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Today I’m removing Delta Air Lines (DAL) from the Growth Portfolio. The company’s earnings outlook has deteriorated to an expectation of EPS declining 1% in 2016, and the price chart has not improved since I put the stock on Hold two months ago.

It’s been a bumpy ride these last few months, but analysts are expecting big things from small-cap stocks in 2019.

The downdrafts that ended 2018 have created some small-cap bargains, making it a great time to buy.

On February 13, small-cap expert Tyler Laundon will discuss the rewards of having small caps in your portfolio. He’ll talk about what went right, and not-so-right, in 2018 and give you a preview of what to expect in 2019.

And he’ll conclude with secret stock picks from his new report (which you’ll receive FREE) that you won’t want to miss.

The market began correcting in late March, and since then it has tried to get going twice (in late April, and in early June), with both rallies failing. Late last week, though, another rally attempt got underway, and while it’s early, it looks more promising—the upmove last Friday was powerful, and there appears to be less uncertainty surrounding Europe. Plus, potential leading stocks have now had two to three months to rebuild bases, so there are more potential buyable patterns out there. That said, the market remains fragile, and earnings season is dead ahead; our guess is that earnings, not Europe, will likely decide the market’s next big move. We’ll keep our Market Monitor in neutral territory for now, but color us encouraged by the market’s action.

This week’s list has a few good ideas; sector-wise, it’s clear that the housing stocks are performing best. Thus, we’ll keep it simple and name Lennar (LEN), the leading homebuilder in the market, as our Editor’s Choice; the company just came out with a great earnings report, propelling shares to new highs. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
3D Systems (DDD)	0.00	30-32	-
CPHD (CPHD)	0.00	42-44	-
Cirrus Logic Inc. (CRUS)	0.00	27-28.5	-
Eagle Materials Inc. (EXP)	0.00	35.5-37.5	-
Expedia Group (EXPE)	0.00	46-48	-
Lennar (LEN)	61.85	28.5-30.5	-
Ocwen Financial (OCN)	0.00	17.5-18.5	-
Skechers (SKX)	0.00	19-20.5	-
Ultimate Software (ULTI)	0.00	85-88	-
Western Refining (WNR)	0.00	21-22.5	-

The market succumbed today to some bad news from Europe, although some buyers did support shares after the early-morning dip. Net-net, today and last Friday were bad, but the major indexes remain range-bound; amazingly, the Nasdaq is now in the midst of its sixth 4% swing up or down since early June, and yet, has made basically no progress during that time. It’s choppy out there! Thus, we see no reason to change our Market Monitor from its neutral position. As for individual stocks, it, too, is a mixed bag—some big leaders broke down last week, but many are still base-building and a couple actually poked into new-high ground after solid quarterly reports. All in all, a little buying is fine, but do your buying on weakness, keep positions smaller than normal and adhere to your stops.

This week’s list is a hodgepodge of stocks from different industries; most are strong for individual reasons (earnings, etc.). Our top pick is PPG Industries (PPG), which isn’t an exciting company, but it delivered a solid earnings report and announced a merger that kicked the stock higher. We think it could do well if bought on pullbacks.

Stock Name	Price	Buy Range	Loss Limit
A.O. SMITH (AOS)	0.00	49-50.5	-
ASML Holding (ASML)	350.01	52.5-54.5	-
DVA (DVA)	0.00	94-97	-
eBay Inc. (EBAY)	0.00	43-45	-
Medivation (MDVN)	0.00	90-94	-
Mellanox Technologies (MLNX)	92.00	84-90	-
PPG Industries (PPG)	0.00	109-112	-
Skyworks Solutions (SWKS)	0.00	27-28	-
USG Corp. (USG)	0.00	18.5-20	-
WOR (WOR)	0.00	21-22	-

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!

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.

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.

This week’s volatility has been a bit unnerving but below the drama some good things are happening. The majority of our stocks finished the week higher and Sea Limited (SE) hit an all-time high after reporting another great quarter, confirming our view that this
could be an enduring growth story. No surprise that our emerging market timer is mixed, in a very modest uptrend but still below 50- and 200-day moving averages

Today, we have a new recommendation for you as we follow Warren Buffett to a financial technology play in Brazil

The MSCI Emerging Market (EM) basket of 25 emerging market countries pulled back 15% in dollar terms, the Japan market was down 12%, and China’s Shanghai Composite index got clobbered, falling 25%. India ended the year down only 4.2% thanks to pro-business economic policies and an infrastructure boom.

The Fiat Chrysler-Peugeot merger seems doomed to fail. Are any car stocks worth the investment right now? Let’s size all of the options up.

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.

CEOs get a lot of flack for their compensation (especially the highest-paid CEOs), but how important are they to the stocks of the companies they helm?

U.S. conglomerates, all the rage in the 1970s and into the 1980s, are still alive and kicking though investors prefer a more sector and global approach.

Yesterday, General Electric (GE) completed the spinoff of its healthcare business, GE HealthCare Technologies (GEHC). GE HealthCare, which makes MRI machines and other medical equipment, now trades on Nasdaq under the ticker symbol GEHC.

There is a doom-and-gloom quality to much of the talk about the subprime crisis. The reasoning is that this wad of bad debt is hanging like an enormous boulder over the stock market highway, and that when it falls, the world as we know it will essentially end. In this regard, it’s a lot like assertions that the U.S. national debt (or current account balance or poor educational system or declining manufacturing base, etc.) will ruin everything forever.

It’s the largest provider of cell phone service in Turkey, with a 60% market share, and it’s named, appropriately enough, Turkcell. The firm’s ADRs (American Depositary Receipts) trade on the NYSE under the symbol TKC. With 32 million subscribers, Turkcell is the third-largest provider of GSM service in Europe. It has $5 billion in annual revenues; it’s expected to grow earnings 42% this year and 21% in 2008; and it pays an annual dividend of 3.8%!

Ideally, you want to invest in industries where the dominant factors are positive, where booming demand for products and services means revenue growth is rapid and profit margins are high. Trouble is, in the current market climate, the best growth stocks, which have enjoyed great advances earlier this year, are in retreat. Buying them is a high-risk proposition. But there is one exception, and it’s interesting enough to discuss here.

This is the tale of two Chinese game stocks. One, Netease.com (NTES), got hit when the Chinese government delivered some bad news. Another, Shanda Games (GAME), is a hot new IPO.

After every mass shooting, the prospect of increased gun control sparks the buying of more guns. As a result, gun stocks tend to get a boost.