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This year has been about as choppy and tricky as we can remember, so nothing the market would throw at us from here would come as a surprise. That said, there’s no question the snapback of the past couple of weeks has been very encouraging—the major indexes have rebounded beautifully, with many regaining their 50-day lines, and individual stocks (especially growth stocks) have done great, with more and more moving back to (or out above) their prior highs. We also like that the bounce has been broad, with the on-again, off-again, rotational action taking a backseat to outright buying. Obviously, the market isn’t totally out of the woods, as most indexes are still range-bound and earnings season is upon us, which will often change the trajectory of things. But we always go with what we see, and the odds are increasing that the September/early October correction is over. We’re moving our Market Monitor back up to a level 7, and could go higher than that if the good vibes continues.

This week’s list represents the broad advance of late, with stocks of all different spots and stripes making the cut. Our Top Pick is Zscaler (ZS), which has lifted to new price and relative performance highs after a six-week pullback.

Stock Name	Price	Buy Range	Loss Limit
Atlassian (TEAM)	415	392-405	360-365
Cameco Corporation (CCJ)	26	25-27	21.5-22.5
Continental Resources (CLR)	52	49-51	42.5-43.5
Datadog (DDOG)	157	152-158	135-138
MGM Resorts (MGM)	48	47-48.5	42.5-43.5
Range Resources (RRC)	24	21.5-23	18.5-19
Snowflake (SNOW)	338	322-333	286-292
Tesla, Inc. (TSLA)	870	845-865	760-770
XENE (XENE)	31	29.5-31.5	25-26
Zscaler (ZS)	301	292-302	262-268

Stocks chopped up and then down last week, and all told, not much has changed—the market is still in the throes of a two-month correction, with a sideways-to-down intermediate-term trend and few stocks moving in a sustained way on the upside; simply put, there’s little money being made right now. That doesn’t mean we’re in the storm cellar—we’re OK having a few lines in the water and starting some small positions in potential leaders as the odds favor the next big market move being up. But overall, a cautious stance is warranted given the evidence. We’ll leave our Market Monitor at a level 6.

This week’s list has something for everyone, with a variety of sectors and setups represented. Our Top Pick is an old name, but it’s cheap, strong and has an AI infrastructure angle that should keep buyers interested. Try to buy on weakness.

With low interest rates and easy borrowing terms, and some supportive jaw-boning and incremental buying by the Federal Reserve, new corporate debt issuance in the United States is reaching record highs.

This week’s note includes our comments on Goodyear Tire (GT), Warner Bros Discovery (WBD) and Berkshire Hathaway (BRK/B), which reported late last week. It also includes comments on the 12 companies that reported earnings this week: Bayer AG (BAYRY), Brookfield Reinsurance Ltd (BNRE), Dril-Quip (DRQ), Elanco Animal Health (ELAN), Goodyear Tire & Rubber Company (GT), TreeHouse Foods (THS), Six Flags Entertainment (SIX), Viatris (VTRS), Toshiba (TOSYY), Volkswagen AG (VWAGY), Warner Bros Discovery (WBD) and Western Digital (WDC).

All across America, but especially in the Northeast and the Midwest, Boomers will be putting their homes up for sale, and often leaving those areas for warmer climates.

We haven’t seen this many growth stocks acting well at one time since at least late 2010, and probably more like 2007, which is very encouraging. That said, we are seeing some froth begin to appear—many investors are giddy with their recent gains, and a few smaller-cap, speculative names have gone vertical. Thus, be sure to keep your feet on the ground, and don’t be afraid to book some partial profits here or there. But, in general, the buyers are clearly in control, and the main trends of the market are up, so you should work to get (or remain) heavily invested.
This week’s list has a few of the aforementioned zoomers, but most of the stocks have very solid fundamentals and aren’t far from solid entry points. There are many we like, but our favorite is Concur Technologies (CNQR), one of the many younger Cloud-based software firms that are thriving.

