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With many people watching the developments on the Ukraine front and the inflation front, my focus is on the broad market’s lows of late January, which serve as a line in the sand that we don’t want to see crossed. And because the market is technically in a downtrend, I continue to focus on lower-risk stocks, and hold a healthy cash position as well.
The only change to the portfolio today is the sale of Oracle (ORCL), which is going the wrong way.


As for the new recommendation, it’s a well-established American brand whose stock has shown great strength recently.


Details inside.

While the market has rallied roughly 25% off its closing low from March it’s not exactly a roaring bull market. We are where we are because the Fed and Treasury are lobbing money-filled grenades in all directions. Near-term market fundamentals are weak, but looking out a few quarters (or more) things should improve drastically, and that’s what the market is trying to factor in. On balance, it’s time to be conservative, but to take shots here and there. This month’s Issue of Cabot Early Opportunities offers up five options that look good right now.

In this Month’s Issue of Cabot Early Opportunities we take a closer look at recent recommendations and evaluate their Q3 earnings reports. I also show why I think the Small cap index is going higher in the near term. Finally, I feature five early-stage growth stocks going after totally different markets that look poised to deliver big gains in 2020 and beyond.

The best poker players usually are stone-faced. That means that they show no emotions, make no unusual or unplanned moves, and most important, have no “tells.” A “tell” is any change in a player’s behavior, attitude or other actions that indicate the strength of the cards they hold in their hand. Common tells are changes in their chatter, eye contact, twitches and frequency of checking their hole cards.

This might be the first time anyone has described singer-songwriter Katy Perry as a sage observer of the stock market. Her song, “Hot and Cold” opens with the lyrics, “You change your mind / like a girl changes clothes.”

This perfectly captures the changes in sentiment in the stock market over the past two months. Going into October, the market was fully locked into the view that elevated inflation would endure, that 10-year Treasury yields were headed above 5% and that there was no hope for small-cap stocks or any group of stocks other than the Magnificent Seven mega-cap tech stocks. Dark days and a hard landing were undoubtedly ahead.

There’s a lot of noise out there. Sticky inflation and the Fed’s response to it; Iran getting involved in the Israel-Palestine war; war in Ukraine now in year three; a pivotal U.S. presidential election drawing ever closer; first-quarter earnings season underway, etc., etc. But the only thing that truly matters to the market, at least lately, is bond yields. Specifically, yields on the 10-year U.S. Treasury bonds. The last couple years, the inverse bond yield-stock market correlation has been undeniable.

The financial media over the past weekend and in the early days of this week has been full of stories about the upcoming Fed meeting on Wednesday. It’s remarkable how much ink (or electrons) is being spilled in efforts to predict what the Fed will do, and why, along with all of the implications of this or that outcome.

In the November Issue of Cabot Early Opportunities, I take a quick look at some recent earnings reports and continue to spread things out among different industries with our new additions.

This month I cover a premium furniture retailer, a micro-cap biotech, an online finance specialist, an oil refiner and a somewhat speculative space economy stock. There should be something in this Issue for everybody.

Earnings season has arrived, and with it could be a recalibration of investor expectations for stocks broadly.

The S&P 500 Index seems reasonably priced at 19.5x estimated 2024 earnings. But nearly 30% of the index’s weight comprises Magnificent Seven stocks, whose average multiple is 33x. Estimated earnings growth rates for these Mag Seven stocks, which average 19% for each of the next five years, set a high bar. When high expectations meet less-high reality… well, investors know what can happen to stock prices. And, any wobbling in the largest stocks can send the market broadly lower. As Dennis Gartman, the legendary and now-retired writer of The Gartman Letter, frequently said, “When the generals leave the field, the rest of the army follows.”

Good enough.

That was the resounding sentiment on Wall Street after Wednesday morning’s inflation print came in slightly better than expectations … but still stubbornly above 3% year over year. The headline CPI number for May, 3.3% year over year, was just below the 3.4% economists anticipated; the month-over-month increase (0.2%) was also a bit lighter than expected (0.3%).

In the November Issue of Cabot Early Opportunities, we jump into a crazy semiconductor growth story, an electrification name and an international travel story. We also kick the tires on a new company focused on acquiring outdoorsy brands as well as another playing in the healthy and alternative food space.

As always, there should be something for everyone.

As early as last summer, I predicted that the S&P 500 would continue rising into early 2018, then experience its overdue correction. I was about a month off on the timing. I was guessing March, but the correction arrived in February. I was right on the size of the downturn, though, almost to the penny. That was a small part technical analysis and a large part luck.

This earnings season, shares of Facebook (FB), Twitter (TWTR) and Netflix (NFLX) got pummeled by investors, and mostly for good reason.

It’s earnings season! Hoo-boy, I’d better clear my calendar. Just a guess, but I think we’re going to see fantastic quarterly results from financial stocks that will catch investors with their…er, let’s just say “catch investors by surprise”. Financial stock share prices might have a very good couple of weeks!

With the market still in a downtrend, defense continues to be important.
Cash is the simplest defensive asset, but low-risk stocks, undervalued stocks, dividend-paying stocks and stocks in sectors bucking the downtrend are all worth considering.



My recommendation this week is a well-known automaker with great prospects in the electric vehicle space whose stock is trading 38% off its recent high.



Details inside.

The market rally that materialized over Thanksgiving week is on temporary hold as investors wait to see if the Fed will, in fact, cut interest rates by another 25 basis points as anticipated this week. If it happens, there’s a good chance the risk-on mood will resume, and the major indexes could reach new all-time highs by Christmas. While I’m not big on predicting what’s going to happen with the Fed, the odds heavily (87%) favor investors getting their wish, so let’s play those odds today by adding a speculative mid-cap software stock recently recommended by Mike Cintolo in Cabot Top Ten Trader.

Details inside.

Value stocks are outperforming growth stocks right now.

That’s not a sentence that’s been uttered (or written) often over the past decade and a half. But for the past three months, it’s definitely true. Growth stocks – as measured by the Investors’ Business Daily 50 ETF (FFTY) – peaked in late October and are still 10% off their pre-Halloween apex. Value stocks – as measured by the Vanguard Value Index ETF (VTV) – have risen more than 4% during that time and have really come on since the calendar flipped to 2026, advancing nearly 3%.