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Five Below (FIVE) has been unable to pull out of its tailspin following a good-but-not-great quarterly report last week, so we’re selling the stock today and booking our small profit.

I’m changing my recommendations on Dollar Tree (DLTR) to Hold; and on Big Lots (BIG), Kraft Heinz (KHC) and WellCare (WCG) to Buy.

In the April Issue of Cabot Early Opportunities we take a look at the red-hot real estate market and muse on the dramatic and lasting impacts from the Covid-19 pandemic.

We also take hints from the market’s action that it continues to be a time to focus on diversifying new buys across different markets. We take this evidence to heart and add five stocks that offer exposure to everything from resort travel to Afib surgical tools to digital transformation services.



Enjoy!

In the March Issue of Cabot Early Opportunities we offer up a diverse mix of growth stocks with exposure to vastly different markets, all of which should be healthy for the duration of 2021.

While it’s been a rough month since the February Issue and investors are still on edge, stimulus checks should be hitting the economy soon and the broader economic picture is a heck of a lot better than even a couple months ago.



Still, on balance it’s best to keep new buying on the small side and average into these positions as the market seeks the firm footing that is needed to launch a sustained advance higher.



Enjoy!

Current Market Outlook


The market staged a nice-looking rebound today, especially given that both the S&P 500 and Nasdaq were hanging around their 50-day lines coming into today. Up is definitely good, but when examining the evidence, we see a tale of two markets. Growth stocks still look ragged, as many cracked key support last week and have been extraordinarily choppy during the past month (a sign bulls and bears are fighting it out after big runs). However, the broad market is largely fine, with small- and mid-cap indexes perched near their highs and many sectors acting fine. All in all, the evidence has worsened, so we’re knocking our Market Monitor down a notch, but we’re mostly taking things on a stock-by-stock basis, ditching those that break down while targeting new buying at resilient names.

This week’s list is heavy on cyclical and re-opening plays, though chip stocks remain a bastion of resilience. Our Top Pick is Kulicke & Soffa (KLIC), which staged a long-term breakout in November, has huge growth and has been unaffected by the market’s wobbles.

Stock Name	Price	Buy Range	Loss Limit
Ameriprise Financial, Inc. (AMP)	229	218-225	200-204
Amkor Technology (AMKR)	25	23-25	19-20
Avis Budget Group (CAR)	58	53.5-56.5	46-48
Bausch Health Companies (BHC)	32	29.5-31	26.5-27.5
The Cheesecake Factory (CAKE)	55	51.5-54	45-46.5
HubSpot (HUBS)	527	490-510	430-440
Kulicke and Soffa Industries (KLIC)	52	48.5-52	41-43
Pioneer Natural Resources (PXD)	149	141-146	125-128
Shake Shack (SHAK)	118	113-118	100-103
Valmont Industries (VMI)	244	226-236	203-208

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the March 2021 issue.

This month we look at post-bankruptcy energy stocks. Companies that have emerged from bankruptcy are generally shunned by investors, as are energy stocks in general in the current market. Combined, these two traits offer some attractive investment opportunities. We discuss four of them.



We also look at tobacco stocks. Shares of these companies have fallen sharply in recent years due to an acceleration in the decline rate of cigarette volumes. However, that trend appears to be moderating, leaving the shares undervalued yet paying high dividend yields. Our feature recommendation, Altria Group (MO), is a stand-out value among the group.



We also include comments on recent price target and rating changes, including our recent Sell recommendations on Trinity Industries (TRN) and ViacomCBS (VIAC).



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 last two weeks have seen a massive rally into cyclical stocks, and a purge of growth stocks. Massive! Whether this trend will continue is anyone’s guess.

The good news for the Cabot Profit Booster portfolio is we have a relatively diverse portfolio. And as I eyeball our portfolio, I would say we have five cyclical stocks (AZEK, JCI, SONO, GS, APHA) and “only” two growth stocks (DT, AMKR), and the premiums we collected via our covered call sales have partially buffered us from big losses on those stocks that have been hit hard.

