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Cabot Prime Week Ending October 8, 2021

Cabot Prime Week Ending October 8, 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 discusses the solid rebound in the market and individual stocks, with some names actually rebounding all the way back to new highs. That said, the move hasn’t been enough to turn the trend back up, so Mike is sticking with a cautious stance, but he has his watch list in order in case the rally confirms itself on the upside next week.


Cabot Prime Members Meeting with the Analysts: 4th Quarter 2021

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3 Stocks to Play the Coming American Solar Boom

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Cabot Retirement Club Member Call

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Advisory Services

Cabot Growth Investor

Bi-weekly Issue October 7: We’re now about a month into this market correction, which to this point has been relatively garden-variety—from the high in early September to its low earlier this week, the S&P 500 slipped 5.9%, while growth-oriented indexes did a bit worse (Russell 2000 Growth down 7%, Nasdaq down as much as 8%, etc.). And individual stocks are in a similar boat, with many cracking intermediate-term support but few showing any longer-term abnormal action.

Bi-weekly Update September 30: Remain cautious. Our Cabot Tides remain under pressure, with the indexes (including growth indexes and funds) showing no ability to bounce in recent days. On the plus side, sentiment is getting pretty dour (a good thing down the line) and many growth stocks are still hanging in there, but we’re playing mostly defense and seeing how this correction plays out. Earlier this week, we cut bait on DocuSign (DOCU) and placed Cloudflare (NET) on Hold, leaving us with 45% in cash. We’ll sit tight tonight, but will be on the horn with any other actions in the days to come.

Special Bulletin September 28: Growth stocks (and, today, the market as a whole) are seeing follow-on selling after last week’s crack. Many stocks are pulling in normally, but some aren’t, including a couple of our names. In the Model Portfolio, we’re forced to cut bait with DocuSign (DOCU) and we’re placing Cloudflare (NET) on Hold. We came into this week with around 36% in cash, and today’s sell will lift that to a beefy 45%.

Cabot Top Ten Trader

Movers & Shakers October 8: The past two weeks have been 2021 in a nutshell. Two weeks ago, stocks came into trading having bounced nicely, but instead of following through, the indexes and leaders cascaded. Then, this week, when things looked close to going over the falls, we’ve seen an excellent rebound, with the major indexes recouping 45%-ish of their losses in just a couple of days.

Weekly Issue October 4: For many weeks, we’ve been writing that there’s more good than bad in the market, and indeed, while choppy, many names did work their way jadedly higher. But now the shoe is on the other foot: The intermediate-term trend is now down for the major indexes, and we’re starting to see more and more individual stocks follow suit. Mike’s Top Pick is CF Industries (CF), which is emerging from a multi-month dead period with a lot of power; as with most names in this market, try to buy on weakness.

Cabot Undervalued Stocks Advisor

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.

Weekly Update September 29: Across almost the entire length of the yield curve, interest rates are ticking up. The benchmark 10-year Treasury yield reached 1.53% and may be headed back toward its December 2019 rate of about 1.90%. In an economy that is showing rapid growth, with inflation well above the Fed’s 2% target and likely at 6% or more if housing prices were properly factored in, a sub-2% 10-year Treasury yield doesn’t seem to make sense.

Special Bulletin September 24: We are initiating coverage of ConocoPhillips (COP) with a BUY rating. Our interest in oil and natural gas exploration and production (E&P) companies has been warming up lately. Many of these stocks are beaten down, yet oil prices have remained resilient, leaving producers like ConocoPhillips meaningfully undervalued.

Cabot Stock of the Week

Weekly Issue October 4: The major indexes have trended down over the past month, as the chorus of worries about over-regulation in China and inflation here in the U.S. has grown. Tim’s featured stock Signet Jewelers (SIG), is the largest retailer of diamond jewelry in the world and the largest specialty jewelry retailer in the U.S., U.K. and Canada under the brands Kay Jewelers, Zales, Jared, Ernest Jones and more; all told, the firm operates around 2,800 stores.

Cabot Explorer

Bi-weekly Update October 7: U.S. crude oil hit a seven-year high as stocks, especially tech stocks, face headwinds. Today I am moving dominator Taiwan Semiconductor (TSM) to a Sell as Taiwan, America, China and Japan play a dangerous game. China sent 52 warplanes into the islands air buffer zone after the U.S. and allies held exercises nearby.

Bi-weekly Issue September 30: Xu Jiayin was China’s richest man, a symbol of the country’s economic growth who helped move poor villages into cities for the rising middle class. His company, China Evergrande Group, became one of the country’s largest property developers, and he enjoyed hobnobbing with the elite, trips to Paris to taste rare French wines, a million-dollar yacht, and private jets. Now the company has nearly $300 billion in debt, has missed interest payments on loans, and has 800 unfinished projects in more than 200 cities across China. Carl’s new recommendation Else Nutrition Holdings (BABYF), a young, Israeli-headquartered, plant-based food and nutritional company aimed at babies and toddlers.

