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Last week, The Priceline Group (PCLN) reported fourth-quarter 2015 results that surpassed market earnings per share (EPS) expectations, while Boise Cascade (BCC) reported fourth-quarter 2015 results that disappointed the market. I’m raising the ratings on Carnival (CCL), D.R. Horton (DHI) and Royal Carribean Cruises (RCL) to Buy. I’m lowering the rating on Boise Cascade (BCC) to Hold.

U.S. stock markets continue to suffer, revisiting lows from October and November. We could see modest improvement through year end, but I don’t expect a strong stock market rebound until at least January.

U.S. stock markets continue to suffer, wiping out year-to-date gains that had previously culminated in all-time-high prices on the S&P 500, Dow Jones Industrial Average and NASDAQ indexes. If you’re looking for “the bright side” of this dour news, take heart that none of these market indexes have retraced their early-2018 lows.

We summarize our recent monthly edition of the Cabot Turnaround Letter as well as the Catalyst Report,
provide comments on our companies that reported earnings or had other meaningful news. Also, some thoughts on the war in Europe.

Yesterday, while reviewing my entire Buy List, I noticed that the insurance/annuity and investment stocks appear ready to begin new run-ups, after resting for a few days.

The market was hit hard last week, so all trends are down, and increased caution is advised.
In the portfolio this week, we’re selling four stocks, which will both reduce risk and raise cash.


As for the new recommendation, it’s one of the world’s leading uranium companies, which has a great growth story thanks to growing negative attitudes toward Russian energy and growing positive attitudes toward carbon-free energy.


Details inside.

While there’s a very possibility of a good market bounce after last week’s washout, the overall picture is still very weak and thus continued defensiveness is still advised.
This week’s recommendation is the world’s largest manufacturer of industrial robots, yet most U.S. investors don’t even know its name. It looks like a great low-risk buy here.


As for the portfolio, we’re selling one stock, a small company in the beleaguered technology sector.


Details inside.

In this Month’s Issue of Cabot Early Opportunities I discuss one simple way to measure how much a given stock will move relative to the market. I also feature five stocks, from quite small to larger than we normally go. All have something different going for them. We are tilted toward software names this month, though I round things out with another solar name and an emerging biotech opportunity.

There is tremendous growth ahead for technology. There will be incredible opportunities to invest. While you probably don’t associate technology stocks with a dividend newsletter, things are changing. In this issue I identify a technological behemoth that is now a blue chip dividend payer. Its products are so widely used that owning the stock provides a great way to play the technology revolution in general and gain exposure to the explosive growth.

The broad market remains in fine health, with all major indexes trending higher and sentiment measures still telling us this market has not yet reached the stage where amateurs are sucked in to buying at the top. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks that fit your investment needs.

However, I will note that the fact that the Cabot Stock of the Week portfolio is now full, and that it is difficult to choose a stock to sell, is a sign that, at least in the short term, the market is high and thus ripe for a correction. If that makes sense to you, you might want to hold off on new investments.

In any case, today’s recommendation is a true diversification play, a small but high-potential Indian company that is destined to benefit from that country’s growth and the growth of tourism in the years ahead.

The broad market remains in fine health, with all major indexes trending higher and sentiment measures telling us this market has not yet reached the stage where amateurs are sucked in to buy at the top. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks that fit your investment needs.
Today’s recommendation is a very large company in an industry that has major ebbs and flows due to circumstances that are beyond this company’s control. But right now, conditions are excellent, and the 4.3% yield is an indication that the stock is cheap as well.
As for the other stocks in the portfolio, they look great, with six at or near their all-time highs. Details inside.

The market environment hasn’t changed much during the past couple of weeks; the intermediate-term trend of the market is down, and few stocks are managing to make meaningful progress on the upside. That said, it’s also not a disaster out there; some growth stocks have been hammered, but many groups are holding up well and most indexes are just a few percent off their peaks. Of course, the U.S. elections are tomorrow, and it’s possible the results could change the market’s course. But right now, we’ll keep our Market Monitor in neutral territory as the sellers remain in control.

