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Cannabis stocks are set to close out the year with a punishing 14% decline. Cannabis investors need help from anywhere they can get it.

It looks like it could come from an unusual place in 2025. The future of the cannabis industry is now in the hands of President-elect Donald Trump.

If anyone told me a few years ago this would be the case, I might have asked them what they are smoking.

However, the reality is that during his presidential campaign, Trump endorsed all three of the main reforms that would legitimize the industry and boost cannabis share prices: Rescheduling, bank reform known as SAFER banking, and legalization of recreational use. Trump endorsed the first two outright. He implicitly endorsed legal rec-use because he supported the Florida referendum which would have made this change. At the very least, he has openly endorsed decriminalization.

Stocks are at all-time highs, yet again, defying the myriad potential macro tailwinds (expanding war in the Middle East, looming presidential election, another damaging hurricane, Q3 earnings season underway, etc.) that have been threatening to derail the market. One of them still could, but for now, we’ll stick with what’s in front of us, and that’s a market with plenty of momentum. Today, we lean into that momentum by adding a mid-cap tech stock recently recommended by Tyler Laundon to his Cabot Early Opportunities audience.

Details inside.

As 2017 comes to a close, we all have a lot to be thankful for, as the bull market provided us with a great environment for stock picking. There’s always room for improvement (which we’ll probably write about in future issues), but coming into this week the Model Portfolio was sitting on a gain north of 40%. We’ll take it.

Looking ahead, we remain bullish, especially longer-term, as some big-picture indicators point toward higher prices. Near-term, though, it’s hard to ignore the optimistic sentiment, which we write about in today’s issue. It’s very inexact, so we don’t base trading decisions on it, but it’s good to remember to keep your eyes (and your options) open.

While the market was weak this morning, 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 a low-risk dividend payer whose products you have probably bought—and probably never knowing the company’s name. More importantly, Tom Hutchinson says it’s cheap.



As for the current portfolio, most of our stocks look good, so the only changes is an upgrade of Five Below (FIVE) to Buy.

The market’s evidence continues to improve, with our core market timing indicators returning to the bullish side of the fence. That’s obviously a good thing and has us optimistic -- though upside follow through from here will be key, as many growth measures are still lagging behind, though we are seeing more setups, especially from areas that sat around for much of the past year (see the issue for much more on that). All told, we are doign some new buying tonight, and will have more to come if the market continues to act well.

The market’s evidence has clearly worsened the past two weeks and, really, there hasn’t been any money made in growth stocks since late September, when more names began to flash abnormal action and crack. We’ve mostly been selling in recent weeks, building up a big cash position of 56%, and tonight we’re hanging on to that as our Cabot Tides is on the fence, Two-Second Indicator is negative and many stocks are headed south. To be fair, the indexes are hanging in there and we still have many stocks we like (we write about some liquid biopsy stocks and other potential leaders in tonight’s issue), so we’re staying flexible--but right now it’s prudent to hold our cash and see how this selling wave plays out.

A sizzling summer for stocks has delivered some strong returns for investors, though not all sectors have enjoyed the ride. In fact, seven of the 11 S&P 500 sectors have underperformed the benchmark index’s 8% return so far this year. As a result, there’s plenty of value still out there. So today, we set our sights on of those underperforming sectors: consumer staples. While the sector hasn’t trailed the market as much as a few others, we’ve found a usually steady, reliable stock that just touched five-year lows despite reporting record sales. The company dates back to the 1800s, and is a brand everyone knows – and has likely been in your house, your parents’ house, your grandparents’ house and your great-grandparents’ house. And now it’s on sale.

Details inside.

Stocks inched further into record territory this week. And while there’s another big news event to weather this week (the Fed’s Jackson Hole meeting and Jerome Powell press conference), the market has already motored ahead in the face of a bad July jobs report and escalating inflation. The real test is likely to come in September, historically the worst month for stocks as Wall Street returns from its summer vacation and sells off its laggards. So today, we add a bit of safety in the form of a low-beta, high-yield utility courtesy of Cabot Dividend Investor Chief Analyst Tom Hutchinson. But this utility acts more like a growth stock, thanks to AI and data center buildouts.

Details inside.

Large-cap stocks are starting to show some cracks. But small caps aren’t.

