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Stocks made yet another new high this week.

The S&P 500 has returned 17% this year and is well on its way to another 20%-plus return year, making it three consecutive years of such returns for the first time in nearly 30 years. Sure, the market likes rate cuts, but artificial intelligence is the main force driving the market higher.

Technology stocks, which now comprise more than a third of the S&P index, have driven the market higher for most of this three-year-old bull market. While AI is the primary driver of the market, it isn’t about just technology stocks anymore. The AI catalyst is driving other sectors higher.

AI is transforming the utility sector. The best stocks now offer strong growth in addition to defense. After being stagnant for decades, electricity demand is exploding. AI requires enormous amounts of electricity for the data centers that house the computer components. Electric vehicle proliferation and rapidly growing onshoring of manufacturing are also juicing demand.

In this issue, I highlight one of the best utility stocks on the market. This unprecedented environment is transforming the market’s most defensive sector into one that also offers exciting growth. The combination of defense and growth is unbeatable.

We’re still thinking there’s a decent chance that the market’s action since May and June is part of a big bottoming process, but it’s also pretty clear that, even if that’s true, the market has more work to do—the selling of the past three weeks has erased many of the positive top-down signals from the prior month or two, with the intermediate-term trend of the major indexes pointed down, the broad market unhealthy and growth stocks in general again underperforming. We’re still aiming to hold onto resilient names, but having plenty of cash is also a must, as is staying flexible.


This week’s list has a bunch of good charts, reflecting the fact that many nooks and crannies of the market are still looking somewhat solid. Our Top Pick is a leader in a commodity niche that has a good launching pad and has come under strong accumulation.

As I mentioned in my first installment of the Cabot Turnaround Letter, the most valuable lesson I have learned in my professional career as a price forecaster is that the rate of change – of just about any metric – tells us everything we need to know about the immediate future. When the rate of change accelerates, it tends to continue accelerating. When it decelerates, it tends to continue decelerating. And the resulting push and pull is a large part of what comprises the business cycle.

“Hertz Global Holdings, Inc. (HTZ NYSE) is in the fast lane. The rental company, with a fleet of nearly 760,000 cars, operates roughly 10,400 locations in about 150 countries. Hertz also rents equipment, while a separate unit offers fleet-management services. The car-rental industry has consolidated in recent years, leaving only...

Cabot Cannabis Investor has delivered several excellent trades in the past month.

* Back on October 31 I was very bullish on the cannabis group which was weak because of the nomination of Rep. Mike Johnson (R-LA) as House speaker. He has always opposed cannabis legislation. I argued there were several other catalysts in the mix regardless of how Congress acted on legal reforms. “Cannabis stocks are a strong buy in the weakness,” I wrote.

I suggested any of the names in our portfolio, or the AdvisorShares Pure U.S. Cannabis (MSOS) exchange-traded fund (ETF) and the leveraged version, AdvisorShares MSOS 2x Daily (MSOX), for simplicity. “I am adding to MSOS and MSOX in the weakness, and I will continue to add, particularly if they get weaker from here.” Since October 31, here’s how those trades have done.

After weeks of straight-up action, leading stocks finally came under some selling pressure late last week, and it appears more selling is on the way, short-term. We’ve written that such a pullback is likely (you often see peaks and troughs near the 15th of the month of earnings season), so if you’re holding a couple of laggards, now’s the time to kick them out of your portfolio. Longer-term, however, we believe any retreat will result in buying opportunities – our OptiMo stock screening system continues to uncover a wide array of great-looking stocks with even greater-sounding stories. Thus, while you should expect some choppiness in the near-term, you should be putting money to work on weakness. Our favorite idea this week is Aecom Technology (ACM), part of the strong engineering and construction group. It’s a new issue, which helps, and looks like a good buy around here, or on a slight pullback.

Stock Name	Price	Buy Range	Loss Limit
ACM (ACM)	0.00	33-36	-
ANW (ANW)	0.00	39-43	-
CRM (CRM)	0.00	53-56	-
FLR (FLR)	0.00	145-155	-
GIGM (GIGM)	0.00	17-20	-
GOLD (GOLD)	0.00	32 1/2 - 34 1/2	-
HNSN (HNSN)	0.00	27-31	-
JASO (JASO)	0.00	45-49	-
LVS (LVS)	0.00	130-138	-
VIP (VIP)	0.00	26-30	-

Investing in up markets is easy. From the December low until recently, the strong market provided a huge tailwind that sent marijuana stocks soaring—and had our portfolio, at the peak, up 57.2% year-to-date.

It’s been a challenging year for investors in cannabis stocks, but the good news today is that with the broad market very weak as well, eventually the weakness will turn to strength—and the best of our stocks will soar.

In the meantime, our portfolio is more than a third in cash, waiting patiently for the turn.



Full details in the issue.



Yours for wealth and wisdom.

Top Stocks to Make You Money Now, Regardless of Investing Style | Nancy Zambell, Chief Analyst of Wall Street’s Best Investments and Wall Street’s Best Dividend Stocks, talked about where to make money, no matter what your investing style is. PLUS she shared the best top Growth, Value, and Income picks so far this year!

V.F. Corporation (VFC) announced the sale of Supreme, the famed streetwear brand, to EssilorLuxottica, the owner of Ray-Ban, for $1.5 billion, leading to a 13.6% surge in VFC’s shares on Wednesday. Supreme, a New York City skate shop turned global fashion icon since 1994, became renowned for its exclusive collaborations with luxury brands like Louis Vuitton and Nike. VFC acquired Supreme in 2020 for $2.1B, hoping to leverage its trendy image to boost its portfolio. However, the huge debt load and miserable margins took their toll, and by last year the company had written down two-thirds of Supreme’s value.

I’m not advising any actions before the market opens today. However, I am watching all of our stocks closely for any signs that a significant decline could reduce our gains in the short-term.

Cheap defensive stocks are poised to outperform if we see sustained market rotation, and BIPC and AMT are two good-looking choices.

We’ve previously written about small-cap stocks being historically undervalued right now, that also happens to make them attractive acquisition targets in 2023.

Much of what we believe is wrong—and it has always been so. But the sooner we discover new truths, the better.

Human genome sequencing has made huge strides in the last decade. And my two favorite sequencing stocks are 10x Genomics and NeoGenomics.

Now is an excellent time to buy undervalued Canadian stocks. Canada’s housing market and the banking sector are healthy.

The fourth stock in our Forever Stocks to Buy series is SiteOne (SITE), which looks to be the landscape supply industry’s version of Home Depot (HD).

How do you find growth companies that pay dividends? Using the Cabot resources, there are two excellent ways. One is to refer to Cabot Dividend Investor, which recommends three specific classes of stocks for its readers: High Yield, Dividend Growth and Safe Income.

For individual investors, it’s better to wait a few weeks to see what trading range the company falls into.