Cabot Dividend Investor

Weekly Update October 6: September was ugly. The S&P 500 fell 4.8% for the month. But that month is over. Now we are in what is only the second worst month of the year historically. So far, October has been volatile. There have been strong rallies that quickly become undone in the following days. The market is still even for the month, but it looks very unsteady. It’s not inspiring a lot of confidence. It can’t take another bad headline.

Monthly Issue September 8: It’s still an amazing market. The S&P is up 96% from the bear market low in March of 2020. The index is also up over 20% so far this year. It may seem too good to be true. It feels like the market is overdue for trouble. And we are heading into what is historically the worst time of year for stocks, September and October. Meanwhile, the Delta variant is still wreaking havoc and inflation is persistent. Tom’s featured stocks are AGNC Investment Corp. (AGNC) and U.S. Bancorp (USB).

Cabot Marijuana Investor

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.

Update September 22: The simple fact is that the major market indexes are still high, even after Monday’s plunge, and thus a correction is to be expected, at some point. And whether that correction is blamed on a Chinese real estate company or inflation numbers or what the Fed does next really doesn’t matter. What matters (for this advisory service) is that marijuana stocks have already had their big correction—though of course it can get bigger. The index is already 51% off its February high—and some of our stocks have corrected even more.

Cabot Early Opportunities

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

Special Bulletin October 4: We’re seeing the ugly action from last week continue today so we’ll take a few steps to protect some of our hard fought profits. Here are today’s suggested actions: Sell Bentley Systems (BSY). We’ve held the stock since April and still have a 16% profit, even after the recent retreat. With shares falling through 60 today we’ll walk away and put BSY back on the watch list.

Monthly Issue September 15: From Tyler’s perspective growth has been where it’s at lately. We all tend to focus on what’s right in front of us, but even when flipping through dozens of charts of other types of stocks lately it seems like those that are working the best are the ones growing the fastest. In particular, software and rapid growth IPO stocks have been on fire. Case in point is Upstart (UPST), which is up 126% for us in just two months.

Cabot Profit Booster

Weekly Issue October 5: Last week the major indices pulled back in a meaningful way. The S&P 500 lost 2.20%, the Dow declined 1.36%, and the Nasdaq pulled back 3.20%. The benchmark index sank 4.8% in September, marking its worst month since March 2020. It was also the first losing month for the S&P after seven straight months of gains. The outlook didn’t look much brighter Monday as the market saw another bout of losses. Jacob’s new stock recommendation is International Game Technology (IGT).

Update October 4: The market is having another ugly day, and two of our stocks (SONO and TX) that recently broke our mental stops have not shaped up post-quarter-end last Thursday. While it’s possible that the market, and these stocks, will bounce in the days to come, it’s also possible that the recent 5-6% declines in the indexes are the start of a larger fall. For that reason, we are going to exit these positions today, and will not roll to new call sales.

Cabot Income Advisor

Weekly Update October 6: Earnings could save or sink the market. It’s still a great earnings environment. S&P 500 earnings are expected to grow 28% on average over last year’s quarter. It’s not the 88% growth of last quarter but it’s still light years better than average. And earnings have continually exceeded expectations. Earnings could deliver a reignited bull market.

Special Bulletin September 24: Trade Alert: Sell USB November 19th $60 calls at $2.30 or better.

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 8: This week’s update includes our comments on Lamb Weston’s (LW) earnings as well as commentary on several stocks. We had no ratings changes this week. Next week, Wells Fargo & Company (WFC) and Walgreens Boots Alliance (WBA) report earnings, on Thursday.

Monthly Issue September 29: Most investors, and the general public, seem to regard the transportation industry as somewhat dull. No doubt, there is little inspiration that comes from waiting at airports, driving in city traffic, or watching delivery trucks start-n-stop their way through neighborhoods. Bruce’s has one buy recommendation: TreeHouse Foods, Inc. (THS). TreeHouse Foods is one of the nation’s largest independent private label food manufacturers.

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 a 1/2
CCHWFSee Advisory
CGCSee Advisory
CHPTBuy a 1/2Sell
CRLBFSee Advisory
CURLFSee Advisory
FSRBuy a 1/2
GRWGSee Advisory
GTBIFSee Advisory
IBMBuy a 1/2
IIPRSee Advisory
JUSHFSee Advisory
MRVLBuy a 1/2Buy
NETHold a 1/2Hold
NVNXFBuy a 1/2
PLTRBuy a 1/2
SEBuy a 1/2Hold
SPCEHold a 1/2
SSOHold 1/2
TCNNFSee Advisory
TPBSee Advisory
TRSSFSee Advisory
VECOBuy a 1/2