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For the first time since the summer began, the market is faltering. The rally that thrust the S&P 500 60% higher in little more than five months is cracking.

The end of summer is being greeted by cranky investors who see a market that has run up to new all time highs despite the risks of Covid and the election. Of course, a huge rally of this magnitude needed a breather. The pullback is normal, healthy and overdue.



It is impossible to say how far stocks will fall. But, unless there is some very bad news, I don’t expect a prolonged or deep selloff. The market is still looking ahead to a positive environment where the pandemic is fading away and the economy is quickly recovering.



In this uncertain environment, I found a rare stock. It is a company that benefits from the undeniable trend toward technological proliferation. It has solid earnings growth and stock performance. But it provides these benefits with remarkably low volatility.



The stock is off the high after a rare pullback and selling at a cheap price. Historically, it has less than a quarter of the volatility of the overall market. It’s a great forward-looking investment for this uncertain environment.

The past month has been very profitable for investors in the sector, as stocks rallied off their December lows and climbed strongly through January, with several hitting new highs as I write. In general, I recommend that you enjoy the trend; the long-term prospects remain bright.

But short-term, there are opportunities for fine-tuning and risk reduction, and thus I have a few recommended changes in today’s issue, as well as one new addition, a company thriving in the booming CBD market.

Today’s stock is in the ultra-glamourous lead-acid battery recycling market. If you want to be a part of what could be the next great industrial revolution, this month’s Cabot Small-Cap Confidential candidate should be right up your alley.

Given the still-iffy broad market, we\'re not advising you to dive in with both feet, but we are adding one new stock to the Model Portfolio tonight and will look to put more cash to work should the bulls continue to make headway.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the April 2023 issue.

We comment on the price of gold and what we see as its primary drivers. Gold is now trading above $2,000/ounce. We also provide updates on our recommended stocks.

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.

This past weekend I attended the company’s annual shareholder meeting in person in Omaha. While the online viewing of Warren and Charlie’s commentary produces many tangible take-aways (which can be found on a wide variety of media outlets), it was the intangibles – obtained only from being there in person – that provided the incremental value.

Two of our positions reported this week. One was up over 8% the day after reporting. And the other is up nicely in early trade today after reporting yesterday.

Recent crosscurrents in the market have seen changes among sector leadership, and today we have a broad selloff, but overall, the main trend of the market is up and thus I continue to recommend that you be heavily invested.

Today’s recommendation is an attempt to benefit from sector rotation, by targeting a sector that’s still down; if the sector turns up soon, today’s buyers should profit handsomely.



As for our current holdings, two stocks are upgraded to buy today, while two are downgraded to sell as we cut our losses short. The adage that applies: There’s nothing wrong with being wrong; what’s wrong is staying wrong.



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 provides a cloud-based service that has been in great demand through the pandemic and will continue to grow in popularity as the world’s business becomes more virtual.



As for the current portfolio, all our stocks look good, so there are no sales, just one simple downgrade to Hold.



Details inside.



Lastly, I hope you’ll join me for the 9th Annual Smarter Investing, Greater Profits Online Conference, August 17-19. We have an incredible lineup of experts ready to share their best picks.

The market’s divergent behavior continues, with small growth stocks in particular suffering, but there are still attractive investments, and for investors looking for something in the electric vehicle sector, today’s recommendation is one of them.

As for the current portfolio, I have two sell recommendations, both small, lightly traded stocks that are losing support.



Details inside.

While there are still symptoms of a broad unfolding market top, and the market as a whole is soft today, the main trend is still clearly up and thus I continue to recommend you be substantially invested.

In fact, in our recommended portfolio all our stocks look fine; there are no recommended changes today.



As for today’s recommendation, it’s a technology company that’s a household name, but still small enough to grow very fast.



Details inside.

Note: Due to the Presidents’ Day holiday, when the stock market is closed, your next issue of Cabot Stock of the Week will be published on Tuesday, February 22.
This week’s stock comes from a recent issue of Cabot Top Ten Trader, which is always on top of the market’s strongest stocks—recently has included a lot of energy and financial stocks. This is one of them.



As for the current portfolio, we come into this week holding 16 out of a possible 20 stocks, and …


Details inside.

The S&P 500 Index and the Dow Jones Industrial Average began new run-ups yesterday, while the NASDAQ Composite Index continues its uptrend. I’m glad that investors are continuing to make money during this market rebound.

Almost everywhere in the mainstream media and across most Wall Street research firms, there is a common implication that a recession will bring a bear market for stocks.

Inflation fears have consumed Wall Street, but using ETFs for hedging inflation in your portfolio can help you weather the storm.

We are likely in a recession. Meanwhile, inflation continues to rage on. That means stocks will have to navigate an environment of both recession and inflation, at least for the rest of the year.
That’s tricky because few companies perform well with both. Commodity-based companies thrive in inflation but struggle in recession. Many defensive companies that shine in recession don’t like inflation.


In this month’s issue, I highlight a stock in one of the rare sectors that can successfully navigate both recession and rising prices at the same time – midstream energy. Strong operational performance, a low valuation, and a high and safe yield are perfect for the current situation.

Stocks continued to retreat last week, ensuring a down February after a very promising January. Still, the latest pullback has been fairly modest, with the 200-day moving average now acting as a floor instead of a ceiling, as it did for most of 2022. With the market in a state of flux, we’re adding another dividend stock today – a household name that used to be part of the Stock of the Week portfolio before we sold it late last summer. That looks like a mistake, as the stock has risen 11% since, and seems to be gathering more steam of late. It’s a longtime recommendation of Cabot Dividend Investor Chief Analyst Tom Hutchinson.

Welcome to our first annual TOP PICKS issue! For this month, I asked the Cabot analysts to give me a couple of their top picks for 2023. I think you will find they have produced a nice selection of companies in diverse sectors. And just as I did in my previous newsletter, Wall Street’s Best Stocks, I’ll keep track of their picks and let you know how they fare.