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Last week, we wrote about how lower quality, in both home appliances and tangible money, debases value and is a form of inflation. Today’s note includes some of our current views on inflation and capital markets, and what investors can do to help mitigate inflation’s effects on their portfolios. The goal, of course, is to protect the long-term purchasing power of investment assets.

Mike Tyson inadvertently offers sage advice for investors. We add a new Buy, two stocks are approaching our price targets so we put them under review, and one stock surges following a shareholder-friendly payout announcement.

The chances of a recession in the foreseeable future seems exceptionally unlikely. The domestic economy is booming: following last year’s estimated 5.2% growth, the economy is estimated to grow at a 3.3% pace this year. Any further Omicron-related deceleration appears more likely to be a temporary slowing rather than anything more ominous. Bolstering this view: future-watchers expect growth to continue at around a 3% pace in 2023. No recession in sight from their perspective.

Current Market Outlook


The market had become vulnerable to a short-term pullback in recent weeks, and now the normal post-Fed wobbles have turned into an abnormal selloff after the new round of Chinese tariffs, with today’s market plunge decisively cracking the intermediate-term uptrends of the major indexes and many leading stocks. Bigger picture, this is still a bull market until proven otherwise, but after some huge runs, many stocks that have been running for months likely need time to repair the damage. Interestingly, the fresher stocks (those that got going in May, June and July) are mostly hanging in there, and we’re not opposed to nibbling on them if you have some cash on the sideline. But at this point, your focus should be more on preserving capital (honoring stops, holding cash, cutting back on new buying) and waiting for bottoms to be formed. Our Market Monitor is back down to a level 4.
This week’s list is full of those fresher names, if you feel like taking a stab at a name or two. Our Top Pick is Inphi (IPHI), a high-potential stock that’s holding up well after earnings.

Stock Name	Price	Buy Range	Loss Limit
Agnico Eagle Mines (AEM)	79.05	53-55.5	48.5-49.5
Anaplan (PLAN)	47.52	51-53.5	46-48
Casey’s General Store (CASY)	165.73	159-162	147-149
Inphi (IPHI)	120.16	59-61	51.5-52.5
MasTec, Inc. (MTZ)	66.65	55.5-58	50.5-52
PagSeguro Digital (PAGS)	35.09	41.5-43.5	37.5-38.5
Pinterest (PINS)	35.86	32-34	28-29
SunPower (SPWR)	12.26	12.4-13.4	10.7-11.2
Survey Monkey (SVMK)	19.97	17.5-18.5	15.8-16.4
Twitter (TWTR)	40.37	39-41	36-37

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

Good investing ideas can come from anywhere. One useful source is to borrow ideas from some of the best value-oriented investors. Their holdings can be found in the 13F and 13D regulatory filings which are required every quarter. In the letter, we briefly describe these filings, how we use them, and six stocks that look attractive from the many holdings we analyzed.



A slightly shocking source of turnaround ideas can come from the electric utility industry – about the last place that contrarians might look these days. We discuss three with interesting stories and strong upside potential.



Our feature Buy recommendation, Vistra Corporation (VST), comes from this illuminating search through the utility sector. Vistra is the nation’s largest independent power producer with an emerging retail business. Its shares were jolted by the winter storms yet look like an attractive turnaround situation.



We also mention our May 12th move from Buy to Sell on shares of Mohawk Industries (MHK).



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.

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.

There’s no doubt the market continues to keep investors on their toes, and some further discomfort in the short term is certainly possible after the recent run. It’s also a decent bet that earnings season, which is now ramping up, will present a few potholes. But those are the trees—if you look at the forest, all of the bullish factors are still in place, whether it’s the uptrend in the major indexes, the solid action among most leading stocks, the sluggishness of defensive stocks and, more recently, the strength of the broad market (including five straight days of 2-to-1 NYSE breadth). We remain bullish and expect higher prices—we’ll leave our Market Monitor at a level 8.

This week’s list has a very broad mix of names, including everything from giant blue chips to more speculative small caps. Our Top Pick is in the right area (big-cap growth) and is trying to emerge from a tight consolidation. Earnings are out in a couple of weeks, so start small and build if the breakout works.

Overall, the market’s action remains as close to pristine as you could hope for. Under the hood, there has been a touch of rotation, with some growth stocks chopping around while cyclical, construction and materials names perk up. All in all, we wouldn’t be surprised if growth continued to catch its breath, as the recent pullback was very brief, but that’s short-term nitpicking: While dips and potholes will come, the bottom line is that the vast majority of evidence is bullish, so you should be, too. We’ll bump our Market Monitor up to a level 8, and think adding exposure (ideally on dips) makes sense.

