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Everybody (including me) loves Warren Buffett. He’s rich. He’s a major philanthropist who actively exhorts other rich people to give away their money. And he looks like an ideal grandfather ought to look: gray, smiling and enjoying life. But I do think Warren Buffett has a little bit of a regret, and it’s this ...

Cannabis stocks have been in a sell-off since February of last year. Here are the 3 most important factors to focus on when they turn around.

Today we’re jumping into an emerging precision oncology company that is on the cusp of a major Phase 3 data release for a potential best-in-class treatment for rare eye cancers.

The company also has a stacked pipeline of other potential assets and has teamed up with some of the best in the business as it looks to transition from a clinical-stage company to a full-on commercial success.

Suffice it to say, the risks are somewhat higher with a stock like this, given that FDA approval, or denial, will have a major short-term impact on share price performance.

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

It’s Trump Week, and stocks are in a holding pattern until the 45th President is sworn in this Friday. In fact, stocks have scarcely budged for the past month on the heels of the furious post-election rally.

Stocks are finally showing signs of life after a brutal August, and many of our Stock of the Week positions have fared even better than the market of late. Don’t expect much movement this week as investors will likely play out the summer string until they lock in after Labor Day. Will the (modest) recent gains hold in September, notoriously the weakest month on the investment calendar? We’ll start to find out next week. In the meantime, we won’t try and do too much, which is why today we’re adding a solid-if-unspectacular big-cap retailer that has a habit of beating the market. It’s a new addition from Cabot Dividend Investor Chief Analyst Tom Hutchinson.

It was a pretty quiet week with most of our stocks up in the 3% -5% range. There are no changes to the portfolio.

After a two-week rally, the major indexes pulled back yesterday, but the retreat isn’t surprising given the market’s recent gains. The last two weeks have turned the market’s intermediate-term trend up, and conditions are in place for a sustained rally. Most importantly, the major indexes have now successfully (meaning they bounced) re-tested their correction lows three times since the start of the year.

Current Market Outlook


For the third straight Monday, Greece caused the market to gap sharply at the open, this time on the upside as a deal in Europe is coming into view. The snapback from last week’s panic has been excellent, and we’re especially pleased to see many resilient, growth-oriented stocks spike to (or close to) new highs. That said, even after the past two days, the major indexes are still hovering near their 50-day moving averages, and it’s obvious that news is driving the market on a day-to-day basis. Throw in the fact that earnings season is about to rev up, and we’re sticking with a relatively neutral stance—focusing on the strongest stocks makes sense, but so does holding some cash and ditching any broken stocks.

This week’s list has a group of names that should do well if the market’s recent strength develops into a sustained uptrend. Our Top Pick is old friend Illumina (ILMN), which is emerging from a very long sideways phase. Start small, and look to add shares if the stock reacts well to earnings next week.

Stock Name	Price	Buy Range	Loss Limit
WhiteWave Foods (WWAV)	0.00	48-50	46-47
Ulta Beauty (ULTA)	331.95	161-164	153-154
Tyler Technologies (TYL)	0.00	135-140	125-127
Tesoro (TSO)	0.00	95-99	89-90
RH Inc. (RH)	252.93	96-100	92-93
Nordic American Tankers (NAT)	0.00	14-15	13-13.5
Neurocrine Biosciences (NBIX)	123.40	47-50	42-43
Meritage Homes (MTH)	102.20	48-49.5	44-45
LifePoint Hospitals (LPNT)	0.00	85-87	77-78
Illumina Inc. (ILMN)	289.74	215-220	205-209

This month we’re going with a small software company serving a resilient industry that has been slow to adopt to cloud technology, but which is coming on strong now.

Despite the tough macro environment this company has been beating expectations for many quarters. Management has been raising revenue guidance too, and a tweak to the business model is starting to pay dividends.

Enjoy!

We’ve studied the characteristics of bull and bear markets going back decades, and we know that bear phases often end with big selloffs caused by scary, headline-grabbing news. The Bear Stearns debacle certainly qualifies, and this financial panic could result in a sustainable low. So if you have a huge cash position (60% or more of your account), buying a few shares here or there could work out well. Just be sure to stick with what’s working–namely oil and natural gas stocks, as well as some steel names that are acting better–and remember to cut all losses short. Overall, you should stay in a mainly defensive posture until we see real signs of improvement. Our favorite stock this week is Steel Dynamics (STLD). The company raised its earnings guidance last week and the sector as a whole seems to be gaining sponsorship. We think you can buy a little on weakness.

Stock Name	Price	Buy Range	Loss Limit
DVN (DVN)	0.00	97 1/2 - 101 1/2	-
EAC (EAC)	0.00	35 1/2 - 38 1/2	-
HLF (HLF)	0.00	43-46	-
NFLX (NFLX)	0.00	31-33	-
NUE (NUE)	0.00	66-70	-
SLW (SLW)	0.00	17 1/2 - 18 1/2	-
STLD (STLD)	0.00	62-65	-
SWC (SWC)	0.00	15 1/2 - 18	-
SWN (SWN)	0.00	62-66	-
WDC (WDC)	0.00	29-31	-

Note: This is our final issue of Cabot Stock of the Week this year. Next week we get a little “vacation.”

But rest assured we’ll be keeping an eye on the market, where market trends remain very positive as we head toward the end of the year.



Today’s recommendation is a low-risk water company in a foreign country, so it may be the perfect diversification move if you’ve got a lot of U.S. growth stocks.



But to fit it into the portfolio, we’ve got to sell something, and the victim this week is Eli Lilly (LLY), which has brought us a decent profit in a fairly short time.



Full details in the issue.

Two companies with low price-to-book value ratios selling at bargain prices are discussed.

AI has been the dominant narrative on Wall Street for over a year now, but are we in the midst of an artificial intelligence bubble?

“The Wheel” is an income-producing options strategy that can be used indefinitely on stocks you’re bullish on to generate income without taking on added risk.

Enovix (ENVX) reported yesterday after the close, and once again the financial results are way down the list in terms of what matters most, for now. It’s all about executing the ramp-up to full-scale production, securing customer orders, and continuing to develop batteries that major electronics manufacturers will qualify for their devices and then order in mass quantities.

DeepSeek: “Gift to the World” or Nightmare for U.S. AI Ambitions