Stock Name	Price	Buy Range	Loss Limit
Pioneer Natural Resources (PXD)	0.00	172-177	159-162
LinkedIn Corporation (LNKD)	0.00	228-236	205-208
Chart Industries (GTLS)	72.05	110-115	101-103
Gilead Sciences (GILD)	75.10	59-61	54-55.5
Canadian Solar (CSIQ)	0.00	14-15	11-12
Concur Technologies (CNQR)	0.00	97-100	88-90
Con-way (CNW)	0.00	43-45	41-42
Ciena (CIEN)	44.25	22-23	20-20.5
Athenahealth (ATHN)	0.00	107-112	93-95
Aegerion Pharmaceuticals (AEGR)	0.00	89-91	78-80

There are a decent number of warts on this market, including some lackluster action from the broad market, the fact that big-cap indexes have been chopping up and down for the past few weeks, and that small-cap indexes look sick. However, the major trends of the indexes remain up, and most leading stocks, while not tearing up the charts, are still in decent shape. (The many earnings reports last week brought a mixed bag of gaps up and down.) We have our antennae up, especially as more earnings reports push stocks this way and that, but right here the evidence continues to tell us to lean bullish and give our top performers a chance to keep rising.

This week’s list has a bunch of recent earnings winners; if the market is going to continue trending higher, most of these names should do well. Our Top Pick is Steel Dynamics (STLD). We’re usually not big fans of highly-cyclical steel stocks, but STLD just had a big quarter and an even bigger acquisition, with huge earnings forecasts for the next 18 months.

Stock Name	Price	Buy Range	Loss Limit
Under Armour (UA)	0.00	65-70	59-60
Steel Dynamics (STLD)	0.00	20.5-22	18.5-19
Silver Wheaton (SLW)	0.00	25-26	23-24
Royal Caribbean Cruises (RCL)	0.00	59-62	55-56
Patterson-UTI Energy (PTEN)	0.00	36-37	33-34
Polaris Industries (PII)	0.00	143-147	136-137
HCA Healthcare (HCA)	137.60	61-63	56-57
Canadian Pacific Railway (CP)	0.00	190-195	178-180
Cameron (CAM)	0.00	71-73	66-67
Apple (AAPL)	248.94	95-98	89-90

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

This month we look at the oil refining industry. Unlike many technology stocks, this group is the opposite of “priced for perfection.” The industry’s products will remain relevant for a long time, despite investors’ enthusiasm for a shift to electric-powered vehicles. Also, the pandemic will eventually pass and demand for refined products (gasoline, diesel, heating oil and jet fuel) will return, lifting these company’s earnings and stock prices. We acknowledge the tax and regulatory risks but see real value in the higher quality and better-financed refinery companies.



We also look at technology turnarounds. Successful tech turnarounds are rare, so our discussion briefly explores why this is the case and identifies six that have interesting turnaround potential.



Our feature recommendation is the oil refining company Valero Energy (VLO), offering what we see as the best risk/reward traits among a group with strong cyclical turnaround potential.



The letter also includes a summary of our recent sale of Amplify Energy (AMPY) and our change to a Sell rating on Consolidated Communications (CNSL), as well as the full roster of our current recommendations.



Please feel free to send me your questions and comments. This newsletter is written for you. A great way to get more out of your 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.

The market remains in good health and trending higher, so while there’s always a possibility of a big correction starting any day, the important thing is to remain heavily invested, because the trend is your friend.

Most of our portfolio stocks have been performing superbly (with three hitting new highs today!), but one that isn’t is Tyson Foods (TSN), so that’s now a sell.



As for the newest recommendation, after last week’s dividend-payer, this week we swing back to the small and aggressive side of the market, with a fast-growing company that’s thriving by providing a great consumer service in the cloud.



Full details in the issue.

The market’s main trend remains up, and thus I continue to recommend that you be heavily invested.

At the same time, it’s important (as ever) to monitor your individual stocks and prune any from your portfolio that no longer deserve to be there. In our portfolio, there are no stocks that fall into that category this week.



