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We have been starting to see signs that the stretched rubber band might be snapping back a bit, with a few strong areas taking on water while the Dow Industrials and the broad market rally. It’s something to watch and, if it gets a head of steam going, could launch some new leadership while denting some popular names. That said, we’ll see how things play out, especially as the end of Q2 (and the first half) is this week, which can often bring some volatile trading. All in all, we remain in our current stance and are taking things on a stock-by-stock basis.

This week’s list has some familiar names, but also a few that have recently come under big accumulation on some sort of news. Our Top Pick has come alive after earnings as the long-term growth plan (buoyed by some industry consolidation) comes into focus. Aim for dips to enter.

The market has been spectacular. Can we expect more of the same in 2026?

The S&P is up a staggering 95% since this bull market began in October of 2022. It’s up 128% this decade, for an average annual return of about 15%, 50% higher than the historical average.

The huge returns have been all technology. Without technology, market returns for the past few years would be rather uninspired. But there is growing investor angst regarding the sustainability of technology valuations and whether all this massive AI investment will deliver tangible payoffs. The sector could have a tougher year in 2026.

Fortunately, there are a lot of stocks that aren’t technology. The rest of the market cares more about interest rates and the economy, and those things are shaping up well. The Fed is in a rate-cutting cycle, inflation is subdued, oil is cheap, and a higher level of economic growth is expected in 2026.

The rally is broadening, and 2026 may be a year for non-technology stocks to shine. Overall earnings are expected to grow 14% next year, with much of the growth over last year coming from other sectors. Many stocks in other industries sell at cheaper valuations than the market, and performance is improving as investors seek to diversify beyond technology.

The bull market has been lopsided toward technology so far. But 2026 is shaping up to be a year for other stocks to catch up. In this issue, I highlight a stock poised to do just that in the year ahead.

Buying and selling stocks is not simple, but if you hire a coach, you can simplify the process.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the December 2021 issue.

The emergence of the Covid Omicron variant has temporarily upended the market’s emerging post-Covid view of the economy. We share our thoughts on this, as well as on Fed Chair Powell’s testimony this week about accelerating the bond-buying taper. We also comment on how artificial selling pressure as the calendar year-end approaches can drive already-weak stocks to steeply undervalued levels.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the August 2021 issue.

Earnings season is in full gear, and we review the several companies that have reported as well as provide some expectations for those yet to report. General Motors (GM) releases its earnings on Wednesday, August 4, after our publishing deadline – this is a highly anticipated report.



Perhaps the biggest difference between value investing and growth and momentum investing is what to do when a stock price falls. Many investors using growth and momentum strategies have a discipline of selling if a stock price falls 15-20%. This may make excellent sense for these strategies but is the exact opposite of what one using a value strategy should do. With value strategies, one generally should buy when their stocks go down in price. We touch upon this more in today’s note.



I’d like to invite you to our 9th Annual Cabot Investor Conference, held online again this year, on August 17-19, that’s Tuesday – Thursday. You can see presentations by all of our analysts, which will include updates on 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 and the best way to get more out of the 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.

Last week had a few potential potholes for the market’s nascent rally, including some influential big-cap earnings releases and an inflation report before the long weekend—but despite some selling that popped up here and there, the market and fresh leaders handled themselves well. Stepping back, we’re definitely encouraged by the market’s snapback and the numerous upside moves in individual, growth-oriented stocks during the past month; we think the odds favor the next major, sustained move is up. That said, a lot of stocks have set up (but not broken out), old leaders (chip names in particular) look suspect and it’s a fact that defensive areas continue to ramp higher, which is a sign that big investors are hunting for some safety. Again, we’re encouraged overall, but continue to think going slow makes sense, especially now that some selling pressures are beginning to emerge, stickign with mostly small positions and keeping some cash on the sideline. We’ll keep our Market Monitor at a level 6 today.

This week’s list is a bit of a hodgepodge, with some recent earnings winners, some fresh names and a few stodgier types. Our Top Pick is Rocket Cos. (RKT), which is basically a cyclical (mortgage lending) company that should be lean and mean after the multi-year dry period—meaning its earnings power should be big as rates head lower.

The market has been bouncy but slightly higher for the year so far, but it’s a different story under the hood.

Eight of the eleven S&P stock sectors are outperforming the market, and none of them is technology. That’s a stark difference from most of this bull market, where technology and AI drove the market higher while most other sectors underperformed. Now, the rally is broadening.

The market isn’t as expensive as it may seem, as the valuations of many stocks are below that of the overall market and don’t reflect the index returns of the bull market so far. Most of the expensive stocks are in technology, but those stocks are getting cheaper as well.

In this issue, I highlight two of the most promising dividend stocks for 2026. Both stocks have been in the portfolio before and have provided great income and total returns in a short period of time. They also can generate huge call premiums.

It’s fair to say the evidence has taken a small step back in recent days because the intermediate-term trend of the major indexes is essentially on the fence, because the broad market has also faded somewhat, and because we’re finally seeing some earnings-induced dents in strong stocks. Of course, the election has finally (almost) arrived, which could easily cause some hecticness in the days ahead—but also remove some uncertainty. Put it all together and we’re still bullish, but we did pull in our Market Monitor to a level 7 and will take it as it comes in the days ahead.

This week’s list has a pretty solid growth component to it, which we do find encouraging. For our Top Pick, we’ll go with a zinger that has a great story and a powerful chart that we think can go far.

Various portfolio companies are in the midst of changes and volatility related to a spin-off, a name change, the Boeing Max 737 problem and the ongoing effects of Midwest flooding. In addition, U.S. stock markets decided that they’re ready to rise again, so I itemized several opportunities in this issue ranging from blue chip stocks to a microcap stock.

