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Current Market Outlook


The overall market continues to act just fine, the trends are pointed up for most indexes and stocks, and the broad market remains in great shape. That said, it’s not all peaches and cream—the last three days have seen some selling pressure in a few highflyers and money flows into defensive groups (like utilities and consumer staples). Moreover, this action comes after a few short-term signs of enthusiasm, including a huge number of new highs on Nasdaq last Wednesday. Don’t get us wrong: We’re still bullish, and you should hold your strong stocks and be heavily invested. But we’ll knock our Market Monitor back down a notch (to a level 8), and think being selective on the buy side and ditching losers and laggards makes sense.

This week’s list has a broader array of stocks than in recent weeks as money flows shift. Our Top Pick is Square (SQ), which looks like a new leading growth stock after galloping ahead on earnings last week. Keep positions small and try to get in on dips.

Stock Name	Price	Buy Range	Loss Limit
Applied Optoelectronics (AAOI)	0.00	43.5-47	38-40
Autohome (ATHM)	98.65	32-34	30.5-29.5
HubSpot (HUBS)	582.89	57.5-60.5	55-53
Marriott Vacations (VAC)	0.00	93.5-97.5	87-89
Sage Therapeutics (SAGE)	0.00	62-66	56-59
Sinclair Broadcasting (SBGI)	54.14	38-40	35-36
Southwest Airlines (LUV)	0.00	55-57	51-52.5
Square, Inc. (SQ)	91.04	17-18	15.2-15.6
Univar (UNVR)	0.00	30.5-32	28-29
Universal Display (OLED)	187.54	82-85	74-76

Current Market Outlook


The market hit a little turbulence early last week on renewed trade worries but bounced back nicely, with the major indexes finishing flat (S&P 500 and Nasdaq) to up (small- and mid-cap) on the week. Short-term, though, we wouldn’t be surprised to see some further ups and downs as the market and many stocks/sectors consolidate their two-month runs; we still favor buying pullbacks rather than breakouts at this time. The good news is that we continue to think current pullbacks and consolidations are leading to some good-looking entry points in a variety of leading stocks. All in all, we remain bullish, though it’s still best to be a bit choosier on the buy side at the moment, while giving some stocks that you own breathing room to consolidate if they’ve enjoyed a good run.

This week’s list has many leaders that are retreating toward support or are otherwise showing solid setups. Our Top Pick is Seattle Genetics (SGEN), which looks like a leader in the biotech field, and the stock is now pulling back for the first time after a big run.

Stock Name	Price	Buy Range	Loss Limit
Amedisys (AMED)	174.06	161-164	146-148
The Walt Disney Company (DIS)	144.76	144-147	136-138
DocuSign (DOCU)	107.98	72-75	64-66
GSX Techedu (GSX)	97.59	18-19	15.5-16
Incyte Corporation (INCY)	76.98	92-95	84-86
Qorvo (QRVO)	129.47	105-109	94-96
Seattle Genetics (SGEN)	150.85	112-115	103-105
Splunk (SPLK)	207.67	145-150	132-135
TransDigm (TDG)	599.41	550-565	515-525
Tesla, Inc. (TSLA)	818.87	333-353	303-308

Today’s featured stocks include two new additions to the portfolios and a stock that has ostensibly become a takeover target.

Current Market Outlook


The answer to the question above is simple: Go up! And that’s what all of the major indexes have been doing in recent days, knocking out all-time highs amid a vacuum of selling pressure. Short-term, there are some signs of complacency, and of course earnings season is coming up, which always adds volatility to the mix. Both of those factors probably mean you shouldn’t buy stocks with both fists. But the big picture is clear: It’s a bull market, and while the below-the-surface action continues to show some rotation, the odds favor higher prices ahead. You should be holding your top performers and looking to grab shares of new leaders as opportunities arise.

This week’s list has a nice mix of growth, “old world,” big and small, reflecting the broad strength in the market. Our Top Pick today is HubSpot (HUBS), which is a bit thin and jumpy, but has a great fundamental story and recently broke out on excellent volume.