But the market is pricey. Stocks are extended. So today’s recommendation is a low-risk dividend-payer with solid growth prospects as the world transitions to a world of clean energy.



Details inside.

After weeks of straight-up action, leading stocks finally came under some selling pressure late last week, and it appears more selling is on the way, short-term. We’ve written that such a pullback is likely (you often see peaks and troughs near the 15th of the month of earnings season), so if you’re holding a couple of laggards, now’s the time to kick them out of your portfolio. Longer-term, however, we believe any retreat will result in buying opportunities – our OptiMo stock screening system continues to uncover a wide array of great-looking stocks with even greater-sounding stories. Thus, while you should expect some choppiness in the near-term, you should be putting money to work on weakness. Our favorite idea this week is Aecom Technology (ACM), part of the strong engineering and construction group. It’s a new issue, which helps, and looks like a good buy around here, or on a slight pullback.

Stock Name	Price	Buy Range	Loss Limit
ACM (ACM)	0.00	33-36	-
ANW (ANW)	0.00	39-43	-
CRM (CRM)	0.00	53-56	-
FLR (FLR)	0.00	145-155	-
GIGM (GIGM)	0.00	17-20	-
GOLD (GOLD)	0.00	32 1/2 - 34 1/2	-
HNSN (HNSN)	0.00	27-31	-
JASO (JASO)	0.00	45-49	-
LVS (LVS)	0.00	130-138	-
VIP (VIP)	0.00	26-30	-

I’m changing the stock rating on BorgWarner (BWA) to Hold, E*Trade Financial (ETFC) to Buy, H&R Block (HRB) to Hold and Vulcan Materials (VMC) to Hold. Quarterly earnings were reported last week by Big Lots and H&R Block. There’s dividend news on Big Lots (BIG), and there’s stock repurchase news on Big Lots (BIG), Delta Air Lines (DAL) and H&R Block (HRB).

Today, I’m changing the rating on many Smart Investing stocks to Hold. These rating changes are only about share price. Other than Axiall, none of these stocks are experiencing earnings downgrades or corporate troubles. They are all undervalued growth stocks.

Twenty-three of our portfolio companies reported June quarter results. Among those companies, 14 reported EPS that exceeded analysts’ consensus estimates; seven of which exceeded all analysts’ estimates.

In late December, prior to the holiday, we published the January edition of the Cabot Turnaround Letter. Our first article, “Top Five Stocks for 2022,” we highlighted Credit Suisse (CS), Dril-Quip (DRQ), Lamb Weston Holdings (LW), Nokia (NOK) and TreeHouse Foods (THS).

The market is certainly healthier, but it probably won’t go straight up from here. In fact, it’s more likely that sellers will see this bounce as an opportunity, and we’ll get another, probably smaller, leg down before the market starts a sustainable new uptrend.

It’s been another strong week for stocks despite rising concerns about overseas conflicts disrupting the flow of oil and that the market is overshooting just how fast the Fed will cut rates this year.

It wasn’t long ago that investors were factoring in an 80% chance of a March Federal Funds Rate (FFR) cut. Today that probability is down to just 40%.

That said, what’s most important is the expected trend in the FFR. While the timing of the first rate cut and the pace of subsequent cuts remains open to debate, there’s no arguing that the market still sees rates significantly lower at the end of 2024.

Happy Thanksgiving! I’ve written in the past that dividend investments can be a solid piece of your portfolio. I prefer growth stocks, and in that realm, dividends are basically meaningless. However, with more and more stocks, trusts, exchange-traded funds and the like, there are definitely intelligent ways to invest for yield. But beware of the supposed free lunch on Wall Street, because there is no such thing. Double-check the safety of the dividend before you jump in.

Today, one investment strategy that’s struggling a bit is the value strategy. While growth stocks in general have had a great year, and international investments have had a great year, thanks in part to the falling dollar, value investing strategies have lagged.