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There is no sugarcoating it: last week was ugly for the market as the S&P 500 fell 2.3%, the Dow lost 3.1%, and the Nasdaq declined by another 2.4%. And while the market looks terrible, on a positive note, stocks had their best day of the year on Friday.

Housekeeping: With Santa coming soon, we have some changes to the schedule. Next week, we’ll have your Top Ten issue as normal—but there will be no Movers & Shakers next Friday. As for the following (post-Christmas) week, there will be no Top Ten issue on Monday (December 29), but we will do a full-fledged M&S update that day so you’re on top of things. See you Monday and good luck wrapping!

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It’s been a modestly down week for the market, with just about every major index in the red, though not hugely so, generally in the 1% range.

The volatile and sloppy start to 2025 continued last week as the indexes fell hard on Monday, recovered in the middle part of the week, and then lost ground again on Friday. For the week the S&P 500 fell 0.2%, the Dow lost 0.5%, and the Nasdaq declined by 0.5%.

This is the worst market we’ve seen in a while. And the ugliness could last a while.

Tariff talk is all the rage. The economy is slowing. Nobody is sure about inflation or interest rates. It all adds uncertainty. The market had been riding high for more than two years. A comeuppance has arrived. How long will it last and how deep will it be?

During times of maximum uncertainty like this, healthcare stocks are a great place to be. That was the topic of last month’s exquisitely crafted issue. But there is another industry with both defensive and growth characteristics that’s ideal for uncertain times – garbage.

We live in the garbage capital of the world. This country generated 292 million tons of waste in 2018, up from 251 tons in 2012, and nearly double the waste produced in 1980. That’s enough waste to produce a pile long enough to go to the moon and back – 29 times. And that’s every single year. Waste services are big business. In 2023, the U.S. waste management services industry generated $145 billion in revenue. That was up from $137 billion the prior year and that number is likely to keep rising.

Garbage will continue to pile up regardless of where interest rates go, the level of economic growth, or the fallout from tariffs. The market could soar, or the world could go to Hell in a handbag. Either way my wife will nag me every week to take out the garbage.

Bank on a company with certain earnings and revenue in uncertain times. Defensive stocks tend to outperform during and after volatile markets. In this issue, I highlight a company that is the unquestioned leader in waste services. The stock has a strong track record which could get even better in the years ahead.

Bull Market stocks are those that benefit from, and outperform during, a bull market. Here are three I like in what looks like the first leg of a bigger move.

As early as last summer, I predicted that the S&P 500 would continue rising into early 2018, then experience its overdue correction. I was about a month off on the timing. I was guessing March, but the correction arrived in February. I was right on the size of the downturn, though, almost to the penny. That was a small part technical analysis and a large part luck.

The stock market’s pullback resumed yesterday, but this still looks like a normal retreat following a breakneck four-month rally. One warning light is decreasing breadth, which suggests that when the rally gets going again, it could be driven by a smaller group of stocks.

Markets are choppy, which is normal considering uncertainty is high and we’re less than a week from the presidential election. Today I look at what history can teach us about politics and markets and why it might be a bit different this time. The Ant Technology giant IPO moves forward as China flexes its muscle, and it’s a signal for coming events. Today’s new idea is an electric vehicle play from Canada that is under the radar of even the trends of most avid supporters.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the September 30th issue.

This month we look at stocks that might benefit from the (eventual) arrival of a post-Covid world. Currently, the news seems uninspiring – new cases are accelerating in some regions that may foreshadow a return of economically-crippling lockdowns, and hopes are dimming for a vaccine in the near future.



Many stocks have surged already in anticipation of this yearned-for world, but many remain moribund. Some laggards are likely to be zombies – still alive but burdened with overwhelming debt loads. We avoided these, and instead found several that should prosper with the return of a fully-opened economy and also have more resilient capital structures to help them endure while we all wait.



We also looked at publicly-traded chicken processors and found that the sky is not actually falling, even if the shares seem to imply an atmospheric tumbling. Near-term wholesale chicken prices have become meaningfully but temporarily depressed, in our view. We highlight three stocks and discuss their risk/return nuances, along with a fourth intriguing commodity food company.



Our feature recommendation, Western Digital (WDC), trades at a depressed valuation but has major strategic changes underway.



The letter also includes a summary of our recent sale of Gilead Sciences (GILD) as well as the full roster of our current recommendations.



Please feel free to send me your questions and comments. This newsletter is written for you and a great way to get more out of your letter is to let me know what you are looking for.



I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.



Thanks!

There’s been a lot of hand-wringing about the havoc last week’s GameStop Affair wrought. I see it in a totally different light.

Rich Howe, Chief Analyst of Cabot Micro-Cap Insider, talks about the micro-cap market and how he identifies top ideas. He then profiles three stock ideas which could triple within 12 months.

Walt Disney stock has not only survived the recent market downturn, but thrived. How is it doing it? There’s one underlying reason.

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

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.

Today’s recommendation is a little-known but mature industrial company with great growth prospects. Chart risk is small, as the stock has been basing for months, but there is some liquidity risk—this is more thinly traded than any of the current stocks in the portfolio. So if you buy, buy carefully.

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!

The S&P 500 index continues to act well, rising to new highs in July, conducting a very orderly pullback in August, and rebounding in September. To my eyes, the price chart still looks strong.

The market has hit its first real rough patch of 2023, but so far the damage has been fairly limited. Still, it makes sense to add some protection, so today we’re adding a value stock that’s been one of the better performers in Bruce Kaser’s Cabot Undervalued Stocks Advisor portfolio for the past six months – but still has plenty of upside. Also, with the Stock of the Week portfolio at max capacity, we are parting ways with several positions to clear out some room for better opportunities in the coming weeks.

The market was steady this past week as the Federal Reserve completed its two-day meeting and announced plans to end its stimulus program but keep rates unchanged. Some highlights among Explorer stocks: