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Our national high-interest-rate nightmare is over, as the Fed has (finally) started slashing short-term rates in a big way, cutting by 50 basis points last week. The market likes the aggression, sending two of the three major indexes to new all-time highs. Is it the beginning of a new – and more egalitarian – leg of the bull market? Could be. Regardless, let’s strike while the iron is hot, adding shares of the leading company in one of the hottest new U.S. markets: sports betting. It’s a recent recommendation from Mike Cintolo in his Cabot Top Ten Trader advisory.

Details inside.

While emerging markets stocks have been mostly going sideways, there are always opportunities to find stocks on the upswing or high quality companies that have pulled back but present “catch up” potential.

Our new recommendation is from the latter group and is a name most members will know well.

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.

A 3x ETF magnifies returns, both good and bad, but should you make room for them in your investment portfolio?

Current Market Outlook


The market’s meltdown today cracked the intermediate-term uptrend that got going back in January, with all major indexes (and many leading stocks) closing well below their 50-day lines today. Big picture, we still see this as a bull market, so we’re still OK holding most of your shares in your strong, profitable stocks; encouragingly, despite taking on water, many stocks are still hanging in there. That said, you also shouldn’t be complacent—after four months with no meaningful pullbacks, it’s likely (not for sure, but likely) the market needs more than six trading days to consolidate the January-April advance. In a nutshell, you should keep tight stops in place on losers and laggards, give your profitable names a bit more rope and, on the buy side, be very selective and/or keep positions small. We’re moving our Market Monitor down to a level 5.

Interestingly, this week’s list is very heavy on growth-y names despite the market’s plunge. Our Top Pick is Match.com (MTCH), which has a great long-term story, and the stock has re-emerged after earnings.

Stock Name	Price	Buy Range	Loss Limit
Avalara (AVLR)	102.00	64.5-67.5	56-58
HubSpot (HUBS)	582.89	170-175	157-160
Lithia Motors Inc. (LAD)	146.30	107-111	97-100
Match (MTCH)	0.00	66-69	58-60
PayPal (PYPL)	147.00	105-107.5	98-100
Roku, Inc. (ROKU)	150.46	74.5-77.5	64.5-66
Tandem Diabetes (TNDM)	74.77	60-63	54-55.5
Teradyne (TER)	82.83	44.5-46.5	42-43
TopBuild (BLD)	111.00	77.5-81	70-72
Woodward (WWD)	111.91	105-108	95-97

I’ve mentioned a few times this year that I expect the shortage of truck drivers in the U.S. to be the lynchpin in the current economic cycle’s eventual inflation surge. Now that Wal-Mart (WMT) is publicly discussing their driver shortage, let’s review this theory.

Chinese stocks were hit this week both on American exchanges and overseas as Chinese regulators ratcheted up the pressure through antitrust and regulatory steps that caught many executives and investors off guard. The Golden Dragon index of Chinese technology stocks fell by 15% in two days before rebounding after regulators tried to reassure markets.

The Dow Jones Industrial Average celebrated 125 Years yesterday as the index has increased an average of 7.7% each year. Markets continue to consolidate and churn with solid earnings offsetting concerns over inflation and valuations. This week Virgin Galactic (SPCE) took off while overall Explorer positions moved forward. Today’s new recommendation is a big data software stock that is in an uptrend on the back of some big government contracts. Enjoy!

We’re still in the midst of a market correction that began in late January. I consider this correction to be perfectly normal, and unrelated to politics, economics, natural disasters or war. In short, the stock market rose for 15 months without resting, and it was overdue to rest. Sometimes things really are that simple.

Today’s addition is a profitable small-cap MedTech company specializing in products to treat peripheral nerve injuries.

Management has a number of growth-oriented irons in the fire. And I think the company could be an attractive acquisition target.

While the sock has been relatively stable in this increasingly volatile market, we’ll still start with a half-sized position, just in case.

The major indexes continue to hover near all-time highs, even as more issues beneath the surface crop up. Another strong earnings season, dwindling U.S.-China trade tensions, and another interest rate cut are helping prop stocks up, even as volatility begins to creep higher again. So today, to account for a possible pullback, we opt for a stock that’s a household name but one that has become so undervalued that Clif Droke just added it to his Cabot Turnaround Letter portfolio.

Details inside.

The bull market remains intact, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.

Today’s featured stock is in the semiconductor industry, which as we all know, is enjoying great demand in a supply-constrained world.



As for the current portfolio, most of our stocks look good, but Progyny (PGNY) is a sell, simply because it is our biggest loser.



Details inside.



Lastly, I hope you’ll join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible line-up of experts ready to share their best picks.

It started off as an ugly week for the market. But things have gotten better. Stocks flirted with the recent low on Monday but held strong and recovered. That’s a good sign. But is it enough?


Big tariff news is on the doorstep. Uncertainty abounds. It is unclear yet how many countries will be included in the reciprocal tariffs scheduled to take effect today and to what extent there will be exceptions. The market may be happier about things by the end of the week. But if it isn’t, stocks might go lower again.

I’ve been watching for opportunities to add companies to the Cabot Undervalued Stocks Advisor portfolios that are outside the financial, energy and construction sectors and industries. Today, I’m adding an aerospace manufacturer to the Growth Portfolio as a Strong Buy.

Buy Second Half Reddit (RDDT)

Explorer stocks, with the exception of Neo Performance (NOPMF), held their own in a difficult week. The market concerns center on the impact of high interest rates and mortgage rates on consumer spending, investment, and economic growth.

The bull market remains intact, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.

Today’s featured stock is one of my favorite kinds of stocks—a small company that’s not well known but that’s growing fast by making a big difference in a global marketplace.



As for the current portfolio, most of our stocks look good, and many are hitting new highs, but I have two sells, Five Below (FIVE) and Molson Coors (TAP).



Details inside.

If you want to build a buy-and-hold portfolio of attractive takeover targets, look no further than undervalued small- and mid-cap growth stocks. Presuming normal stock market action, you’ll reap the benefits associated with owning growth stocks, and you’ll periodically reap the additional exciting benefit of owning takeover stocks.