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Markets are facing end-of-the-summer doldrums as concerns about job and Covid growth dampen enthusiasm. We move two stocks from buy to hold, while on the positive side, Cloudflare (NET) shares are up 73% this year and Novonix (NVNXF) shares are up 58% in the last 10 days of trading. Today we have a new semiconductor-related idea for you in an area usually overlooked by investors.

A Joe Biden win is becoming increasingly likely, and that could mean a big bump for infrastructure stocks - these three in particular.

After a fairly quiet March, emerging markets came to life this week after the revelation of unexpectedly strong manufacturing growth in China, progress on trade talks and lower interest rates—which always help emerging markets.

This week we have a new recommendation that helps power emerging market consumer spending, a key driver as these markets transition from exports to consumer spending to fuel their growth.

The market has been jumping around lately as it digests the Fed’s announcement last week that it expects to hold interest rates steady until 2020 (and just one hike in that year) and would stop shrinking its balance sheet later in 2019.

There is a growing mental health crisis going on out there.

But it’s starting to be addressed by a tiny, unknown (so far) company with a virtual care platform that’s beginning to make a difference across the U.S. And it’s doing so while growing both the top and bottom lines.

All the details are inside the April Issue of Cabot Small-Cap Confidential.

WHAT TO DO NOW: The market has pulled back a bit this week after a big recent run, but most things have taken the selling in stride. Further weakness can’t be ruled out, especially in the near-term but with the market digesting well and our intermediate-term indicators looking good, we have a few moves tonight. First, we’re going to sell our small position in Flutter (FLUT), but we’re also adding half-sized positions in Axon Enterprise (AXON) and ProShares S&P 500 Fund (SSO), the latter of which we’re averaging up in. We’re also placing Take-Two Interactive (TTWO) on Hold. Our cash position will still be around 47% after these moves.

The market’s main trend remains up, but the crosscurrents are getting fierce! So today I’m selling four stocks (two for good profits and two for small losses), all in an effort to keep the portfolio full of stocks whose potential upside justifies their potential downside.
As to this week’s recommendation, I’m happy to say that it’s a company headquartered in India, which is relatively free of the political turmoil that’s gripped the U.S. recently. Furthermore, given that foreign stocks have underperformed dramatically this year, I’m optimistic about getting on board somewhere near the beginning of a renewed uptrend.

The market decline of the past month has turned Cabot’s long-term trend-following indicator negative (after 30 months on the positive side), so it’s time to recognize that the tide is now going out. Defense is now a major part of the game.

The market remains in fine health, with many of our stocks hitting new highs and a slew of earnings reports providing reassurance that the good times are not over yet.
For today’s recommendation, we have another financial stock to replace the one that was sold profitably last week. It’s a strong sector, with no end to the strength in sight.
As for the current portfolio, overall, our holdings are performing well. But we have one sell, an emerging market stock that’s gone the wrong way and presented us with a small loss. Details in the issue.

Recognizing the risk in today\'s hot market, today’s selection is not a hot stock; it’s a slower grower, a big stock with a heathy and growing dividend that’s technically in the leisure services business.

In today’s note, we discuss developments and institutional ratings upgrades for some of the stocks in the portfolio, including Agnico-Eagle Mines (AEM), Atlassian (TEAM), GE Aerospace (GE), SPDR S&P Retail ETF (XRT) and Starbucks (SBUX).

Many stocks are rising—either toward former highs, or surpassing recent highs—because the companies are growing profits very well. It’s not “Trump,” nor “irrational exuberance,” nor “a lack of other good investment markets.” It’s simply strong earnings growth.

We’re not ready to declare an end to the market’s correction, despite last week’s encouraging action. After all, a horrendous November (the Nasdaq was down more than 10% for the month before last week’s rally) was bound to lead to some type of bounce; what happens from here will be key. Regardless, there’s no question that many stocks improved their standing, finding big-volume support and, in some cases, shooting to new peaks. These are the names you want at the top of your watch list; the first groups out of the gate usually lead the ensuing bull move. For now, we advise continued prudence – buying just small amounts, keeping some cash on the sideline – but you should also be ready to turn bullish if the market follows-through powerfully in the days ahead. This weeks’ Top Ten contains an eclectic mix of names, some conservative, some high-flying. Our favorite: Turkcell (TKC), the leading wireless service provider in Turkey, which is registering strong bottom-line growth. We love the big-volume upside of late, a sign big investors will support the stock on any pullback.

