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After surging to new highs in mid-March, today’s recommendation entered into a tight consolidation pattern—and today it’s still in that pattern! While the broad market has pulled back, this stock has held up strongly, which is a very good sign.

In choosing today’s recommendation, I returned to a sector that was white-hot a few years ago, bringing big profits to investors who got out before the sector collapsed. But now the sector is back in favor and my selection is the leading Chinese stock in the industry.

Like many coffee aficionados, I have something of a love/hate relationship with Starbucks (SBUX). My main gripe is that the company’s food and beverage offerings have always been pricey compared to the fare served in most fast-food restaurants and run-of-the-mill coffee houses.

Just when the market appeared vulnerable to selling pressure, news from an unexpected source rode to the rescue, lifting stocks.

On Tuesday, the Labor Department announced that inflation rose 2.7% in July from a year earlier, which was the same as the previous month and up from a post-pandemic low of 2.3% in April. “Excluding the volatile food and energy categories, core prices rose 3.1%, up from 2.9% in June,” according to the Associated Press.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Agnico Eagle Mines (AEM), Alcoa (AA), American Airlines (AAL), Berkshire Hathaway (BRKB), Brookfield Wealth Solutions (BNT), GE Aerospace (GE), Pan American Silver (PAAS), Starbucks (SBUX) and Toast Inc. (TOST).

May the buyouts begin. Poor sentiment has pushed the values of cannabis companies so low, the strong are now buying the weak. Like the recent cannabis company insider buying, this is a signal that valuations may be close to bottoming here.

However, realistically, it could be a while before the sector recovers since we are dependent on politicians for progress.

If your portfolio is full of growth or materials stocks, you’re likely a happy camper, as these types of issues are being gobbled up by institutional investors these days. Indeed, we’re glad to see the Nasdaq – a good representation of growth stocks – outperforming the broader S&P 500, a sign that investors are growing more bullish. That’s a good sign for the market as a whole, but remember that with a new quarter underway, earnings season is about to begin, so be prepared for increased volatility (both upside and downside) going forward. This week’s Top Ten contains something for everyone, whether it’s China, oil, chips or even engineering and construction. Our favorite of the week is Focus Media (FMCN), a great growth company that just leaped out from a nice basing structure. It’s already reported earnings, and we think you can buy a little on weakness.

Stock Name	Price	Buy Range	Loss Limit
Aecom Technology (ACM)	0.00	30-35	-
CMED (CMED)	0.00	40-44	-
Crocs (CROX)	0.00	65-67	-
New Oriental Education (EDU)	113.97	62-65	-
Focus Media Holdings (FMCN)	0.00	53-58	-
Flotek (FTK)	0.00	40-44	-
HANS (HANS)	0.00	52-55	-
OMTR (OMTR)	0.00	27-30	-
OmniVision (OVTI)	0.00	21-23	-
VeriFone Systems, Inc. (PAY)	0.00	42-44	-

The bull market is alive and well, and our holdings, in general, are delivering as expected, with the usual zigs and zags to keep us on our toes.

Today’s recommendation is a big solid technology company that should benefit for years from the ongoing 5G communications rollout—and it pays a nice dividend, too.



As for our current holdings, there are no changes. With the new addition, the portfolio is once again fully invested.



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 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.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the May 2021 issue.

The stock market, so far in May, hasn’t continued the robust momentum of the first four months. Treasury Secretary Yellen’s comment about the possible need to boost interest rates to ward off inflation seems to be the catalyst. The market and the broad economy will likely respond differently if rates increase. We briefly outline on our asset allocation philosophy, which helps guide us when the market is edgy, in our economic comments.



Earning and proxy voting are in full swing. We’re updating the earnings as they come in.



Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the 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.

It’s Trump Week, and stocks are in a holding pattern until the 45th President is sworn in this Friday. In fact, stocks have scarcely budged for the past month on the heels of the furious post-election rally.

The market looks healthier today than it has in nearly two weeks. After its big drop on June 9, the Nasdaq found support repeatedly last week, and this Monday brought an impressive surge in all the indexes.

Fear of the spread of a new virus has devolved into an economic disaster, at least in the short term.

The market doesn’t know how long this will last. And that’s why it hasn’t been able to find a bottom. But there has been some very encouraging news in the past week.

Be cautious. The selling pressure has spread to the rest of the market, with the recent decline cracking a bunch of stocks and causing our Cabot Tides to turn negative.