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The market’s rally since its mid-November lows has proven durable enough to turn our intermediate-term indicators back into a bullish mode. (Our Market Monitor, shown to the left, has followed suit.) Granted, the buyers aren’t exactly flexing their muscle here, with plenty of choppy action as investors await word on the Fiscal Cliff. But there’s enough evidence that the sellers have left the building, seen in both the major indexes, which have refused to give back any gains of late, and in leading stocks, more and more of which are setting up. You shouldn’t head for the deep end yet, but putting some sidelined cash to work is advised.

This week’s list is a hodgepodge of stocks and sectors, with a handful of turnaround-type stories thrown in. Our favorite of the week is MasTec (MTZ), an off-the-radar name in the construction business. Growth is picking up, and the stock is acting excellently.

Stock Name	Price	Buy Range	Loss Limit
United Rentals, Inc. (URI)	0.00	40-42	-
Rackspace (RAX)	0.00	65-68	-
Rackspace (RAX)	0.00	65-68	-
MasTec, Inc. (MTZ)	66.65	22-24	-
Marathon Petroleum Corporation (MPC)	0.00	58-60	-
Louisiana-Pacific (LPX)	0.00	16.5-17.5	-
Lowe’s Companies (LOW)	98.15	33.5-34.5	-
First Solar (FSLR)	83.74	27-29	-
Canadian Pacific Railway (CP)	0.00	97-99	-
ASML Holding (ASML)	350.01	60-63	-
Amazon.com (AMZN)	2.00	244-252	-

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

While investment losses are everywhere this year, we highlight two ways to harvest these losses and discuss seven stocks that have strong appeal as year-end bounce trades.

We also highlight four attractive stocks held by highly-regarded long-term value investment funds that we found in our analysis of the recent 13F regulatory filings.

Our feature recommendation this month is theme park operator Six Flags Entertainment (SIX). This company is aggressively working to improve its profit structure under a completely new leadership team but the turnaround is taking longer than investors would prefer, leaving its shares overly depressed. For patient long-term investors, the shares offer an attractive, asymmetric potential return.

The big macro news this week is that the U.S. economy is doing well and there’s no really clear reason for the Fed to cut interest rates. Trade deals continue to be announced, and the U.S. should be bringing in a good deal more money due to tariffs than it has in the recent past.

Real GDP was just announced to have risen 3%, thanks to capex on hardware and software to build out data centers. Results from Microsoft (MSFT) and Meta (META) confirmed this trend.

Current Market Outlook


In the big picture, we still have yet to see much abnormal action from the market—the long-term trend is up, the broad market is relatively healthy and, while many leading stocks have been dented, plenty are still acting well. Because of that, the odds still favor the next big move being up. But the short-term is trickier to game—it looks to us as if the market topped out for a few weeks starting in early September, with last Tuesday’s breakdown and last Friday’s rally rejection signs that big investors are liquidating some positions. With the major indexes just 2% to 3% off their highs, now is not a time to panic, but it is time to prudently manage your risk by cutting losses short, holding some cash and keeping new buys on the smaller side. We’re nudging our Market Monitor down to level 6 (out of 10) and believe the onus is on the bulls to reignite a new uptrend.

This week’s list has a wide variety of stocks and sectors to choose from. Our Top Pick is Paterson-UTI Energy (PTEN), which has been in rough shape during the energy bust, but the stock is now forecasting better times ahead.

Stock Name	Price	Buy Range	Loss Limit
Aerie Pharmaceuticals (AERI)	0.00	37-34	29.5-28
Diamondback Energy (FANG)	0.00	100-97	93-92
GoDaddy (GDDY)	0.00	35-34	32-31.5
ICU Medical (ICUI)	0.00	147-142	130-128
Las Vegas Sands Corp. (LVS)	0.00	58-56	50.5-49.5
Momo Inc. (MOMO)	44.65	24-22.5	21.5-20
Patterson-UTI Energy (PTEN)	0.00	24-22.5	21-20.5
PRA Health Sciences Inc. (PRAH)	96.08	54-52	49-48
RPC Inc. (RES)	0.00	18-17	16-15.5
TAL Education (XRS)	0.00	69.5-67.5	65-64

If you like the software-as-a-service (SaaS) business model (or even if you don’t understand it), then I can tell you about the best SaaS stocks to buy now.