This week’s list is a bit of a hodgepodge of stocks and sectors, but most of the names have recently reacted well to earnings, which is always a positive clue. Our favorite of the week is Whirlpool (WHR), a turnaround stock that is showing exceptional strength. It’s not changing the world, but the numbers look outstanding. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
WPI (WPI)	0.00	84-86	-
Whirlpool (WHR)	0.00	94-98	-
Affiliated Managers Group, Inc. (AMG)	0.00	124-128	-
CommVault (CVLT)	0.00	62-64	-
Eastman Chemical (EMN)	0.00	57.5-59.5	-
Expedia Group (EXPE)	0.00	58-59.5	-
GameStop (GME)	0.00	23-24.5	-
Louisiana-Pacific (LPX)	0.00	15.5-17	-
NXP Semiconductors (NXPI)	0.00	24.5-25.5	-
PVH Corp. (PVH)	0.00	105-110	-

The past three weeks have done a lot to improve the market’s stance, in our view. At long last, the action of the indexes and most potential leaders has tightened up; no longer are names gapping up or down randomly based on overseas news. And this tightness has, in the case of many stocks, come after a period of accumulation. In other words, we’re seeing a change of character for the good—it looks like many stocks are poised for a move higher. Until that move really begins, we’ll leave our Market Monitor in neutral territory ... but be sure to have your shopping list ready should the bulls flex their muscles.

This week’s list continues the string of high-potential stocks that are either finishing up their base-building work, or have already pushed to new highs ahead of the market. Our favorite is Verisign (VRSN), a steady growth play as the leading Internet domain registrar. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
Express Scripts Holding Company (ESRX)	79.25	59-61.5	-
Five Below (FIVE)	134.58	30-32	-
Mindray Medical (MR)	0.00	33.5-35.5	-
Ocwen Financial (OCN)	0.00	21.5-23	-
Pharmacyclics (PCYC)	0.00	54-56	-
Rackspace (RAX)	0.00	51-53	-
SeaDrill Limited (SDRL)	0.00	38-39.5	-
Team Health Holdings (TMH)	0.00	25-27	-
VeriSign (VRSN)	190.71	44.5-46.5	-
Weyerhaeuser (WY)	0.00	23-24	-

The market bolted ahead last week, cheered by news that the Federal Reserve was joining the European Central Bank in embarking on new money-printing programs. The strength was so broad, in fact, that we saw nearly 750 stocks on the NYSE and Nasdaq hit new 52-week highs on Friday, the highest level since early 2011. In the long run, such strength usually portends more strength; uptrends don’t up and die after exhibiting so much momentum. Short-term, however, the market almost always has a digestion phase after such a powerful romp; we don’t expect a huge, punishing retreat, but we do think patience could pay off with many stocks during the next couple of weeks. Bottom line: You should remain bullish, but keep your feet on the ground and look for advantageous entry points.

This week’s list has a heavier commodity flavor than we’ve seen in some time—that’s not a surprise given the central bank action. Our favorite of the week is Silver Wheaton (SLW), a unique silver firm that owns stakes in many mines. With precious metals back in favor, we think buying SLW on weakness will pay off.

Stock Name	Price	Buy Range	Loss Limit
ANN (ANN)	0.00	36–38-	-
Cameron (CAM)	0.00	56.5–58-	-
The Gap, Inc. (GPS)	0.00	33.5–35-	-
Lululemon Athletica (LULU)	304.69	75–77.5-	-
Martin Marietta Materials (MLM)	261.52	85–90-	-
NXP Semiconductors (NXPI)	0.00	24.5–26.5-	-
Pioneer Natural Resources (PXD)	0.00	109–113-	-
PulteGroup (PHM)	45.93	15–16-	-
Rackspace (RAX)	0.00	62–65-	-
Silver Wheaton (SLW)	0.00	36–38-	-

In addition to a detailed explanation of the market’s moves and our portfolio’s holdings, we write about the puzzling failure of the average investor to take part in the equity rally and how to handle stocks around their Initial public offerings.

In today’s issue, I add a mid-cap tech stock to the Dividend Growth tier, provide updates on all our holdings, and share some of my favorite investment resources.