Search

Those of us who work the growth investing side of things here at Cabot certainly enjoy the stock selection process.

After years of being either ignored or sold off, value stocks are finally having a moment on Wall Street. The Vanguard S&P 500 Value Index Fund (VOOV) is up 25% in the last five months and is actually outpacing growth titles over the last month. Still, it’s a bull market, and growth stocks are king. How to compete as value investors in a growth-minded market? By seeking growth stocks at value prices.

Today, we do just that, adding a household name that’s been rejuvenated thanks to a shift in industry trends. The stock is up 18% year to date, and yet its shares remain dirt cheap by virtually every measure.

Enjoy!

In choosing today’s stock, I deliberately looked for one that was not hitting new highs, a stock with limited downside. And what I found was a stock that came public recently—to great fanfare—but that has since cooled off and settled down to what I believe is a buyable bottom.

The market continues its good news/bad news behavior, with emerging market stocks as a whole not doing well but Chinese stocks performing strongly. So, while we don’t have a formal Buy signal, we’re taking advantage of Chinese strength to inch a little deeper into the market. Today’s featured stock is another old friend that we’ve made money on before that has broken out of a nice consolidation pattern.

Today’s recommendation is a stock that you may never have heard of, and there are pros and cons to that. But it will certainly bring diversification to the portfolio, and I leave it to you to decide if the stock is right for your portfolio as well.

Current Market Outlook


If you look at the weekly charts, the trends of the major indexes and most stocks are pointed up—i.e., this is still a bull market, and the trends and other factors (such as the unusual strength seen two weeks ago) portend higher prices down the road. That said, there’s no question the environment remains extremely news-driven (mostly with vaccine news, but also economic reports and government policy outlooks), with plenty of crosscurrents depending on the day. Encouragingly, today’s vaccine news didn’t dent the growth leaders like it did a week ago, which is a step in the right direction. Net-net, we remain optimistic, but the details remain vital; getting decent entry points and position sizing correctly (not too big so you can handle the swings) is key, as is focusing on stocks (cyclical or growth) that have shown good-volume support of late.

This week’s list has something for everyone, including stocks with fresh growth stories as well as some stodgy, cyclical names. Our Top Pick is Lam Research (LRCX), which looks like a leader in the resilient chip equipment sectors.

Stock Name	Price	Buy Range	Loss Limit
Albemarle Corporation (ALB)	128.90	121-126	106-109
Canopy Growth (CGC)	24.77	23.5-25	19-20
Lam Research (LRCX)	439.40	415-435	375-385
Marvell Technology Group (MRVL)	43.29	41.5-43.5	37.5-38.5
Norfolk Southern (NSC)	247.09	235-245	215-220
ShockWave Medical, Inc. (SWAV)	94.95	87.5-91	75.5-78
Snap Inc. (SNAP)	39.08	37.5-39.5	31.5-33
STAAR Surgical (STAA)	79.31	76-79.5	67-69
The Timken Company (TKR)	73.04	69-72	61-62.5
Upwork (UPWK)	33.08	29.5-31	24-25

I’m a value investor at heart. But sometimes it pays to invest in stocks with plenty of momentum. This micro-cap stock fits the bill.

Wait three days to buy WYNN stock or one of the three other stocks that crashed last Thursday, chances are you’ll get them when they’re back on the uptick.

My kids are a) aware of “cool” trends well before I am, and b) getting interested in money and investing. We put both those factors to the test by giving them money to invest in these stocks.

Some very wise market experts say market timing is foolish, and that buy-and-hold investing is the way to go. Here’s why that’s wrong.

This week I’m adding American worldwide manufacturing services company Jabil (JBL) to the portfolio.

It’s been yet another mildly positive week for the major indexes, with just about everything up in the 0.5% to 1% range coming into Friday. Once again, that keeps the intermediate-term trend of the market pointed up, which, combined with the many other positive current (broad market healthy, defensive stocks lagging) and big-picture (blastoff indicators flashing green from May and June) measures, the path of least resistance remains up.

The S&P 500 broke back above the 6,000 level for the first time since February last week as the indexes are now within striking distance of their all-time highs (though they do have some work to do). By week’s end, the S&P 500 had gained 1.5%, the Dow had rallied 1.2% and the Nasdaq had advanced by 2.2%

The recent bull run continued last week, this time led by Small Caps (IWM), which gained 3.5%, followed by a gain of 2.3% for the Dow, and 1.7% for both the S&P 500 and Nasdaq.

Before we get into this week’s covered call idea, we have two positions we need to address coming out of expiration Friday.

Because the market has somewhat lost its momentum recently, we are going to exit our WDC and WSC stock positions, as the March calls we sold expired worthless on Friday.

The market’s momentum continued last week as a benign inflation print and another round of solid earnings backed up bullish sentiment—with virtually all of the major indexes moving higher. For the week the S&P 500 rose 0.7%, the Dow Jones Industrial Average advanced 0.8%, the Nasdaq Composite jumped 2.2%, but the Russell 2000 slipped 1.4%.

Before we dive into this week’s covered call idea, we need to clean up a couple positions from the October expiration cycle.

Before we dive into this week’s covered call idea, we do need to clean up our CENX position from the November expiration cycle, as the call we sold expired worthless, leaving us with our stock, which we will sell for a net virtual breakeven. Here are the details:

Risk off was the theme last week as traders are once again worried about sticky inflation, and now there is growing fear of further war in the Middle East. And while those are two big worries, big picture it wasn’t a terrible week for the indexes as the S&P 500 and Nasdaq both fell 1.6%, while the Dow lost 2.36%