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It’s been over a month since the major indexes hit their peaks, and while there’s been no major move to the downside yet, the odds of one grow with time, particularly considering that we’re still in October (often a difficult month). Thus, I have no trouble recommending a slightly more cautious attitude at the moment.

But there’s always something attractive to buy, and this week it’s another stock in the vast and complex semiconductor industry. This will be our fourth in the industry.



As for selling, I’m working to hold a bit of cash until the climate improves, and the easy choice to sell today is our biggest loser, Global-E Online (GLBE).



Details inside.

Stocks continue to hold the line, even as the dual tidal waves of America’s involvement in the Iran-Israel conflict and the fast-approaching tariff deadlines threaten to submerge everything. Until that happens, though, we should invest in the market in front of us, not the one we think could materialize. And so today, that means going back to the growth well and adding a medium-sized software offering from Cabot Early Opportunities Chief Analyst Tyler Laundon to the portfolio.

Details inside.

Between the expansion of the war in the Middle East, a U.S. dockworker strike that could slow the supply chain again, and the uncertainty of a too-close-to-call presidential election next month, there are a lot of headwinds out there serving to counterbalance the good vibes created by last month’s Fed rate cut. Add in the fact that we’re in the traditional “spooky season” of October – the month in which the market has bottomed in each of the last four years – and it’s a good time to add some security to your portfolio.

So today we do just that … by adding a well-known home security company to our Buy Low Opportunities Portfolio. It’s been in business for a century and a half but has only been a public company for the past seven years. And with profits accelerating, the stock has become cheap.

Details inside.

Stocks took a bit of a breather this week after weeks of positive gains fueled by tariff deals and pauses, sinking inflation and a very strong Q1 earnings season. Which way the market goes from here may depend on the headlines, but also on whether the bulls have the appetite for another big push to new highs. One area of the market we know is working? Precious metals. Gold has attracted most of the attention. But silver is starting to play catch-up. So today, we add a high-upside silver play via Cabot Explorer Chief Analyst Carl Delfeld.

Details inside.

We may hate to talk (or even think) about it, but we all understand the importance of proper estate planning. And if you’ve spent a lifetime accumulating assets to pass down to those you love, the next best thing you can do is to make sure you’ve taken the right steps to avoid leaving your heirs with a headache on top of their inheritance. This month, let’s explore the steps you can take right now to help make sure your wishes are honored and that your family doesn’t spend months or even years duking it out in court.

It was a better year for value stocks, as the Vanguard Value Index Fund (VTV) is up 14.6% year to date with just a few days still to go in 2024. Barring a complete implosion this week, it will be the best year for the VTV since 2021 and the third best in the last decade. That’s good … but the last decade is quite the grim comparison.

Remote work has disrupted the employment landscape and appears to be here to stay; it’s also reshaped real estate as more and more workers are now untethered from the office. This month, let’s dive into how to take advantage of better affordability by relocating, moving for your lifestyle and not your employer, and what states will actually pay you to relocate.

A few weeks ago, we introduced the Gartner Hype Cycle, which traces the path that all tech companies follow in what essentially is an immutable law of tech investing. Currently, tech stocks have passed the Peak of Inflated Expectations and are sliding down to the Trough of Disillusionment. A few will ascend back to prosperity along the “Slope of Enlightenment” if they maintain both their relevance and their competitive edge. But most will lose one or both of these traits and thus continue downward in what could be labeled the “Decline into Oblivion.”

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

Earnings season is in full gear, and we review the several companies that have reported as well as provide some expectations for those yet to report. General Motors (GM) releases its earnings on Wednesday, August 4, after our publishing deadline – this is a highly anticipated report.



Perhaps the biggest difference between value investing and growth and momentum investing is what to do when a stock price falls. Many investors using growth and momentum strategies have a discipline of selling if a stock price falls 15-20%. This may make excellent sense for these strategies but is the exact opposite of what one using a value strategy should do. With value strategies, one generally should buy when their stocks go down in price. We touch upon this more in today’s note.



I’d like to invite you to our 9th Annual Cabot Investor Conference, held online again this year, on August 17-19, that’s Tuesday – Thursday. You can see presentations by all of our analysts, which will include updates on their areas of expertise and discussions of their best picks.



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.

