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In today’s note, we discuss the recent earnings reports from Kohl’s (KSS), Kopin Corp (KOPN) and Volkswagen AG (VWAGY).

*Note: Your weekly Cabot Turnaround Letter update is arriving a day early, on Thursday, July 3, due to the market holiday on Friday, July 4, in observance of Independence Day.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), Bloomin’ Brands (BLMN), GE Aerospace (GE), Intel (INTC), Paramount Global (PARA) and Toast (TOST).

GE Aerospace (GE) strength driven by record backlogs in its commercial aerospace segment.

Finding your “investor profile” (your risk tolerance, investing style and preferences) is crucial for achieving your financial goals. Here’s how to do it.

One stock reports strong fourth quarter and moves from Strong Buy to Hold; a second falls on temporary problems.

I’m raising my rating on Robert Half International (RHI) today to Buy. RHI appears in the Buy Low Opportunities Portfolio.

In good times, it pays to own the most popular stocks on the market. But you need a few contrarian stocks for when things sour for the big boys.

Here at Cabot, we have been successfully employing market timing disciplines for decades.

Investor attention is rotating from the mega-cap growth stocks to the rest of the market which means other stocks, like these solid dividend payers, are set to outperform.

A stimulus bill looks like it is right around the corner but we need to get through this winter before vaccines are widely available. Facebook faces a real challenge to break it up and accept legal liability for content. An EU-China summit is cancelled after China tried to limit speakers critical of China’s clampdown of Hong Kong. On the Explorer front this past week, MP Materials (MP) and NovoCure (NVCR) were particularly strong as Sea Limited (SE) briefly made a new high at 200. As promised, our new idea this week hails from Brazil and is a monopoly play on the most essential of all resources.

Due to the holidays, the next issue of Cabot Global Stocks Explorer will be published on January 7, 2021.

The euphoric vaccine rally has driven the market indexes to all time highs. A vaccine likely means the end of the pandemic, sooner rather than later. The removal of the remaining lockdown restrictions should unshackle the economy and bring on a full and robust recovery.

A full recovery will lift those stocks and sectors that depend on the Main Street economy. It will lift cyclical sectors like energy, finance and hospitality that had not participated in the partial recovery. It’s already happening. The losers of the earlier stock market recovery are on fire.



In this issue I highlight one of the best banks in the country. It is a highly desired stock that should be very quick to recover. The stock has strong momentum and is still priced well below the 52-week high. This issue also highlights two covered call opportunities to cash in on the market rally.

This morning’s market crash will go down in history as a big one—biggest by point drop and one of the biggest by percentage drop. But this is no time to panic. Instead, it’s time to recognize that the market is increasingly offering its wares at bargain prices, and all you need to do is have cash on hand when the climate improves.
For our portfolio, that means selling one more stock today, Endava (DAVA).
In the meantime, Cabot analysts continue to find stocks that are attractive for one reason or another and today’s featured stock is one of them—a leading chipmaker with great prospects as the world goes increasingly online and digital.

Full details in the issue.

Current Market Outlook


Stocks notched another solid week, with most major indexes rising 1.5% or so and a bunch of stocks going along for the ride. We saw the S&P 500, S&P 400 Midcap, Nasdaq, NYSE Composites and the NYSE Advance-Decline line all hit new highs. That’s bullish! We’re also encouraged by the increasing number of powerful earnings reactions we’re seeing, with many stocks surging on their heaviest volume in over a year. Short-term, pullbacks and shakeouts are always possible, but looking at the big picture, we saw the market blast out of an 18-month trading range in November, consolidate tightly for two months through January, and now resume its uptrend, with more stocks and sectors participating. All told, we’ll bump our Market Monitor up another notch to level 9 (out of 10).

This week’s list has another crop of very strong stocks, most of which have either gapped up on earnings or are just emerging from consolidations. Our Top Pick is ON Semiconductor (ON), a chip firm that just blew away estimates and is expecting huge bottom-line growth thanks in part to its acquisition of Fairchild.

Stock Name	Price	Buy Range	Loss Limit
Arista Networks (ANET)	0.00	115-120	102-105
NetEase, Inc. (NTES)	0.00	285-295	260-265
ON Semiconductor (ON)	24.07	14.5-15.5	13.5-14
Paycom Software (PAYC)	0.00	51-53	47-48.5
Portola Pharmaceuticals (PTLA)	0.00	29.5-31.5	26-27
Shopify (SHOP)	585.00	56.5-61.5	50-53
TIM Participacoes (TSU)	0.00	15-15.5	13.8-14.2
TTM Technologies (TTMI)	0.00	15.8-16.8	14.5-15
United States Steel Corporation (X)	0.00	37.5-39.5	35-36
Wix.com (WIX)	302.53	58-62	52-55

Small caps have underperformed since last Thursday with yesterday’s selloff pushing the index to the lowest level since mid-January.

The main culprits are yesterday’s slightly hotter-than-expected CPI report, concerns about tariffs (carveouts expected) and an uptick in bond yields. Yesterday the 10-year yield jumped back to 4.64%, a three-week high.

As expected, the Federal Reserve cut interest rates by a quarter point yesterday. This was largely already baked into the market. Looking ahead, Fed Chairman Jerome Powell had an impactful comment: “What do you do if you are driving in the fog? You slow down.”

This comment is consistent with our strategy of alternating aggressive and conservative stocks, taking partial profits to build cash, and seeking international diversification.

Trump’s victory has given the S&P 600 SmallCap Index the jolt it needed to break out above this year’s overhead resistance at 1,465.

This is what it looks like on a daily chart going back about a year ...

Mattel (MAT) reported revenue of $1.08 billion, down 0.7% from last year, and missing the consensus estimate of $1.09 billion by 1%. Earnings per share, however, exceeded the consensus estimate of $0.16 by 18.75%, coming in at $0.19. Key metrics showed mixed performance: Barbie sales fell 5.9% to $266.10 million, Fisher-Price dropped 17.5% to $135.90 million, while Hot Wheels rose 3.9% to $327.40 million, and other brands reached $471.90 million, beating estimates.

Wells Fargo (WFC) kicked off the Cabot Turnaround Letter earnings season today, showing solid EPS of $1.33/share, which exceeded estimates by 4 cents. WFC also beat revenue estimates by $410M, coming in at $20.69B, but the stock is trading lower this morning as the company posted a 9% YoY decline in net interest. We moved this one to HOLD back in the May 27 issue at 60, and it just hasn’t quite been able to clear that prior high. Given that we have a 119% overall gain on this stock in the rear-view mirror, and that interest rates – and therefore WFC earnings – are only likely to go lower from here, we’re moving this one to SELL.

The Canadian government announced tha trusts will lose their tax-favored status in January.

A listing of positions currently available at Cabot Wealth Network, one of the largest and most-trusted independent investment advisory publishers in the country.