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The “Dogs of the Dow” is an investing strategy that involves trading only once a year, as the calendar rolls over. Over time, the strategy has a track record of slightly outperforming the Dow itself, beating the index in 9 of the last 14 years, albeit by an average of 1%. But the strategy’s most attractive characteristic—aside from its catchy name—is its simplicity. All you do is buy the 10 highest-yielding stocks in the Dow Jones Industrial Average at the beginning of each year. Next year, you replace any stocks that are no longer among the 10 highest yielders.

Want to construct the “perfect stock”? Here are the 13 attributes to look for, according to legendary investor Peter Lynch.

With more life being digitized and automated the need for chips has never been higher. These are two of the best chipmaker stocks to buy now.

So on to the stock. To refresh your memory, Force Protection is a South Carolina company with $340 million in annual sales that makes trucks for the military ... trucks that resist the force of various explosive devices. The majority of these vehicles are bought by the U.S. government, and they’ve proven quite valuable in Iraq. Some have been sold to Canada. And last Monday the British government, which has already bought 100, ordered 140 more.

Do a little buying, but continue to keep a good chunk of cash on the sideline. The market’s evidence has definitely improved recently, though our Cabot Tides have yet to turn positive—in essence, the overall trend is neutral, though many growth stocks are setting up well.

It’s been a tough few months for cannabis investors, but no downtrend lasts forever, and yesterday’s blast-off by Aphria (APHA), which sparked buying across the sector, is a sign that the worst has almost certainly passed.

The market’s bounce off support last week was encouraging, and while we remain in a news-driven, choppy environment, our current cash level is too high given the mostly positive evidence. Thus, tonight, we’re adding two new stocks leaving us with a cash position of 20%.

The overall market continues to look good, though this week we’ve seen most growth stocks take hits as money has flowed into the broad market.

Stocks seemed to wobble a bit this week and yesterday there was a mild sell-off among some tech stocks. Still, of the 400 S&P 500 companies that have already reported earnings, 80% had beaten analysts’ expectations, according to FactSet. Overall, the Explorer portfolio has performed relatively well with Fisker (FSR) up 17% and Virgin Galactic (SPCE) doubling since the beginning of 2021. This week’s new recommendation is from a sector in an uptrend due to a combination of higher demand and tight supply.

U.S. and international markets staged a rally this week alongside momentous events in Asia as China imposes its will on Hong Kong through the passage of national security law. America indicates it will withdraw trade preferences for Hong Kong, viewing it as indistinguishable from China. China cracks down on Hong Kong as legislation advances in the U.S. to potentially delist international and Chinese companies that do not meet U.S. disclosure standards. Meanwhile, we have a new recommendation this week that has been in the news regarding Covid-19 and how we should all look at the economics of discovering new drugs.

This stock and its peers are experiencing a game-changing situation within its industry. The stock therefore deserves a second look by growth investors.

Traders will be happy to see this stock joining the Buy Low Opportunities Portfolio for the third time in less than a year. Let’s see if we can accomplish a trifecta!

Current Market Outlook


During the last couple of weeks of August, more stocks, sectors and indexes were getting in gear, which was a change from the past few months of whippy crosscurrents. But as September has progressed, it looks like we’re still in the same overall environment—growth stocks, indexes and funds have again taken hits while some cyclical/value areas have perked up. That’s not necessarily a negative (at least to this point); as we wrote last week, some retrenchment among extended growth stocks was half-expected, and even if it wasn’t, the action is more a confirmation that the choppy environment is still intact, not that the sellers are truly taking control. Long story short, we’re still sticking with the same game plan as the evidence remains unchanged—we’re more bullish than not, but booking partial profits into strength, raising stops as things head higher and aiming to enter on dips is the right way to go.

This week’s list is lighter on growth stocks than in recent weeks, reflecting some of the dents they’re taking, but there are many other names that look to be resuming their advances. Our Top Pick is Antero Resources (AR), which looks like the best play in the natural gas space. Aim to enter on dips.

Stock Name	Price	Buy Range	Loss Limit
Antero Resources (AR)	17	15.4-16.1	13.8-14.2
Celsius Holdings (CELH)	87	84-88	73.5-75.5
DOCN (DOCN)	76	69-73	58-60
ICU Medical (ICUI)	240	233-243	215-220
Innovative Industrial Properties (IIPR)	228	222-230	209-212
MongoDB (MDB)	485	460-475	408-420
Pure Storage (PSTG)	26	25-26	22.5-23
SBLK (SBLK)	24	23-24.5	19.5-20.5
Teck Resources Limited (TECK)	25	23.5-24.5	21.5-22
Varonis Systems (VRNS)	68	65.5-68	59-60

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.

NOTE: A couple of things. First, we’re sending this update a day early, as the Friday holiday is pushing up our publishing schedule by a day. And second, I’m actually out of town on vacation, so while we’re sending this update this morning, we’ll follow up with a bulletin tomorrow morning if need be. If we’re not in touch, have a great holiday weekend!

WHAT TO DO NOW: Remain bullish but take things on a stock-by-stock basis. The overall market is in fine shape, but Tuesday saw a lot of selling in growth stocks as investors rotated into stodgy areas (Dow Industrials and defensive stocks). For now, the action is broadly acceptable, but the next few days will be key. Today, we are making some small changes: We’ll place Axon (AXON) and Rubrik (RBRK) on Hold and we’re going to sell one-third of our remaining position of Palantir (PLTR), leaving us with around 23% in cash.

For the second straight week the leading indexes went in vastly different directions as the S&P 500 fell 0.6%, the Dow lost 1.9%, and the Nasdaq gained 1%.

Despite some wobbles early in January the S&P 500 closed at a new all-time high on Thursday. And even though the indexes pulled back marginally on Friday, by week’s end the S&P 500 had gained 1.7%, the Dow had rallied 1.83% and the Nasdaq had added 1.53%.

Despite some wobbles early in January the S&P 500 closed at a new all-time high on Thursday. And even though the indexes pulled back marginally on Friday, by week’s end the S&P 500 had gained 1.7%, the Dow had rallied 1.83% and the Nasdaq had added 1.53%.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the March 2021 issue.

This month we look at post-bankruptcy energy stocks. Companies that have emerged from bankruptcy are generally shunned by investors, as are energy stocks in general in the current market. Combined, these two traits offer some attractive investment opportunities. We discuss four of them.



We also look at tobacco stocks. Shares of these companies have fallen sharply in recent years due to an acceleration in the decline rate of cigarette volumes. However, that trend appears to be moderating, leaving the shares undervalued yet paying high dividend yields. Our feature recommendation, Altria Group (MO), is a stand-out value among the group.



We also include comments on recent price target and rating changes, including our recent Sell recommendations on Trinity Industries (TRN) and ViacomCBS (VIAC).



Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your letter is to let me know what you are looking for.



I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.