Stock Name	Price	Buy Range	Loss Limit
BeiGene (BGNE)	170.20	106-112	95-98
Five Below (FIVE)	134.58	54-57	50-52
HubSpot (HUBS)	582.89	82-85	75.5-77
LGI Homes (LGIH)	86.04	49-52	45.5-47.5
MyoKardia (MYOK)	108.56	39-42	34-36
RH Inc. (RH)	252.93	69-73	64-67
ServiceNow (NOW)	341.86	117-122	109-112
Tronox (TROX)	0.00	23.5-25.5	21.5-22.5
United Rentals, Inc. (URI)	0.00	136-140	126-128
Yelp (YELP)	41.30	44-46	40-41

Current Market Outlook


After a big run last year and a moonshot during January, the sellers have finally come out of the woodwork, pushing the major indexes (and many leading stocks) sharply lower during the past six trading sessions, including a mini-crash today (the Dow was down 1,500 points at one point!). Looking at the evidence, the bull market (longer-term trend) is still intact, but the intermediate-term trend has turned negative and many leading stocks have come unglued. In the near-term, we certainly wouldn’t be shocked to see a snap back, but following a major extreme in price and sentiment two weeks ago and this abnormal selling, stocks probably need some time to wear out the weak hands and digest their recent gains. We’re moving our Market Monitor down to neutral to respect the change in the evidence—we don’t advise selling wholesale here, but you should honor your stops and loss limits, and on the buy side, be very choosy and keep new positions small until the market finds support.

This week’s list is a potpourri of stocks and sectors, most of which have recently reacted well to earnings. Our Top Pick is Pure Storage (PSTG), a fast-growing outfit that emerged from a base on big volume last month.

Stock Name	Price	Buy Range	Loss Limit
Autohome (ATHM)	98.65	73-77	67-69
BofI Holding (BOFI)	42.93	33-35	30-31.5
Harris Corp. (HRS)	198.60	145-150	137-139
Knight-Swift Transportation Holdings Inc. (KNX)	40.61	46-48.5	42.5-44
LPL Financial Holdings (LPLA)	85.22	59-62	56-57.5
MercadoLibre, Inc. (MELI)	980.83	340-360	310-320
Meritor (MTOR)	21.46	27-28.5	25-25.5
MyoKardia (MYOK)	108.56	47-51	42-44
Pure Storage (PSTG)	25.64	18.5-19.5	17-17.5
Shutterfly (SFLY)	94.71	68-72	59-63

Current Market Outlook


The market has enjoyed something of a “lockout” rally since it bottomed in early February, rarely pulling back for more than a couple of days before finding buyers. Combined with some rare momentum indicators that have flashed, the action is characteristic of a kick-off to a sustained advance. That said, there remain flies in the ointment—most of the strength has been in dividend-related stocks (growth stocks are just doing so-so), and the off-the-bottom sectors (industrials, commodities, etc.) are starting to hit resistance. As earnings season approaches, some pullbacks would not be unusual among individual stocks and sectors. Altogether, you should continue to lean bullish, but we need to see growth stocks get going and the longer-term trend turn up before getting fully bullish.

This week’s list is a good mix of stocks and sectors; we’re seeing more growth-oriented stocks begin to appear. Our Top Pick is Five Below (FIVE), a great cookie-cutter story whose stock recently reacted well to earnings. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
United States Steel Corporation (X)	0.00	15-16	13-13.5
Square, Inc. (SQ)	91.04	13-14	11-11.5
Sonic Corp. (SONC)	35.22	33.5-35	30-31
RSP Permian (RSPP)	0.00	27-28.5	25-25.5
MasTec, Inc. (MTZ)	66.65	18.5-19.5	17-17.5
Lululemon Athletica (LULU)	304.69	66-68	61-62
Michael Kors Holdings Limited (KORS)	73.22	55-58	50-51
Hewlett Packard Enterprise (HPE)	0.00	17-18	15-16
Five Below (FIVE)	134.58	39-40.5	35.5-36.5
Amedisys (AMED)	174.06	46-48	43-44

For most people, investing during a bear market is a frustrating experience. Share prices keep going down, profitable positions erode in value, new purchases become money-losers. Short upward bursts in market sentiment bring hope for a new bull market, but these fade quickly. The temptation is to sell everything and wait for better times.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the February 2024 issue.

This issue focuses exclusively on spin-offs and discusses seven attractive and relatively recently spun-off companies.

This month’s Buy recommendation, Baxter International (BAX), a major producer of medical equipment and hospital supplies, is involved in a spin-off. In this case, it is the parent company of an upcoming spin-off. The transaction, along with fundamental improvements and a long-time low share valuation, makes Baxter shares attractive.