After an ugly start to the week on Monday, stocks rallied very impressively as the S&P 500 gained 4.6%, the Dow added 2.5% and the Nasdaq surged higher by 6.7%.

After an ugly start to the week on Monday, stocks rallied very impressively as the S&P 500 gained 4.6%, the Dow added 2.5% and the Nasdaq surged higher by 6.7%.

Small caps shot higher last Friday after Fed Chair Jerome Powell indicated his willingness to consider a September rate cut.

On Friday, the S&P 600 SmallCap Index jumped by 3.8%, blasting through the 1,400 level that has served as intermittent overhead resistance in July and August. The index also broke through the 1,424 level, which the index jumped to following the weak jobs report a couple weeks ago.

The title of this note might be, “What to expect when you’re expecting … earnings.” As companies in the Cabot Undervalued Stocks Advisor portfolio start reporting earnings this week, let’s look into what is behind the results and estimates.

At the index level, small-cap performance has been unremarkable (though stable) for a while, but under the hood, there continue to be plenty of performing names, and we’ve been fortunate enough to be in a number of them.

That said, there’s been some shifting of the deck this week with a few growthy stocks (TMDX, RXST) taking a bit of a hit. On the flip side, continued performance from the likes of ENVX and new addition (from June) AORT is very nice to see.

In today’s note, we discuss the recent developments concerning Tyson Foods (TSN) and Alibaba Group Holding (BABA), with a particular emphasis on exit strategies for both stocks.

Starting next Monday, August 31, before the market opens, the Dow Jones Industrial Average will have a new look.

Today’s selection is a company you’ve probably not heard of, but it provides a valuable medical technology that should see increased use in the years ahead. Also, it’s growing by acquisition.

It’s hard to believe anything is thriving right now, but there are a number of stocks benefitting from coronavirus. Here are four that top the list.

There’s no doubting the dominance achieved by mega-tech companies like Facebook, Amazon, Netflix, Google and the other members of the “FANGMAN” club (Microsoft, Apple and Nvidia). Over the past decade or two, these have created entirely new industries, grown to unprecedented size and rewarded shareholders with vast profits. And, like all of the technology companies that preceded them, they have reached their peak potential.

AST SpaceMobile (ASTS) Update: Full Steam Ahead

Explorer stocks had a good week led by Super Micro (SMCI) up 20% and Cloudflare (NET), up 9%, as PayPal (PYPL) has struggled a bit as it launches a new, higher-margin digital ad business. The S&P 500 is up 14% so far this year but the 10 biggest stocks recently represented almost 37% of the index’s total value, the highest since September 2000, according to FactSet. Use caution and take partial profits if you have some of these in your portfolio.

We have been discussing some great companies and breakthrough technologies, but it is easy to overlook that energy is the foundation of economic and technological development. It is also at the core of how countries secure and project national power.

So today, we add a U.S. renewable energy company that is a leader in an alternative energy source that’s making a comeback.

This has been a week for the history books with record-breaking volatility and uncertainty.

My advice? Stay on the conservative side, leaning to blue-chip dominating stocks not tied to U.S.-China trade. Buy more gold. Since early 2022, gold has strongly outperformed inflation-protected Treasurys, so gold is now the world’s preferred safe-haven asset by many investors.

The President Trump reversal yesterday as Treasury bond market yields jumped and the U.S. dollar fell sent markets soaring. The U.S. raised China tariffs and China responded in kind. Unfortunately, both sides remain on a collision course.

AI dominated the media and the stock market in 2023, but what revolutionary new tech product will take the reins in 2024? Allow me to make a case for flying cars.