Current Market Outlook


If you look at the weekly charts, the trends of the major indexes and most stocks are pointed up—i.e., this is still a bull market, and the trends and other factors (such as the unusual strength seen two weeks ago) portend higher prices down the road. That said, there’s no question the environment remains extremely news-driven (mostly with vaccine news, but also economic reports and government policy outlooks), with plenty of crosscurrents depending on the day. Encouragingly, today’s vaccine news didn’t dent the growth leaders like it did a week ago, which is a step in the right direction. Net-net, we remain optimistic, but the details remain vital; getting decent entry points and position sizing correctly (not too big so you can handle the swings) is key, as is focusing on stocks (cyclical or growth) that have shown good-volume support of late.

This week’s list has something for everyone, including stocks with fresh growth stories as well as some stodgy, cyclical names. Our Top Pick is Lam Research (LRCX), which looks like a leader in the resilient chip equipment sectors.

Stock Name	Price	Buy Range	Loss Limit
Albemarle Corporation (ALB)	128.90	121-126	106-109
Canopy Growth (CGC)	24.77	23.5-25	19-20
Lam Research (LRCX)	439.40	415-435	375-385
Marvell Technology Group (MRVL)	43.29	41.5-43.5	37.5-38.5
Norfolk Southern (NSC)	247.09	235-245	215-220
ShockWave Medical, Inc. (SWAV)	94.95	87.5-91	75.5-78
Snap Inc. (SNAP)	39.08	37.5-39.5	31.5-33
STAAR Surgical (STAA)	79.31	76-79.5	67-69
The Timken Company (TKR)	73.04	69-72	61-62.5
Upwork (UPWK)	33.08	29.5-31	24-25

Current Market Outlook


For the first time in a few weeks, we’re seeing some signs of spring when it comes to the Nasdaq and growth stocks, as many found support near or above their early-March lows and have begun to perk up, including some that have rallied back above their 50-day lines. (The Nasdaq itself has done this, too, which is obviously encouraging.) Moreover, we’re seeing many more six- to 10-week structures out there, which are far more palatable than the jagged three-week bases seen a while back. That said, we’re not out of the woods—the major indexes remain divergent (not the healthiest situation) and very few growth names are hitting new highs. For the first time in a while, we do think the market has a chance to kick into gear, but we have to see it to believe it; we’re nudging our Market Monitor up to a level 6, but still think the general game plan (small positions, buying cyclical names on weakness) makes sense for now.

This week’s list is a nice mix of growth and cyclicals, many of which look like either potential breakouts or early-stage pullbacks. Our Top Pick is Amkor Technology (AMKR), which might need a little more seasoning but has held up great during the correction and is now pushing ahead.

Stock Name	Price	Buy Range	Loss Limit
10X Genomics (TXG)	191	182-187	164-168
Align Technology (ALGN)	548	538-560	490-500
Amkor Technology (AMKR)	26	24.5-26.5	21-22
Cleveland-Cliffs (CLF)	19	17.5-19	16-16.5
The Gap, Inc. (GPS)	30	28.5-30.5	25.5-26.5
Lam Research (LRCX)	661	620-645	565-580
Lennar (LEN)	105	98.5-102.5	90-92
Micron Technology, Inc. (MU)	94	91.5-94.5	83-85
Scotts Miracle-Gro (SMG)	253	237-247	220-226
ShockWave Medical, Inc. (SWAV)	133	125-130	110-114

We’re still thinking there’s a decent chance that the market’s action since May and June is part of a big bottoming process, but it’s also pretty clear that, even if that’s true, the market has more work to do—the selling of the past three weeks has erased many of the positive top-down signals from the prior month or two, with the intermediate-term trend of the major indexes pointed down, the broad market unhealthy and growth stocks in general again underperforming. We’re still aiming to hold onto resilient names, but having plenty of cash is also a must, as is staying flexible.


This week’s list has a bunch of good charts, reflecting the fact that many nooks and crannies of the market are still looking somewhat solid. Our Top Pick is a leader in a commodity niche that has a good launching pad and has come under strong accumulation.

Even as worries fade over the recent Middle East flare-up, new tariff-related headlines have lately crept back into the news. However, stocks have taken it in stride by ignoring what would normally be “bad” news. In view of this, we’re pleased with the market’s resilience—and it’s also welcome that it hasn’t become overheated with too much enthusiasm yet. We’re still seeing a few flies here and there, with some stocks having trouble breaking above resistance, but a growing number of stocks are joining the parade, with a nice mixture of growthy and cyclical names getting into sync with the general march forward. All told, we like what we’re seeing, and in view of the continued strength, we’re raising our Market Monitor to a level 8.