It’s another dreaded inflation week, yet there’s not much dread in the market right now, considering the S&P 500 is up 3.75% in May and the Dow is off to its best winning streak in May ever (!). Still, a “hot” CPI or PPI number this week could prompt another pullback like we saw in April, so this week we’re playing it safe by adding a reliable, large-cap, dividend-paying healthcare stock. It’s been a longtime favorite of Cabot Dividend Investor Chief Analyst Tom Hutchinson.

Details inside.

The markets traded sideways through most of April. But since then, the choppiness has returned—along with worries about the uncertainty regarding the debt ceiling, the expiration of the immigration-limiting legislation, and ongoing debate about the possibility of a recession.

Yet, economically speaking, the trends are still healthy. Manufacturing has held up, employment continues to rise, and job openings are still underutilized (as you can tell if you’ve been in a restaurant lately!).

Thank you for subscribing to the Cabot Value Investor. The new name for the former Cabot Undervalued Stocks Advisor more clearly and broadly describes our mission to serve value-oriented investors. We hope you enjoy reading the May 2023 issue.

Fitting for a value investment newsletter, your chief analyst will be making the pilgrimage to the Berkshire Hathaway Annual Shareholders Meeting this coming weekend.

In this month’s letter, we include our recent new Buy recommendation: NOV, Inc. (NOV). This high quality mid-cap company ($7.3 billion market cap) appears to be in front of an upshift in demand for sophisticated drilling equipment even as its shares trade at a modest valuation.

We also cover earnings reports and provide other relevant updates on our recommended companies.

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.

The deep breath before a toss-up presidential election has arrived on Wall Street, with stocks barely budging in the last two to three weeks. Investors are likely prepared for either outcome but are waiting until a winner is declared before resuming this two-year bull market rally. While we wait, it’s a good time to pare down our portfolio a bit, which we do today by saying goodbye to three recent laggards. We also add a high-growth tech stock with plenty of momentum that Mike Cintolo recommended to his Cabot Top Ten Trader audience a week ago.

Details inside.

Current Market Outlook


You can blame interest rates or the Chinese or the economic cycle or politicians or even the celestial bodies, but it when all is said and done, it doesn’t matter why stocks have been struggling; the fact is that they are. And if you simply recognize that fact and accept it, then you can turn to the next step, which is to protect the profits you’ve earned in the long bull market and be selective when it comes to venturing into new stocks. That’s what Cabot Top Ten Trader is all about. The Market Monitor falls one notch lower to 5, but the ten stocks in today’s issue are still—on their own—quite attractive, plus they come from a wide variety of industries.

Our Editor’s Choice is Clean Harbors (CLH), a stock that was last hot in 2011, after which it spent nearly seven years out of the limelight. But now it’s back and the chart risk looks low.

Stock Name	Price	Buy Range	Loss Limit
American Outdoor Brands (AOBC)	13.69	14-15	13-13.5
Canopy Growth (CGC)	38.82	46-50	40.5-43
Clean Harbors (CLH)	66.42	68.5-71	63-64.5
Endo International plc (ENDP)	13.32	16-17	14-14.7
EOG Resources, Inc. (EOG)	101.98	127-131	120-122
Exact Sciences (EXAS)	116.91	67-70	62-64
Glaukos Corp. (GKOS)	67.84	58-61.5	53-55
Novocure (NVCR)	0.00	47.5-49.5	43-44
Roku, Inc. (ROKU)	150.46	63-66	58-60
Square, Inc. (SQ)	91.04	83-86	76-78

In October’s Issue of Cabot Early Opportunities we zero in on four software and internet companies that are benefiting from a variety of tailwinds, including two that are finding success after years of less-than-stellar performance. We also revisit an old MedTech friend that helps deliver drugs and vaccines around the world.

Enjoy!

Today’s recommendation is a classic steelmaker that has great growth prospects as the U.S. economy speeds along and protectionist measures improve our country’s competitive position. Also, the stock is cheap, so downside risk is limited.

The year began with five straight days of advances for emerging market stocks, which was pleasant. And the little rap on the knuckles from the market on Tuesday and Wednesday brought us back to reality without doing much damage. So the bottom line is that our stock universe is still in an uptrend and the prospects for 2018 looks just fine.

Cannabis stocks look buyable in the current weakness.

Cannabis stocks are always buyable when they are down, but there are potential near-term catalysts on the horizon. That is the case now. There are three to expect over the next few months, and possibly as soon as the middle of May.