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I’m changing my recommendations on Dollar Tree (DLTR) to Hold; and on Big Lots (BIG), Kraft Heinz (KHC) and WellCare (WCG) to Buy.

It was a much better week for the market, and even more so our portfolio, as all but two of our existing 20 stocks were up at least 2%. Of course, there’s a lot of ground to make up from the damage done by “Liberation Day” at the start of the month, but it’s possible the market has turned a corner and a glorious month of May awaits for U.S. stocks. In case it doesn’t, however, today we beef up our overseas exposure by adding our first ETF in a while. It’s a fund just recommended by Carl Delfeld to his Cabot Explorer audience – and one that aims to take advantage of recent strength in European stocks.

Details inside.

Tariffs are here, and the market doesn’t like them. But how long are they here for? As this morning’s deal with Mexico to delay them by a month reveals, it’s possible tariffs are being used as more of a scare tactic than a permanent penalty. If so, that would be good for stocks. But the best thing to do with tariffs as an investor is to ignore them and focus on stocks that are performing well. And today, we do just that, adding a promising biotech that caught the attention of Cabot Top Ten Trader Chief Analyst Mike Cintolo.

Details inside.

It’s time to think about investing on the other side of the pandemic.

When the environment normalizes, investors will find the best opportunities in the same place they did before – technology. Growth in technology exponentially eclipses all other industries. And the pace of growth will accelerate as new and game-changing technologies are on the cusp of transforming the world as 5G continues to roll out.



Sure, the cyclical sectors are coming back. There will also be solid growth in other industries. But nothing will compare to the immense growth in technology. The sector will rule the market for many years to come.



Recent stumbles in the sector create an opportunity for the great normalization ahead. In this issue I highlight two portfolio positions perfectly positioned to benefit in both the long and short term.

It’s Fed rate-cut week. Will Jerome Powell and company come out of the gates quickly, slashing rates by a full 50 basis points, as the majority of traders now expect? Or will they start with a more sober, 25-basis point cut … which is what I expect? In the long run, it probably doesn’t matter much. But in the current market, the answer will likely determine whether last week’s bounce-back has legs – or if another October bottom is in order.

In the meantime, today we add a stock that has nothing to do with interest rates: a fast-growing water company. It’s a recent recommendation from Tyler Laundon in his Cabot Early Opportunities advisory.

Details inside.

There has been plenty of action in emerging markets recently, but today’s strong rally pushed the Cabot Emerging Markets Timer to a clear buy signal. Part of this may be the continuing effect of a great Singles’ Day splurge in China, and I write about that. We’re making some adjustments to the portfolio to put the spotlight on the winners and switch out of one laggard.

This week, we review earnings reports from Advance Auto Parts (AAP), Berkshire Hathaway (BRK/B), Dril-Quip (DRQ), Elanco Animal Health (ELAN), Fidelity National Information Services (FIS), Gannett (GCI), Macys (M), Six Flags Entertainment (SIX), Viatris (VTRS) and Warner Bros Discovery (WBD).

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.

The market has been generally very good, although it’s wobbling this week so far.

The bull market that started two years ago has returned more than 60% in the S&P 500. The index is up about 23% year to date. The market rally has also broadened since the summer to include many other stocks and sectors besides technology.

As we plow into March, the overall story remains mostly the same for the market—the primary evidence remains strong, with the trends of the major indexes up, most leading stocks in good shape and with hundreds of stocks hitting new highs.

Critical metals like copper, aluminum and even silver are commanding headlines, thanks to their uses in high-demand applications pertaining to the AI datacenter/infrastructure buildout trends. But lost in the shuffle is what some analysts are calling the “forgotten metal”—nickel. The base metal is heavily used in high-energy battery applications, including for its use in boosting range in EV lithium-ion batteries—particularly with long-range or premium vehicles—with high-nickel batteries currently dominating EV markets in North America and Europe.