I expect 2019 to continue being a year that offers great opportunities for stock traders. While my investment style of identifying undervalued growth stocks is not conducive to day trading, investors will likely find lots of opportunities to achieve capital gains of 10% or more over several-month periods.

First off, a quick note: Due to our regular schedule (50 weeks a year), there won’t be a Movers & Shakers update this shortened week, or a Top Ten issue next Monday—but we will send out a Movers & Shakers update next Monday and will be around all next week if you have any questions. Have a fantastic Thanksgiving!

Nothing much changed with the market last week: The major indexes were down, but not severely, and the intermediate-term trend continues to point up. That said, under the surface, it remains a very mixed bag—some areas look great, but there are as many (or more) wobbly names out there compared to names in solid uptrends. We’ll keep our Market Monitor at a level 5 this week, though we’d like to individual stocks act better soon.

This week’s list is heavy on old world companies, though there are a few great-looking growth names, too. Our Top Pick is in that space and has shown great power before and after its recent earnings report.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the October 2022 issue.

As stock prices tumble under the twin pressures of rising interest rates and the likely arrival of an economic downturn, just about every new stock pick is destined to be a disappointment. How does one select stocks in such an environment? While most fresh ideas will be near-term duds, there is an important purpose to picking new ideas. And, one doesn’t need to buy full positions right away. We screen for low P/E stocks on depressed 2023 earnings, with estimates for those earnings that are increasing. These make good stocks in which to take starter positions.

We also sorted through stocks with high dividend yields and highlight two picks and two pans (with enticing yields yet have serious dividend risks).

Our feature recommendation this month is Dow (DOW). Its shares have been sold by fearful investors, but the company’s low valuation doesn’t recognize the improvements in its financial strength and cost structure since the dark days of early 2020, nor the attractive yet sustainable dividend yield.

Current Market Outlook


We’ve entered the third week of September, and today was another day of sharp rotation, with the market’s leading growth stocks and indexes taking hits while other areas declined modestly (if at all). Big picture, the intermediate-term trend of the major indexes is still up, and most leading stocks, while choppy, are in the same boat; hence, we remain optimistic. That said, we are nudging our Market Monitor down a notch today to respect the repeated waves of selling and, just as important, a bit more iffy action from leading stocks (including a few that are seeing wild swings up and down after a big run, which is often a sign of distribution). Thus, we’re being patient with our top performers, but it’s also a good idea to tread carefully, holding at least a little cash and booking some partial profits on any stocks that are showing wear and tear.

This week’s list is another growth-heavy list, which is encouraging to see given the bouts of rotation. Our Top Pick is CarGurus (CARG), which is aiming to be the TripAdvisor of car information and whose stock is under accumulation after a four-week dip.

Stock Name	Price	Buy Range	Loss Limit
Acxiom (ACXM)	0.00	46.5-48.5	42.5-43.5
Align Technology (ALGN)	316.20	372-382	345-350
CarGurus (CARG)	41.58	49-52	44-45
Centennial Resource Development (CDEV)	20.33	20.2-21	18.4-18.9
Guidewire (GWRE)	90.60	102-105	94-96
HealthEquity, Inc. (HQY)	70.70	90-93	82-84
Jacobs Engineering Group (JEC)	89.83	73-76	67.5-69.5
Sendgrid (SEND)	33.32	34-36	30.5-31.5
Spirit Airlines (SAVE)	57.03	46-48	42-43
Viper Energy (VNOM)	36.55	37-39.5	33.5-35

Overall, the market’s action remains as close to pristine as you could hope for. Under the hood, there has been a touch of rotation, with some growth stocks chopping around while cyclical, construction and materials names perk up. All in all, we wouldn’t be surprised if growth continued to catch its breath, as the recent pullback was very brief, but that’s short-term nitpicking: While dips and potholes will come, the bottom line is that the vast majority of evidence is bullish, so you should be, too. We’ll bump our Market Monitor up to a level 8, and think adding exposure (ideally on dips) makes sense.

This week’s list reflects the broadening we’re seeing out there, with a few tech names but many others from other corners of the market. Our Top Pick is a long-term winner in the aerospace and defense field whose stock just broke out.

Artificial intelligence is a massive catalyst that is changing the market. It is spreading beyond technology and transforming other industries.

Utilities are companies that provide water, energy, and electricity to homes and businesses. They operate monopolies or near monopolies in their areas and the rates they charge are usually determined by regulatory bodies.

They usually pay strong dividend yields and provide highly defensive earnings that continue in any kind of economy. But, aside from the dividend and defensive characteristics, they’ve typically offered little else. Good stocks tend to outperform the indexes in flat or down markets and underperform them in bull markets. They are the market sector that most closely resembles bonds.

But skyrocketing electricity demand, mostly from data centers supporting AI, is changing that sector for the better. The phenomenon is making electric utilities growth businesses as well. The changing environment is adding another hugely positive dimension to these underrated stocks.

In this issue, I identify a beneficiary of that positive change that’s ahead of the pack. It’s an opportunity that has never existed before in modern times. The combination of defense and growth is the best of both worlds.

Ethanol industry players expect that Congress will let the subsidies and tariffs expire as scheduled at year’s end.

As I have mentioned a time or three, I love numbers.

Paul Goodwin offers his forecast for the economy in the new year.

Las Vegas Sands and Wynn Resorts are seeing success in Macau.

Global citizens are beginning to witness a relatively unprecedented situation in which a communicable virus that originated in China is now traveling around the globe.