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Current Market Outlook


The market had a relatively quiet week, with the major indexes slipping a fraction of a percent on light volume and most leading stocks marking time after solid advances the prior two weeks. So far, this action is totally acceptable, but the key will be what happens from here—a couple of large, high-volume selloffs would put a serious dent in the rally, but upside follow through in the indexes and many leading growth stocks would go a long way toward confirming that the January-May market correction is over. For now, we advise sticking with a “lean bullish” mentality; we’re OK doing some buying, but also picking your spots and holding some cash as we look for follow through. Our Market Monitor remains unchanged.

This week’s list has a ton of strong stocks in a variety of growth-oriented sectors. Our Top Pick is LPL Financial (LPLA), a mid-sized Bull Market stock that is acting very well and recently crushed earnings expectations.

Stock Name	Price	Buy Range	Loss Limit
51job, Inc. (JOBS)	0.00	99-103	92-94
Baozun (BZUN)	44.24	51-53	46.5-47.5
Carvana (CVNA)	82.90	25.5-27.5	23-24.5
Illumina Inc. (ILMN)	289.74	260-270	244-249
Ligand Pharmaceuticals (LGND)	267.14	181-188	169-172
LPL Financial Holdings (LPLA)	85.22	69-72	63-65
Penn National Gaming (PENN)	45.38	33.5-35	30.5-31.5
SolarEdge Technologies Inc. (SEDG)	124.37	64-67	58-60
Supernus Pharmaceuticals (SUPN)	52.50	53-56	48-49.5
WildHorse Resource (WRD)	0.00	25-27	21.5-22.5

In today’s issue, there are no new buy and sell recommendations, but you’ll find updates on all the stocks. And as we head toward the last of 2018, I’m very optimistic that the sector will have another great run in 2019—just when most investors least expect it!

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the April 2024 issue.

In this issue, we discuss the most effective and often the only way to reverse the fortunes of a struggling company: a change in leadership. We offer our views on four new CEO situations that are currently attractive and three that are not quite ready yet.

This month’s Buy recommendation, Barnes Group (B), is an aerospace and industrial components maker that is stepping up its efforts to become more valuable, helped by a new CEO and urged on by pressure from a credible activist investor that recently gained several board seats.

The market’s resilience in the face of bad headlines (tariffs, higher inflation, an increasingly cautious Fed, etc.) continues to impress. And with the major indexes currently trading near their 2025 highs despite all the outside attempts to derail them, perhaps the next big market move will be up. With that in mind, today we add to our growth stockpile in the form of a former market (and Cabot) darling that was recently recommended by Mike Cintolo to his Cabot Growth Investor audience. After a rough stretch in mid-2024, the stock is soaring again.

Details inside.

Sell Terex (TEX)

We jumped into TEX four months ago on March 3, literally just a few days before the stock took a dive that ended up sending it 30% lower over the next few weeks. We held on and those of you that added shares along the way should have a much better return than the roughly 7% gain showing in our official portfolio. With so many growthier stocks acting well and TEX up over 50% from its April lows, I’m going to take the modest gain and boot it from our portfolio today. To be clear, I don’t hate TEX and think the bullish thesis I presented back in March still holds true. That said, the reality is there are just too many other stocks with better upside potential right now and I want to maintain concentration in those while taking down our market exposure ever so slightly through next week’s Fed meeting (our next Issue is due out in two weeks). SELL

The expiration of our December covered calls is today, and I’m happy to report that four positions (GM, PINS, YETI, CGC) are closing for max profits

Nine weeks ago, as the marijuana sector was completing what looked like a climax top, I took the risky step of taking partial profits in ten of our stocks, moving to a 45% cash position.

Investors appear concerned that ExxonMobil Corp. (XOM, NYSE) might have paid too much for XTO, while some have expressed concerns that the new assets increase the profile of natural gas in Super Oil’s production mix. The market has vastly overreacted to both concerns, furnishing savvy investors with an excellent opportunity...

As markets weigh tariff and trade risks, we will continue our efforts to protect assets through portfolio rebalancing while remaining alert to trading opportunities. Our diversified and global Explorer stocks are doing well.

International investors will be important at the margin since they account for 18% of U.S. stock ownership.

The retreat of the U.S. dollar, down 10% in the last six months, and the emerging premium for U.S. bond markets is leading to higher yields (interest rates).

I recently noticed a few popular stocks such as MicroStrategy (MSTR) offering exposure to leveraged Bitcoin which to me seems like excessive risk and a sign of potential trouble.

This is like pouring gasoline on a roaring fire. It reminds me of a quote from Edward Chancellor’s book The Price of Time, which offered this gem:

“……as a rule, panics do not destroy capital; they merely reveal the extent to which it has previously been destroyed by [the taking on of excessive leverage in good times].”

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.

While Emerson Electric Co.’s (EMR 36.09 NYSE – yield 3.70%) short-term prospects depend on the vagaries of the global economy, the company has a history of innovation, as well as manufacturing and marketing strength, that bodes well for the longer term. The company’s brands are well-known and well-respected around the...

** Because of President’s Day, our offices will be closed next Monday, February 15 — so your next Cabot Profit Booster issue will be published Wednesday, February 17.

This morning Inspire (INSP) issued preliminary Q4 2022 results that came in ahead of expectations. Management said it sees Q4 revenue up 76% to around $137.7 million (consensus was at $117 million, or +49%).

The one big lesson I’ve learned since coming to Cabot is that not only can you time the market, it’s one of the biggest advantages you, the individual investor, has over the big boys. You can move into or out of the market at a moment’s notice! And if you still have money in growth stocks, and you’re watching the market take away a little more every week, you need to consider trying it. Soon.

For almost the entire time I’ve been editing the Dick Davis Digests, experts have been predicting that natural gas prices would rise. Their reasoning is that, per dollar, you can currently produce much more energy from natural gas than from oil. Since the energy produced by each is indistinguishable, the...

So far, earnings season hasn’t had that much of an impact on the overall market. I don’t think investors know quite what to make of this quarter. It’s bad. But everyone knows that going in.

In 1931, Humphrey Neill, who later became famous as the Vermont Ruminator, wrote a book called “Tape Reading and Market Tactics - The Three Steps to Successful Stock Trading.” What are the Mr. Neill’s three steps to successful stock trading? The first step is familiarizing yourself with the methods of the institutions that move the market. The second step is learning how to interpret the actions of both these groups and the investing public. The third step (and hardest of all) is achieving mastery of yourself; of the “temperament, emotions, and the other variables that go to make up human nature.”