Stock Name	Price	Buy Range	Loss Limit
ANR (ANR)	0.00	25-28	-
DV (DV)	0.00	50-55	-
FOSL (FOSL)	0.00	40-43	-
ISRG (ISRG)	0.00	310-325	-
OSIP (OSIP)	0.00	42-46	-
SLT (SLT)	0.00	22-25	-
SOHU (SOHU)	0.00	53-60	-
TKC (TKC)	0.00	24-27	-
VRSN (VRSN)	0.00	38-40	-
WFR (WFR)	0.00	73-77	-

The meat of earnings season is upon us—many blue-chip firms have already reported, but the fast-growing, emerging leaders are just starting to release numbers. Remember that big earnings gaps up (10% or more) generally lead to further gains in the weeks ahead (with normal pullbacks, of course), and vice versa. So it shouldn’t be a surprise to see a few recent earnings winners in this week’s Top Ten; a couple of them are likely to be big winners should the market continue to trend higher. Overall, we remain optimistic the market’s best days are ahead, but there’s no rush—things are still falling into place, supporting further gains in the weeks to come. Our favorite of this week is Fording Canadian Coal (FDG), a stock that’s been featured a few times in Top Ten, thanks to its huge reserves of metallurgical coal. The entire group remains strong, although it has paused somewhat in recent weeks. We think it’s a good time to get on board.

Stock Name	Price	Buy Range	Loss Limit
FRO (FRO)	0.00	51-53	-
GDI (GDI)	0.00	45-48	-
PDE (PDE)	0.00	38-41	-
SOHU (SOHU)	0.00	65-70	-
SOL (SOL)	0.00	16-18	-
SWN (SWN)	0.00	38-42	-
XEC (XEC)	0.00	59-62	-
CLF (CLF)	0.00	150-160	-
DAR (DAR)	0.00	13-15	-
FDG (FDG)	0.00	60-63	-

In the February issue of Cabot Early Opportunities, we take something of a barbell approach, reviewing a couple of phenomenal large-cap stocks poised for the next big chapter of their lives while also uncovering a handful of much smaller companies, one of which is just getting its business off the ground (literally)!

As always, there’s something for everybody!

The bull market remains alive and well, with major indexes hitting new highs in the last week. However, growth stocks in particular have been hit hard recently—finally spilling into the broad market in the last few trading days—and that requires some selling, so today we’re purging four of our weakest performers from the portfolio. As for new buying, today’s recommended stock is growing by consolidating a fragmented mature industry. It just came public this year, so it’s a name few investors are aware of. The stock was originally recommended by Tyler Laundon in Cabot Early Opportunities.

Details inside.



Lastly, I hope you’ll join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible lineup of experts ready to share their best picks.

In tonight’s issue, we dive into some education, revealing a long-term chart pattern that bodes well (including one stock that’s at the top of our Watch List now). We also give you all our latest thoughts on the market and our recommended stocks, and present the usual crop of new ideas if you have some cash on the sideline.

Current Market Outlook


The market’s rebound continues, and encouragingly, we’re seeing some power develop—stocks have shown two major accumulation days (one the day after Christmas, when the Dow rose 1,000 points, and the other last Friday after soothing words from the Fed) and breadth has been terrific. We can’t say we’re out of the woods yet; even after today’s rally, the intermediate-term trends of the major indexes are clearly down (all indexes are still near their 25-day moving average, in fact). But even so, there’s no denying the rally is off to a good start, and to this point, the market and potential leading stocks are doing what they “should” to carve out a sustainable low. You should still keep plenty of cash on the sideline, but we’re not opposed to adding some small positions in potential leaders and seeing how things progress. We’re nudging our Market Monitor up a notch.

This week’s list has a broad mix of stories and charts, but all of them look like they want to head higher if the market cooperates. Our Top Pick is Chipotle Mexican Grill (CMG), which, after a massive shakeout, looks primed to continue its turnaround.

Stock Name	Price	Buy Range	Loss Limit
AZUL (AZUL)	29.41	26.5-28	24-25
Buenaventura (BVN)	16.23	15.5-16.5	14-14.5
Chegg (CHGG)	74.21	28.5-30	25-26
Chipotle Mexican Grill (CMG)	773.32	465-485	425-435
Etsy (ETSY)	112.97	49-51.5	42-43.5
Incyte Corporation (INCY)	76.98	70-73	64-66
Kirkland Lake Gold (KL)	51.30	24-25.5	21.5-22.5
Okta, Inc. (OKTA)	148.41	63-66	54-56
Telephone & Data (TDS)	35.36	33.5-35	30.5-31.5
Workday (WDAY)	194.88	157-164	143-147

We have obviously lived through a very difficult period in the stock market recently, from which most of the portfolio stocks are recovering or have already recovered. Hopefully we will not see another similarly ugly stock market downturn for several years, but there are no guarantees.