In the closing days of 2020, when many people were focused on preparing for the holidays, a small software company went public through a SPAC IPO. The event occurred on December 23.

Part customer relationship management (CRM) platform, part lead generation and marketing platform, the company’s software helps home services companies grow and manage their businesses, and it streamlines the move-in and post-move journey for homeowners.



The stock represents a compelling way for investors to gain exposure to evolving consumer and business trends related to the housing market and home services, especially home inspection, moving, insurance and utility services. After a pandemic-affected 2020 growth could top 60% in 2021, then remain well above 30% for the foreseeable future.



All the details are inside. Enjoy!

The bull market rolls on, and our portfolio continues to deliver, so I continue to recommend that you be heavily invested in stocks that help achieve your investing goals.

Today’s featured stock is a big Asian consumer company that’s still growing extremely fast; in fact, revenues are accelerating!



As for the current portfolio, to keep it at our maximum level of 20 stocks, we’re parting company with little marijuana company Columbia Care (CCHWF), mainly because it’s 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 lineup of experts ready to share their best picks.

Tax-free bond funds yield peanuts these days, so if you’re trying to actually grow your money, there’s only one sensible course.

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

While the stock market continues to set new record highs, oil and gas exploration and production (E&P) companies have been left behind. Yet, at current commodity prices, which we believe are sustainable, several companies have shares that trade at surprisingly high free cash flow yields, some as high as 24%. We make our case for five stocks.



Related to this, our featured recommendation is Marathon Oil Company (MRO), a mid-cap oil-focused E&P company. Its strong fundamentals, including a high-quality asset base, strong free cash flow and a solid balance sheet, make it particularly attractive.



We highlight three former Cabot Turnaround Letter winners whose shares have retreated since our exit. These now look interesting once again.
In this issue we also discuss three one-off contrarian ideas that have considerable appeal.



During the month, we had a few ratings changes: we moved Berkshire Hathaway (BRK/B) to a Hold, and moved Albertsons (ACI) and Oaktree Specialty Lending (OCSL) from Buy to Sell.



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.

Stocks are coming off a rare down week, though the “damage” was mostly limited to last Thursday after a couple rogue Fed members came out with some hawkish quotes (though, in fairness, this happens just about every month). Still, the bull market is very much intact, and it’s a great time to go looking for growth stocks at value prices. As the new Chief Analyst of Cabot Value Investor, I just added such a stock to that portfolio, so today’s new Stock of the Week recommendation comes from yours truly. It’s a giant in the auto industry that is benefitting greatly from Americans’ burgeoning appetite for hybrid cars.

In reviewing the charts of the major U.S. stock market indexes, I noticed that the Dow, the S&P 500 and the NASDAQ each look as if somebody is slogging uphill in deep thick mud. That’s a bit like a “two steps forward one step back” pattern.

While the outlook for 2025 is positive, things are changing.

Sure, this bull market has driven the S&P 500 nearly 70% higher. But most of the gains are from technology stocks. Until this past summer, nearly all the bull market returns were driven by technology. The rest of the market had done very little.

But the rest of the market is waking up. While artificial intelligence (AI) will likely continue to be a powerful growth catalyst, its dominance over everything else might not be as pronounced in 2025 as it has been in the past. Earnings for other stocks are catching up.

The earning growth difference between the “Magnificent 7” companies and the other 493 S&P 500 companies is expected to plummet from 27.8% last year to 8.3% this year. The rest of the market is cheap, has momentum, and will likely get hot this year as stocks experience an earnings growth spike that could last for years.

In this issue, I highlight a healthcare stock that looks highly promising in 2025. It is poised in front of the aging population megatrend, which makes a successful pick so much easier, and it will likely experience a sizable earning spike in the years ahead. It is an existing portfolio stock of which half the shares were sold last year. It’s a great time to buy back the other half.

There’s one thing that common stocks and the price of oil—and virtually all other investments—have in common: their price charts. The study of price charts is called technical analysis.