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

This past week was vacation week – a valuable respite from the stresses of investing and other features of daily life. We now return to the investing desk, ready for what could be a very interesting remaining four months of the stock market year.



There hasn’t been much recent news on our names, so we provide a bit more color on some of the issues surrounding Arcos Dorados (ARCO) and some other names. We would like to see a market pullback to bring shares of otherwise attractive companies back to attractive valuations. However, even in the current market, we are starting to find appealing stocks again and will bring them to you.



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.



Thanks!

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

The main supports for the market (an improving economy, strengthening earnings, low interest rates and a lack of major negative surprises) remain in place. It looks like a road of green lights well into the future.



One green light has turned yellow, however, with China’s crackdown on Didi Global, owner of the country’s dominant ride-hailing app. We don’t see imminent risk for value-oriented companies, but the long-term risk is rising.



Earnings season starts next week. Earnings reports are often the primary driver of the shares of our undervalued companies. We look forward to seeing how the business fundamentals are improving and listening to managements’ commentaries and outlooks.



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.



Thanks!

Part of my job at Cabot is fielding emails from our Cabot Wealth Advisory subscribers, and one question I see quite often is, “What are the differences between Cabot’s publications?” I’m going to explain our newsletters, one at a time in an ongoing series. This is part one of the series, focusing on Cabot Market Letter, our flagship publication.

It was yet another strong week for the market and countless stocks, many of which are breaking out to new highs. At some point the market may cool off, but for now at least, I’m not seeing any truly worrying signs. And in fact, the S&P 500 closed at a new record high as the index gained 1.44% on the week, while the Dow added 1.56%, and the Nasdaq rallied 1.63%.

Overall, our thinking hasn’t changed from a week ago. The market’s various pieces of evidence almost all point to the bull side, and thus, we think a heavily invested position is advised.

Today we start with a discussion of oil prices, starting with the chart published in January 2015, which shows that oil prices, after building a long plateau in the $110 per barrel range, plummeted to $50 per barrel in late 2014.

Options trading education and playing tennis are two of my greatest passions in life. Last weekend, my two passions converged.

U.S. stocks are at all-time highs, but Europe is performing even better this year. Here are three undervalued European stocks worth your attention.

Today’s recommendation is a software and infrastructure company specializing in communications. It just reported Wednesday night, and results were better than expected, which is great for two reasons.
First, the latest numbers support my thesis that this company has what it takes to grow over the long haul.
And second, we don’t need to stress about the company reporting right after we buy in! We have the latest data. And it looks good.
All the details are inside this month’s Issue.

The Fed’s actions (holding rates steady) and words (seeing three rate cuts next year) has supercharged the broad market this week, keeping our market timing indicators positive while most leaders are in fine shape. We will say that, with the good news out, sentiment has picked up, so we’re still content to move gradually and pick our spots with new buying. Tonight, we’re filling out our position in one name while starting a half-sized stake in a new leader, leaving us with around one-quarter in cash.

The market remains a mixed bag, with some big-cap indexes moving up, but just about everything else still stuck in a trading range, while leading growth stocks remain hit or miss. That said, there are some encouraging signs, including some fresher leadership and resilient action among a bunch of names we’re watching and own, so we continue to play things in the middle--we’re holding some strong names and actually averaging up on one of our stocks tonight, but we’re also holding a chunk of cash and being selective.

“Markets are never wrong, only opinions are.” – Jesse Livermore

Few quotes related to investing have stuck with me more than that one.

Jesse Livermore, of course, is an investment legend who, in the early 20^th century, pioneered day trading and who was the basis of the best-selling Edwin Lefevre book, Reminiscences of a Stock Operator – considered by many to be the investing Bible. Many of his words are relevant to today’s market, nearly 85 years after his death. And I think the above quote is as evergreen as any and is important to remember in bull markets like this one.

It’s not a blastoff-type of environment, but the evidence has steadily improved during the past three weeks, first due to the action of leading growth stocks, and now, our Cabot Tides have returned to bullish territory. Thus, we continue to follow the evidence, slowly putting money to work and rotating into stronger situations. Last week, we averaged up in two of our recent buys, and tonight, we’re adding a full position in a fresh leader.

Elsewhere in tonight’s issue, we write about the ups and downs of recent IPOs, as well as one sector that is beginning to reemerge and has many stocks that fit our stock picking criteria.

The chop factor remains in force in the market, with yet another round of rotation this week out of growth and into the broad market. Even so, we see more good than bad out there, with an increasing number of growth stocks having popped out of multi-month ranges and recent dips mostly looking manageable. We added another new name last week, and we could add more depending on how this rotation plays out, but tonight we’ll stand pat with our stocks and 30% in cash.

In tonight’s issue, we write about one sector that’s showing some signs of perking up, some encouraging sentiment readings and go over all of our stocks and many others we’re keeping a close eye on.

The market’s had a solid week, with most of the major indexes reaching new high ground, including the Dow Industrials’ much-hyped push above the 20,000 level. Better yet, we’ve seen many individual stocks resume their post-election uptrends in powerful fashion, often on big volume.

The market remains in pullback mode, with the major indexes topping in mid-April and steadily slipping since then. The Nasdaq has, by far, fared the worst, falling about 5.5% and trading below its 50-day moving average for the most of the past week.

We’ve grown incrementally more bullish in recent days for three reasons, and we’ll probably bump up our Market Monitor another notch on Monday; the way we run our portfolio, something in the 65% to 70% invested range makes sense at this point.

The market took a step back this week, as Tuesday’s big selloff dropped the Nasdaq and small-cap indexes below their 50-day lines, and pushed other indexes further away from their 50-day lines.

I wouldn’t touch General Electric stock with a 10-foot pole. But there are valuable lessons to be learned from the company’s demise.