This week’s list reflects the broadening we’re seeing out there, with a few tech names but many others from other corners of the market. Our Top Pick is a long-term winner in the aerospace and defense field whose stock just broke out.

Current Market Outlook


While the action of most major indexes wasn’t overwhelmingly positive last week (the S&P 500 was up about 0.5%), there was a bunch of constructive action—the major indexes shook off three big worries (Italian and Spanish political uncertainties and new tariff threats) and some pushed above near-term resistance, with growth-oriented stocks leading the way. There are still many potential potholes out there, including divergences (and overhead) in the major indexes and investor sentiment that’s a bit complacent. However, the primary evidence (trends of the indexes and price/volume action of leading stocks) continues to improve. We’re bumping our Market Monitor up a couple of notches into bullish territory and, while you shouldn’t force it, you can look to take a more positive stance going forward.

This week’s list has a ton of growth-y stories, and even those that have more sturdy stories have recently staged excellent breakouts. Our Top Pick is GDS Holdings (GDS), a smaller Chinese firm with an excellent story. The recent pullback looks like a decent entry point.

Stock Name	Price	Buy Range	Loss Limit
Alibaba (BABA)	254.81	202-210	188-192
Align Technology (ALGN)	316.20	324-334	295-300
Canada Goose Holdings (GOOS)	46.21	40-42	36.5-38
Cheniere Energy (LNG)	63.82	63-66	58-59.5
Chipotle Mexican Grill (CMG)	773.32	430-445	410-416
GDS Holdings Limited (GDS)	80.15	36.5-39.5	32-34
Keysight Technologies, Inc. (KEYS)	97.20	58-60	54-55
Loxo Oncology (LOXO)	186.59	178-186	155-159
Novocure (NVCR)	0.00	28-30	25.5-26.5
Tiffany & Co. (TIF)	132.10	127-131	116-119

Insurance costs have been rising for years, even rapidly outpacing inflation in many areas, and households are feeling the pinch of higher prices. This month, let’s take a closer look at why the costs to insure your home and autos are rising and what you can do about it. We’ll explore who’s paying these higher prices, comparison shopping for new or replacement policies, and the other steps you can take to keep your costs manageable.

Most stocks have barely budged the last two and a half years, but the Magnificent Seven and a handful of large-cap artificial intelligence-related leaders have picked up the slack, resulting in a 22% gain in the S&P 500 since the start of 2022. So, we’ve tried to play the hits here at Stock of the Week, adding a couple Mag. Seven names to the portfolio and several AI plays. All of them are up double-digit percentages (and one triple-digit winner!) in little more than a year. Now, with the market’s tides starting to shift away from AI and the Mag. Seven and toward other, long unloved sectors, we pivot toward one of the new favorites – retail – by adding a recent recommendation from Mike Cintolo to his Cabot Growth Investor readers.

Details inside.

Tariffs are back.

Of course, stocks could continue to move higher. The optimists have been right so far. But the indexes are near all-time highs, while uncertainty abounds. It might not be the best strategy to pay a premium for a stock in a precarious market.

Fortunately, while the overall market is near the high, there are stocks that are still cheap. The amazing market recovery from the April low has been led by technology, which accounts for about one-third of the S&P index. That sector has soared over 40% in the last three months. But many great stocks are still priced far from their 52-week highs.

In this issue, I highlight a financial industry powerhouse with a long track record of outperforming the market. The stock is well below the 52-week high and selling near its cheapest valuations in years. While the market could go either way in the weeks ahead, this stock is well-positioned to boom when the environment normalizes. Meanwhile the current uncertainty is keeping it cheap.

It may seem like stock prices have run away in the impressive recovery from the April low. But there is a stock where it’s still April.

Cannabis stocks remain unloved by investors. This makes the group buyable because catalysts are on the horizon.

The tricky part now is that it is more difficult to predict that we may see a catalyst near term, or even when the next one will occur. Patience is required.

Here is a look at the four main potential catalysts.

Value investing expert Roy Ward discusses Alaska Air Group and SkyWest.

Cutting-edge work is being done in protein engineering, protein sequencing and protein-analysis. Here are the best DNA stocks.

Dividend kings are companies that have raised their dividends for 50 years or more. Here are the three best, in my opinion.

My favorite mortgage REIT for this low-interest-rate environment is Starwood Property Trust stock. Here are several reasons why.

Covid-19 hit the market (and dividend payers) hard. Most have bounced back, but these companies did even more than that.

Dividend Kings are stocks with long-established histories of paying and increasing their dividends, here are my three favorite right now.

Today, I’m adding an American company that develops all-flash data storage hardware and software products, Pure Storage (PSTG).