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Almost everywhere in the mainstream media and across most Wall Street research firms, there is a common implication that a recession will bring a bear market for stocks.

In the March Issue of Cabot Early Opportunities we spread things around with a diverse group of mid-caps, plus one large cap from our Watch List that’s one of the biggest stories in MedTech.

As always, there’s something for everybody.

Enjoy!

An option is a binding, specifically worded contract that gives its owner the right to buy or sell an underlying asset at a specific price.

Today’s note includes an update on Wells Fargo’s (WFC) earnings. There were no ratings changes.

Thank goodness; the shutdown is over!

And that agreement (although not really agreeing on much!) has helped the markets to continue their upward momentum, albeit with a few hiccups. All eyes are on the Fed, as I write this, with expectations that it will once again lower rates by a quarter of a point.

Emerging markets are seeing a boost from positive news out of Hong Kong and on the U.S.-China front. Our Emerging Markets Timer has raced higher in recent days, putting it within striking distance of a new buy signal. Our new recommendation comes from an unexpected country, but a well established semi-monopoly industry.

Anadarko Petroleum is weighing two substantial buyout offers. The outcome has ramifications for all three public companies. Are any of them worth buying?

Last week, Apple presented the bad news that iPhone sales growth has been slowing, and the stock gapped down in response. AAPL is now 29% off last year’s high (hit in April), and more and more investors are wondering what they should do with Apple—buy, hold or sell.

The much-anticipated Santa Claus rally has yet to materialize on Wall Street, though at least the recent losses mostly stopped for the indexes last week. The S&P 500 was virtually unchanged, the Dow gained 0.88%, and the Nasdaq fell 2.5%.

The much-anticipated Santa Claus rally has yet to materialize on Wall Street, though at least the recent losses mostly stopped for the indexes last week. The S&P 500 was virtually unchanged, the Dow gained 0.88%, and the Nasdaq fell 2.5%.

In light of the House tax reform bill, one thing you can do is hold onto a bunch of small-cap stocks, since they have a far higher average tax rate than large caps, and stand to benefit more from a corporate tax cut.

Current Market Outlook


It certainly hasn’t been a buying panic, but last week was another step in the right direction, with growth stocks avoiding selling pressure even as they approach (or in some cases, sneak out to) new highs—a marked change in character from the prior few weeks. There’s still some iffy pieces of evidence out there, including sentiment (complacent), volume (extremely light) and even some of the broad market (materials and energy stocks are beginning to lose some steam), but overall it appears that the sellers have run out of ammunition for the time being. If the buyers can really show up, we could see some solid breakouts going ahead. For now, we’re leaving our Market Monitor at a level 6, but another good week may change that.

This week’s list has a bunch of good-looking charts, most of which have a solid growth story. Our Top Pick is United Therapeutics (UTHR), which recently staged a big-volume breakout on news.

Stock Name	Price	Buy Range	Loss Limit
Acuity Brands (AYI)	173	162-167	145-148
ASML Holding (ASML)	630	605-620	550-560
Boot Barn (BOOT)	67	64-67	58-60
Boston Beer Company (SAM)	1,261	1,200-1,30	1,090-1,110
The Goodyear Tire & Rubber Company (GT)	18	17-18	14.5-15
Pinterest (PINS)	84	80-84	71-73
Sally Beauty (SBH)	21	19.5-20.5	17-17.5
SiteOne Landscape Supply (SITE)	182	174-178	160-162
United Therapeutics (UTHR)	199	192-202	172-177
Yeti Holdings (YETI)	84	81-85	72-74

The markets have continued to flirt with new highs—pulling back and then moving forward—for the past month.

The Fed’s 50-basis-point rate cut inspired investors, home buyers, and those folks wanting to refinance their homes. The Mortgage Bankers Association reported that refinancing applications rose 20% right after the rate cut!

FTAI Aviation (FTAI) Reports