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With this morning’s first read of Q2 GDP coming in at -0.9% and marking the second consecutive quarter of negative growth (Q1 GDP was -1.6%), many are claiming (or soon will claim) the U.S. is in a recession.

The market has been iffy since Fed Chair Jerome Powell’s “prepare for pain” speech at Jackson Hole last Friday.

With interest rates up and (most) stocks down since I’m going with a high-quality name this month.



This healthcare specialist just posted 44% growth in Q2 and has grown its covered lives by 80% over the last 12 months. It’s profitable, and with a bucket of new contracts in the first half of 2022 the business looks set up for a terrific 2023.



Enjoy!

The marijuana sector’s charts have been weak overall since the sector’s March top.

Entrepreneurs, according to academics, are motivated by an overwhelming need for achievement and a strong urge to build. As Thomas Edison commented, while he and his team were working to develop an incandescent light bulb that lasted more than a few minutes, “I have not failed. I’ve just found 10,000 ways that won’t work.” Without entrepreneurs the world, would be far, far poorer today. Most entrepreneurs are less famous than the men in this issue. But they are no less valuable. One is my father, who launched Cabot Market Letter from his kitchen table back in 1970 and persevered until he could afford to leave his regular job a few years later.

The major indexes quickly retreated after the prior couple of good weeks, with growth-oriented areas falling the most, a lot of stocks being rejected near resistance and some old winners being taken out and shot. Despite that, there are some green shoots out there—by the letter of the law, some broad indexes (like small- and mid-caps) are in intermediate-term uptrends, and we’re also seeing some sectors assert themselves, especially in the commodity space. We’re not bullish, and will leave our Market Monitor at a level 4, though our overall advice remains basically unchanged: Hold plenty of cash, honor your stops and, if you do some buying, keep it small.


This week’s list is again heavy on commodity-type names, though we’re also seeing a few recent earnings winners that have some growth to them. Our Top Pick straddles the line between growth and commodity and is one of the few names to move out to recently all-time highs.

Earlier this week, we moved shares of a consumer staples company from Buy to Sell. We comment on earnings from two recommended stocks and comment on other recommended names. Some thoughts on the ESG trend.

The market was hit hard again last week, so all trends remain down, and increased caution is still advised.


This week I’m selling two stocks that have weakened since reporting first-quarter results last week, but I’m also upgrading one to buy!


As for the new recommendation, it’s a well-known retailer with a slow but solid growth story whose stock is cheap.


Details inside.