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Cabot Prime Week Ending October 22, 2021

Cabot Prime Week Ending October 22, 2021

Stock Recommendation Tracker

The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any changes to our recommendations over the previous week. We include this table at the bottom of the Weekly Summary, and provide a link here at the top to the Stock Recommendations Tracker.

Cabot Weekly Review (Video)

In this week’s stock market video, Mike Cintolo sounds a bullish tone, saying the past three weeks have gone about as good as the bulls could have hoped. Earnings season remains a risk, and a near-term wobble wouldn’t surprise him, but just following the evidence, Mike’s been putting money to work and goes through a huge number of stocks and sectors that are acting well today.


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Cabot Growth Investor

Bi-weekly Issue October 21: Still, the action of the past couple of weeks (combined with many signs that investors have become worried) certainly looks like a bullish change of character. We wouldn’t be buying whole-hog, but we’re putting some more of our cash hoard to work—in the Model Portfolio, we’re averaging up on Asana (ASAN) and buying a full-sized position in CrowdStrike (CRWD), leaving us with a cash position of 24%.

Bi-weekly Update October 14: Remain cautious, but don’t ignore the action of individual stocks. Our Cabot Tides remain negative (neutral at best), but as opposed to much of this year, growth stocks are showing great strength. We still mostly favor staying close to shore, as the market correction could have further to go. But today we’re going to buy a half-sized position in Ambarella (AMBA), which we think is a leading glamour name. That will leave us with around 38% in cash. Details below. We’re also restoring our Buy rating on Cloudflare (NET).

Cabot Top Ten Trader

Movers & Shakers October 22: The market had another constructive week, which by our thinking makes it three in a row. Coming into today, most indexes were up in the 1.5% to 2% range, which keeps the nascent intermediate-term green light (received last week) intact.

Weekly Issue October 18: This year has been about as choppy and tricky as we can remember, so nothing the market would throw at us from here would come as a surprise. That said, there’s no question the snapback of the past couple of weeks has been very encouraging—the major indexes have rebounded beautifully, with many regaining their 50-day lines, and individual stocks (especially growth stocks) have done great, with more and more moving back to (or out above) their prior highs. Mike’s Top Pick is Zscaler (ZS), which has lifted to new price and relative performance highs after a six-week pullback.

Cabot Undervalued Stocks Advisor

Weekly Update October 20: A few weeks ago, at the annual Morningstar Investment Conference in Chicago, two investing icons debated the merits of value versus growth. On the value side was Rob Arnott, founder and head of Research Affiliates, with Cathie Wood, founder and head of ARK Investment Management, on the growth side. The debate promised to be enlightening, with perhaps some foreshadowing of which style would perform best over the coming months and years.

Monthly Issue October 6: Official inflation numbers are, of course, starting to rise quickly. The August CPI increased 5.3% from a year ago (even as the housing component continues to significantly understate inflation). Curiously, major appliance makers are curtailing production of their lower-priced models to prioritize their more expensive and higher-margin models – this won’t be good for keeping inflation rates low.

Cabot Stock of the Week

Weekly Issue October 18: Tim’s featured stock Snowflake (SNOW), is a hyper-growth stock that has brought the benefits of public clouds (scalable, flexible, etc.) to data management so customers can better understand their data. Unlike many other high-tech data software solutions, Snowflake’s offering isn’t aimed at just the mega enterprises. It is used by a wide range of companies, from small operations of just a few people all the way up to the largest companies in the world.

Cabot Explorer

Bi-weekly Update October 21: Explorer stocks are trending up, with some exceptions. Recent idea Else Nutrition (BABYF) took a hit early last week after raising capital and diluting shareholders. This is a young company and speculative stock. On the other hand, Sea Limited (SE) continued its strength and Cloudflare (NET) is now up 138% so far this year. Novonix (NVNXF) is getting back in form and nudged upward from 4 to 4.4 as it hopefully moves back to its year high, making it one of our best ideas for 2021.