This week’s list features names across multiple industries, which we view as a sign that categorical strength is building. Our Top Pick is a sporting goods giant that has multiple growth tailwinds and is tightening up as the 25-day line has caught up. We’re fine entering here or (preferably) on a dip.

Our main Cabot Cannabis Investor portfolio has vastly outperformed this year, with a 38% gain as of the March 26 close. That was 15 percentage points better than the 22.8% gain for the New Cannabis Ventures Global Cannabis Stock Index. We’ve done 31 percentage points better than the 7.1% gains this year in the S&P 500.

Our Cabot Cannabis Plus Insider Portfolio is up 42.6% since I launched it on March 29 last year. That’s more than twice the 16.8% gain in the Russell 2000 index over the same time.

The market’s rebound has been very impressive, though there are a couple of flies in the ointment (we’re not huge fans of defensive sectors rallying strongly) and this week looks like a good test for a couple of reasons: First, there are some key quarterly reports coming out in key technology areas, and trend-wise, many growth-oriented measures are closing in on five-week highs, which could turn the intermediate-term trend up … if all goes well. For now, nothing has officially changed: If we see more breakouts and further upside, it would obviously be bullish, but while some retrenchment from here wouldn’t necessarily be bearish, it would be a sign the market likely needs more time to set up. We’ll leave our Market Monitor at level 6 this week.

This week’s list is a bit more diversified than the past two weeks, and for our Top Pick, we’re going with a name that’s very strong following quarterly results, has triple-digit growth and a great story—if you enter, be sure to keep it small and use a loose stop.

The past week or so definitely showed some very encouraging action, with one of the key “blastoff” indicators we track turning green on Thursday. So does that mean we’re off to the races? Well, we wouldn’t go there, at least not yet: The intermediate-term trend of the market and most stocks are still down, and it’s not unusual at all to see some near-term wobbles after this kind of blastoff signal. All in all, we think there’s enough good vibes to extend your line a bit—but we don’t advise buying hand over fist as we’re still looking to see added confirmation. We’ll bump up our Market Monitor two notches to a level 5.

This week’s list is full of resilient names, though many have earnings coming up, so be aware of those dates. Our Top Pick has a great story, great numbers and a resilient chart, with shares back near their highs after a bullish earnings reaction. Start small here or on dips.

After a horrid start to the week, the market actually began finding support last Tuesday and has bounced a bit since. To us, it’s a baby step, and ideally the start of a near-term rally phase that will allow us to not just judge the strength of any recovery efforts, but to also see if any fresher growth stocks per up. However, for the here and now, the intermediate-term trend of the major indexes and vast majority of stocks is pointed down, so we’re remaining mostly in our bunker. If we do see some upside follow-through this week, we could become a bit more optimistic but we’ll wait to see if that happens.

This week’s list is another hodgepodge, with some zingers, some defensive titles and a name or two that are dancing to their own drummer. Our Top Pick has a unique story, and now perception is increasing as demand and pricing picks up.

The market has rebounded encouragingly from last Monday’s Greenland/tariff fears—and, ideally, that shakeout will prove to be the last one for the big-cap indexes and for growth stocks before a sustained run higher. Still, to this point, while resilient, the evidence hasn’t changed, with the broad market doing well, but also with many areas of the market still lagging. Thus, we’ll again leave our Market Monitor at a level 7, but now’s the time to really pay attention—a reversal lower would obviously be iffy, but a rotation into many growth stocks that have rested for three months is possible.

This week’s list is again well-rounded, with many names acting well ahead of their reports. For our Top Pick, we’ll go with a commodity-ish name that’s finally hesitated the past couple of weeks as its moving averages start to catch up. A bit more weakness should lead to a solid entry.

We can’t say much bad about the market’s rebound from its pre-Thanksgiving low area, but we wouldn’t say the rally has been decisive at this point. That’s not bearish, but simply a fact that the recovery needs to continue to progress—a bad two or three days from here could get iffy, though continued strength would likely bring a spate of breakouts. As always, we’ll just take it as it comes—right here, we’re encouraged and are extending our line, but are going slow until we see more stocks confirm on the upside. Our Market Monitor stands at a level 6.

This week’s list reflects some of the broadening out we see in the market, with names from many different nooks and crannies. Our Top Pick is a chipmaker that sat out the dance during the past year and a half but has recently emerged on big volume after earnings as growth accelerates. Try to buy on weakness.