After years of underperformance, small-cap stocks appear to finally be poised for a breakout 2026 thanks to a combination of lower interest rates and soaring earnings. So in this month’s Cabot Value Investor issue, we present a small-cap company that is already coming off a very strong quarter, whose sales and earnings have more than doubled since Covid, but whose shares were overly punished last fall and are just now starting the long climb back. The combination of double-digit earnings growth and a well-below-average valuation makes this small cap ripe for our Buy Low Opportunities Portfolio.

Details inside.

Tuesday’s edition of The New York Times had a stock-centric article titled, “The S&P is Nearing a Record. Really.” The subtext, of course, is that stocks have climbed near February all-time highs despite a bevy of geopolitical tensions, potential economic landmines, and widespread investor and consumer pessimism. As I wrote last week, the market has fully recovered from its tariff-fueled cratering of late March and early April, but lingering uncertainties threaten to derail it at any moment … and that was before Israel and Iran started bombing each other.

Wall Street analysts expect stocks to be flat for the rest of the year. That’s according to a new Reuters poll, which surveyed 51 strategists, analysts, brokers and portfolio managers. Among them, the average year-end target for the S&P 500 was 5,900 – roughly in line with the current price, and essentially unmoved since the start of the year.

That’s not exactly exciting news, even if 5,900 would have felt like a win in early April, when the benchmark index dipped below 5,000 after President Trump’s now-infamous “Liberation Day” reciprocal tariff announcement. The rally since then has been impressive, but analysts aren’t confident we’ll get much more movement through the final seven months of the year.

The market’s big-picture outlook remains excellent, and we’re keeping most of our focus on that. However, there’s no doubt that we’re starting to see some growth stock wobbles, as today was the 3rd day of distribution in the group while money rotates into the broader market. That’s no reason to be defensive, but we are selling one name tonight that flashed abnormal action and holding a bit more than 30% cash on the sideline for now. Our goal is to ditch any laggards or names that crack and eventually replace them with big leaders, some of which are in a rest phase that should result in higher-odds entries.

Another event with consequences is the earnings report for recommended name Big Lots (BIG), scheduled for pre-market release on December 1.

Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the June 2023 issue.

The U.S. presidential election, “only” seventeen months away, is shaping up to follow a predictable script. Investors should keep their personal views and their investing process separate.

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.

The market is in a holding pattern, but holding patterns aren’t bad things when they come on the heels of the kind of run-up we saw in November and the first three weeks of December. Besides, many of the stocks in our Stock of the Week portfolio aren’t in a holding pattern, with 10 of them (!) trading at either 52-week or all-time highs. So today, we add another high-upside position that should benefit from another banner year for the travel industry. Mike Cintolo recently recommended the stock to his Cabot Top Ten Trader audience.

The market has continued to unravel, and there’s no need to review all the gory details from the prior few days—suffice it to say that the trend of interest rates remains up and the trend of most indexes, stocks and sectors remains down. It’s also true that emotions are starting to run high, with a few signs of panic out there as investors throw most everything overboard, bringing lots of stuff down to key levels. Because of that, we remain on the lookout for some sort of market turn, but until then, we advise holding plenty of cash and keeping any new positions on the small side as we wait for the sellers to run out of ammo. We’ll respect the latest leg lower and drop our Market Monitor to a level 4.

This week’s list is a great place to start building your watch list if you haven’t already, with many names that are clearly resisting the market’s pull. Our Top Pick is a tech name that looks to have the right mix of steady growth, big earnings expansion and huge AI potential—as well as a resilient stock.

The cannabis sector has been trending down since the end of March, giving back its spectacular gains from the start of the year, and until now I’ve remained optimistic about our stocks, partially because of their outstanding fundamental growth metrics but also because Cabot’s two main trend-following indicators for the market were positive.

On a recent visit to meet Syracuse University journalism students, I expected long faces and a lot of pessimism. But instead I was greeted with excitement about online media and the way it will not only help continue the tradition of journalism, but will actually improve the craft. This gave me hope that while print newspapers may be on the way out (see the recent news of the New York Times threatening to shutter the Boston Globe), I have no doubt that journalism will continue in one form or another. And that’s a very good thing, in my book (or blog).

After years of buying gadgets, cars and whole wardrobes on credit, the gravy train has stopped. Not only has it stopped, it’s derailed and is hurtling off of a cliff. Many people have locked up their purses and wallets, cut up their credit cards and stopped spending money. American consumers are spent.

Today’s update is brief, but it does include a couple of important observations about the behavior of cannabis stocks in recent weeks, as well as updates on all the portfolio stocks.