Bi-weekly Issue October 14: A country’s brand is largely framed by the perception of its people, power, reliability and influence. This perception can be just as important as a country’s real economic and military power. In short, a country’s brand largely reflects a country’s character. Carl’s new recommendation Bombardier Inc. (BDRBF), is a global leader in aviation with a niche in private and corporate markets, and is making a splash at this week’s aviation show in Las Vegas. It provides world-class products in passenger comfort, energy efficiency, reliability and safety.

Cabot Dividend Investor

Weekly Update October 20: Forget the virus. Forget about the Fed tightening. It’s all about earnings now. Although it’s still very early in the reporting cycle, earnings have been great so far. The market is reacting by recouping last month’s losses and soaring back to within bad breath distance of the all-time high. The positive early earnings are surprising yet unsurprising at the same time.

Monthly Issue October 13: Tom’s featured stock Compass Diversified (CODI), is a holding company that invests in niche middle-market businesses, a segment historically reserved for traditional private equity. It owns ten companies, six in branded consumer businesses and four niche industrial companies. The businesses are unrelated and therefore provide diversification. The branded businesses include companies that make and sell outdoor wear, food warming systems, baseball equipment, diamonds, and baby products. The industrial businesses make circuit boards, magnetic technologies, and custom packaging.

Cabot Marijuana Investor

Update October 13: The good news is that the marijuana industry is growing rapidly, with the leading companies continuing with their programs of store openings and acquisitions. The bad news is that the stocks of these leading companies remain in correction mode, as they have been since February.

Monthly Issue September 29: Since the marijuana sector peaked in February, the Global Cannabis Stock Index has lost 50% of its value. That’s the cost of investing in hot young growth industries. But the fundamentals of the industry remain exceedingly attractive, so there’s no question that eventually, this long slow bottoming process will give way to a new uptrend. In the meantime, our dual focus on the leading companies in the industry (measured by revenues and earnings) and the strongest stocks in the sector (measured by chart strength) will keep us in the stocks that are most likely to lead the next advance.

Cabot Early Opportunities

Monthly Issue October 20: There are a lot of things investors could focus on these days, ranging from potential impacts of supply chain disruptions and labor shortages to the big-picture economic effects of inflation and rising interest rates. But really, for the coming weeks it’s going to be all about earnings season. We’re all looking for insights into how individual companies are being impacted by the aforementioned challenges (and more) and what opportunities they’re successfully chasing down. Tyler’s top pick is Dynatrace (DT).

Special Bulletin October 8: We jumped into Bellring Brands (BRBR) as a trade in September and the stock has slid since. It’s down less than 10%, but the trajectory is clearly not working in our favor and I’m not going to let a trade attempt turn into something significant. We’re moving on. Sell

Cabot Profit Booster

Weekly Issue October 19: The market added to recent gains last week, as the S&P 500 had its best week since July. The S&P 500 rose 1.8%, the Dow climbed 1.6%, and the Nasdaq added 2.2%. The rally came on the back of better-than-expected earnings from several well-known stocks. The big banks dominated the earnings calendar and the sector’s pandemic-era trading boom fueled the continued bullishness. Jacob’s new stock recommendation is Datadog (DDOG).

Cabot Income Advisor

Weekly Update October 20: Supply chain issues and inflation threaten to spoil the party and limit profits. But earnings have been strong and better than expected so far. Bank earnings were stellar. This week, several other companies including Travelers Companies (TRV), Johnson & Johnson (JNJ), and Procter & Gamble (PG) reported earnings above expectations, suggesting that regular companies will overcome supply chain issues and generate strong profits.

Monthly Issue September 22: The dicey market prognosis creates two issues for the portfolio. One is that it isn’t a great time to buy anything. Stocks aren’t down much yet and the near future looks bleak. The other issue is that the recent downward bias has shrunken call premiums, as less investors are willing to bet on higher prices. Tom’s featured stock AGNC Investment Corp. (AGNC), is a mortgage real estate investment trust that invests predominantly in U.S. Government-backed residential mortgages. It pays a very high dividend yield and makes payments on a monthly basis.

Cabot Turnaround Letter

Weekly Update October 22: We raise our price target on Wells Fargo (WFC). Also, our take on earnings from Baker Hughes (BKR) and Mattel (MAT), comments on Macy’s (M), Credit Suisse (CS) and Western Digital (WDC), and our views on WeWork (WE), Digital World Acquisition Corp (DWAC), the metaverse, FaceBook (FB) and the Boston Red Sox.

