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Among all the small-cap stocks I’ve studied in recent weeks one keeps jumping out at me. In fact, I’ve been eying it since March. It’s time to act.

This stock is different in virtually every respect from our typical stock. It’s not high tech and growth isn’t off the charts. That’s because it’s a value stock.



I think once you read my report you’ll “get it.” And in a year or so I believe this stock will be trading 50% to 100% higher than it is now, meaning it could offer the same upside potential as growthier names.



Enjoy!

We can’t say the market is out of the woods, as some major indexes still have work to do (small caps were very weak today) and a couple of bad days could be damaging. But just going with what we see, it’s hard not to be encouraged about last week’s action—after a month of pulling back, no primary indicator flipped to negative, and among individual stocks, the vast majority retreated grudgingly before many took off on the upside in recent days. We’re not going to overreact to a day or two of action, but the fact that our screens are turning up many more high-potential names has us nudging our Market Monitor back up to a level 7—though, as always, we’ll see how it goes during this week’s gauntlet of economic reports.

This week’s list is chock-full of solid growth ideas, with a smattering of cyclical exposure as well. Our Top Pick is a growth name that just broke out from a two-year base after earnings.

The S&P 500 paused its recovery over the past week, moving sideways over the past five days. Here is my take on the market.

Last week’s economic reports delivered good news, presuming that you are rooting for a stable or strong U.S. economy. June retail sales rose 0.4% vs. May, when economists expected an 0.2% increase; and retail sales also rose 3.4% vs. a year ago.

Today’s and next week’s issues of Cabot Undervalued Stocks Advisor are going to look a bit different. I won’t be reviewing all of our portfolio stocks today. Many Wall Street analysts are on vacation, so there will be very little in the way of changes in earnings estimates or new research reports for several weeks.

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 is a speculative suggestion—a small company with great potential to grow as the market for electric vehicle charging booms.



As for the current portfolio, most of our stocks look good, and many are hitting new highs, so I’m downgrading three to hold because they are ripe for correction.



Lastly, a reminder that because of the Labor Day holiday, next week’s issue will be published on Tuesday, September 7.



Details inside.

I don’t know about you, but these market swings are definitely making me dizzy! Tariffs, inflation, the reemergence of recession fears—are all serving to rattle investors.

This morning’s inflation report, however, did push us into somewhat positive territory, with February’s CPI rising 0.2% (2.8%, annually), a bit less than the 0.3% forecast and considerably better than the 0.5% rise in January.

Also, on the good news front, mortgage rates have finally begun to decline, with the average 30-year interest rate now at 6.72%.

The major indexes continue to march higher, but trouble is brewing under the surface. That’s been reflected by the number of earnings blowups of late, including in many stocks of companies that beat estimates. Our portfolio was not immune to that phenomenon last week, and as a result, we’re doing some late-summer housecleaning this week, selling four positions that have been lagging and got worse after reporting earnings. Meanwhile, with technology stocks becoming a bit overcooked, today we add to our portfolio a manufacturing name that makes essential real-world products that are always in high demand. It’s a stock whose shares have been building momentum – enough to attract the attention of Cabot Top Ten Trader Chief Analyst Mike Cintolo.

Details inside.

You may have noticed that the price of West Texas crude oil is up about 48% since it bottomed in late December.

As earnings season unfolds, I’ll be very interested to learn more about the broader capital expenditure landscape. Americans haven’t experienced such a strong economy in many years. And frankly, younger adults have never experienced a strong economy!

Earnings season can be difficult to navigate for any investor. Here are my five rules on how to invest this earnings season.

From an investor’s point of view, I will be cautious about owning P&C insurance stocks. We won’t know the cost of all the damage until second and third quarter earnings reports, but you can be sure that profits will suffer.

Continue to lean bullish. From a top-down perspective, there’s little negative to say about the overall market—all of our indicators remain positive, and the indexes refuse to give up any gains, a sign of strength. Individual stocks are more hit and miss, but we’re looking forward to earnings season to reveal some new leadership. We have no changes in the Model Portfolio tonight—we’re holding seven stocks and a cash position near 30%.

The big news pertaining to global investing is the signing in Washington yesterday of the phase-one “truce” trade deal between America and China.

It’s been fifteen weeks since the marijuana sector topped, sending the Marijuana Index down 55%. But as the picture of this correction gets clearer, every day I get a little more bullish about the possibility that the sector is ready to turn up again. Most of our stocks are exhibiting typical base-building behavior, though there’s no sign of real buying power yet.

But the fundamentals of the industry remain excellent, so there’s no question that eventually these stocks will get going again.



In the portfolio today there are only two small changes. IIPR moves to Hold, and TPB moves to Sell.



Full details in the issue.

Yesterday, Johnson Controls (JCI) reported an agreement to purchase Tyco International (TYC). We had strong earnings reports from three portfolio stocks last week: Delta Air Lines (DAL), D.R. Horton (DHI) and E*Trade Financial (ETFC), and many more portfolio companies will report earnings this week. Today, I’m upgrading Chemtura (CHMT) to a Buy rating.

A week ago, it felt like a bull market in name only. Now, it feels like a full-fledged bull market, with participation coming from places other than just mega caps and artificial intelligence. That’s reflected in our portfolio, where roughly half our stocks are hitting or near 52-week highs. Still, there’s always a chance things could crater, especially with the S&P 500 up 14% year to date and the Nasdaq up 30%. So today we add some needed value, with the bonus benefit of giving us more overseas exposure, in the form of an undervalued U.K. life insurance company courtesy of Cabot Value Investor Chief Analyst Bruce Kaser.