This week there were no earnings reports or ratings changes.
This week, we comment on results from Duluth Holdings (DLTH), the last of our companies to report this earnings season.
We also include the Catalyst Report and a summary of the September edition of the Cabot Turnaround Letter, which was published on Wednesday. We encourage you to look through the Catalyst Report. This report is a listing of all of the companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.
We also include the Catalyst Report and a summary of the September edition of the Cabot Turnaround Letter, which was published on Wednesday. We encourage you to look through the Catalyst Report. This report is a listing of all of the companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.
We include our comments on earnings from Macy’s (M) and Kohl’s (KSS). Duluth Holdings (DLTH) will report on August 31.
Earlier this week, due to circumstances beyond our control, we suspended our rating on shares of Kopin Corporation (KOPN). This means that the shares have no rating: They are not a Buy, Sell, Hold or any other rating, but are in essence unrated. We apologize for this unusual situation.
Earlier this week, due to circumstances beyond our control, we suspended our rating on shares of Kopin Corporation (KOPN). This means that the shares have no rating: They are not a Buy, Sell, Hold or any other rating, but are in essence unrated. We apologize for this unusual situation.
There were no earnings reports this week. Macy’s (M) is now scheduled to report earnings next Tuesday, August 22. Kohl’s (KSS) will report the following day, August 23. Duluth Holdings (DLTH) will report on August 31.
Today we are moving shares of four companies, Toshiba (TOSYY), Holcim AG (HCMLY), First Horizon (FHN) and ESAB Corporation (ESAB) from BUY to SELL.
Today we are moving shares of four companies, Toshiba (TOSYY), Holcim AG (HCMLY), First Horizon (FHN) and ESAB Corporation (ESAB) from BUY to SELL.
We comment on earnings from Bayer AG (BAYRY), Berkshire Hathaway (BRK/B), Brookfield Reinsurance Ltd (BNRE), Elanco Animal Health (ELAN), Kopin Corporation (KOPN), L.B. Foster (FSTR), Six Flags Entertainment (SIX), TreeHouse Foods (THS), Tyson Foods (TSN) and Viatris (VTRS).
We comment on earnings from Adient (ADNT), Dril-Quip (DRQ), ESAB Corp (ESAB), Frontier Group Holdings (ULCC), Gannett (GCI), Goodyear Tire (GT), Janus Henderson Group (JHG), Kaman Corporation (KAMN), Warner Bros Discovery (WBD) and Western Digital (WDC).
Alerts
The company’s turnaround from its modest difficulties yet overly-depressed stock appears complete
With the shares continuing to surge past our recently raised 65 price target and now being priced at a premium to even our upgraded valuation metrics
We are raising our price target on ViacomCBS (VIAC) from 54 to 65 and moving to HOLD.
We are raising our price target on General Motors (GM), following our review as the shares have surged through our 49 price target, to the mid-50s.
We are raising our price target on Mohawk Industries (MHK).
Several of our stocks have reached/exceeded our price targets, so we are making changes to several of our ratings:
We are moving Peabody Energy (BTU) and Weyerhaueser (WY) to Sell.
We are raising Duluth Holdings (DLTH) price target to 17.50 from 15.
We are raising our price target on shares of Jeld-Wen (JELD) to 28 from 25.