Monthly Issue September 29: We look at five interesting turnaround stocks in the transportation industry and four turnaround stocks that trade for less than $11/share. Our new Buy recommendation is TreeHouse Foods (THS), one of the largest contract food manufacturers. Pressure from activist investor JANA Partners could produce strong gains in this undervalued company’s shares.

Ask the Experts

Cabot Undervalued Stocks Advisor

Question: I wanted to get your views on Barrick over Newmont. On the surface, it would seem Newmont might be the better value (similar decline in price; strong, disciplined management; better dividend) plus, more of their assets in developed countries which have a longer history of property protection. But I’m sure I’m missing something?

Bruce: Short answer: Barrick is higher-risk but higher potential return, Newmont is safer, but in the end their shares likely will perform fairly similarly. Barrick initially attracted my attention in early 2019, and I put it in the Cabot Turnaround Letter (at the time, just “The Turnaround Letter”) at about $13. Liked the new leadership via the deal with Randgold, huge debt paydown to almost zero net debt over the prior 5 or so years, and commodity gold prices looked too low at around $1300/oz. Sold Barrick at $26 in late 2020.

Still like the ‘change’ story at Barrick, as there is more optionality for fundamental improvements, gold production growth, portfolio changes vs Newmont that seems more plug-n-chug. Also, GOLD trades at a perhaps 10% discount to NEM on EV/EBITDA (NAV is very subject but I’d estimate roughly similar discount) - while not a huge difference it is on the right side of the valence.
You’re right that Barrick has more geo risk - much of their production is in African countries (and PNG) with govts that may get (or already have) sticky fingers. Newmont has some decent mines in Ghana but that country seems a bit more stable than Barrick’s average African country. The land-grab trend is getting worse globally and things like the recent coup in Guinea only add to the legitimate worries. Newmont clearly has the safety edge although Guinea is only two doors down from Ghana on Africa’s west coast so Newmont may not be immune. South America would seem a more remote expropriation risk but both countries have sizeable assets there and governments are slipping populist/leftward there, too.

Both have near-zero net debt and generate decent FCF. Barrick’s lower recurring dividend gives them more financial flexibility than Newmont - which can be good or bad depending on what they do with it.

Barrick’s recurring dividend yield is lower at 1.8% (to NEM’s 3.8%) but their specials lift this year’s yield to 3.8%, matching NEM and there is upside for more next year. Barrick’s specials offer higher risk-higher return as they have made no commitments for specials beyond 2021 and may decide to do something else with the cash - like make an acquisition. It’s no secret that Barrick yearns to buy Newmont but this seems unlikely to happen, so they may buy mines or companies here and there. Canada has some up-n-coming mining companies that are likely attracting Barrick’s attention.

Quarterly Cabot Analyst Meeting

The recording of the Cabot Prime Members Meeting with the Analysts from July 14, 2021 is now available for you to listen to at your convenience—click here for access. This private call with our analysts is one of your exclusive Cabot Prime member benefits.

Stock Recommendations Tracker

The table below lists all of the stocks held in any Cabot portfolio.
Updated or revised recommendations from the past week are in purple text.
Stocks added to a portfolio are highlighted in green text.
Closed stock positions in the past week are highlighted in red text.

StockCabot ExplorerCabot Growth InvestorCabot Marijuana InvestorCabot Stock of the WeekCabot Undervalued Stock AdvisorCabot Dividend Investor
ASANBuy another Half
CCHWFSee Advisory
CGCSee Advisory
CHPTBuy a 1/2
CRLBFSee Advisory
CURLFSee Advisory
FSRBuy a 1/2
GRWGSee Advisory
GTBIFSee Advisory
IIPRSee Advisory
JUSHFSee Advisory
LLYBuy 1/3
MRVLBuy a 1/2Buy
NETHold a 1/2Buy
NVNXFBuy a 1/2
SEBuy a 1/2Hold
SPCEHold a 1/2
SSOHold 1/2
TCNNFSee Advisory
TPBSee Advisory
TRSSFSee Advisory
VECOBuy a 1/2Buy