Current Market Outlook


Up is good, so last week’s rebound in growth and continued push higher in the broad market was encouraging. That said, nothing much has changed with the overall evidence—many areas of the market look just fine, with a few indexes actually hitting all-time highs, but growth stocks are still (mostly) in a corrective mode, with a bunch of names having rallied only into resistance. Really, we think the action of the next week or two will tell the tale—resilience and upside from here would suggest the huge pullback earlier this month was more of a shakeout, but renewed selling pressure would hint toward another leg down. Right now, we’re playing things halfway—we’re OK with some buying, especially in stronger names that pull back some, but we’re not pushing the envelope and need to see more from growth before concluding the storm has passed. We’re leaving our Market Monitor at a level 5 today.

This week’s list is very much a mixed bag, with cyclicals, retail, growth and turnarounds all making the cut. Our Top Pick is Thor Industries (THO), which looks like the leader of a fresh move for that group. You could nibble here or (preferably) on dips.

Stock Name	Price	Buy Range	Loss Limit
Big Lots (BIG)	71	66-69	59-61
Devon Energy (DVN)	25	22-23.5	19-20
Dropbox (DBX)	28	26.5-28	24-25
Dycom Industries (DY)	100	95-98	85-87
Groupon Inc. (GRPN)	60	57-60	48-50
Inari Medical (NARI)	114	110.5-115.5	98-101
Macy’s, Inc. (M)	21	18-19.5	15.5-16.5
Owens & Minor (OMI)	37	33.5-35.5	30-31
Summit Materials (SUM)	30	28-30	25-26
Thor Industries (THO)	147	140-147	125-128

Current Market Outlook


With the major indices in record territory and the leading growth stocks showing strength, it’s hard to be anything less than bullish right now. Even at these elevated levels, the market has provided us with a few attractive entry points recently. But with earnings season well underway and sentiment still elevated, the potential for near-term volatility has increased. Thus, it’s imperative not to throw caution to the wind in this news-sensitive environment. Given the weight of evidence, being selective when buying is the preferred tactic. The dominant intermediate-term trend is clearly up, though, so you don’t want to be too defensive. We’ll keep our Market Monitor at 7 and see how things go from here.

This week’s list has a nice mix of stocks across several industries benefiting from different trends. Our Top Pick this week is CarParts.com (PRTS), which recently had a high-volume breakout from a huge basing pattern.

Stock Name	Price	Buy Range	Loss Limit
Agilent Technologies (A)	128	127-129	121.5-123
Analog Devices (ADI)	160	156-161	149-151
CarParts.com (PRTS)	21	19.5-22	17-18
Chegg (CHGG)	112	105-111.5	97-100
eXp World Holdings (EXPI)	80	74-79	62-65
Freeport-McMoRan Inc. (FCX)	33	31-33	27.5-28
Johnson Controls International plc (JCI)	53	52-54	49-50
Pinterest (PINS)	89	85.5-88	76-78
Square, Inc. (SQ)	276	263-273	240-250
Twitter (TWTR)	74	68-72	63-66

Current Market Outlook


Sellers finally landed a few punches last week, with many tech-related growth stocks finding resistance and the big-cap indexes losing a little ground. Given the big run of late, lots of speculation and signs of greed, we have our antennae up for abnormal weakness—but so far, there hasn’t been much (if any), with the pullbacks in the indexes and individual stocks appearing normal and other timing indicators (number of new lows, etc.) looking fine. In fact, some solid entry points could appear with a bit more weakness! We are seeing continuing rotation into more cyclical areas and out of some growth names, but the trends of just about all indexes and leaders are up, so we remain mostly bullish.

This week’s list has stocks from many different nooks and crannies of the market. Our Top Pick is Guardant Health (GH), from the strong medical area, as it’s come under major accumulation this year. It’s a bit extended so start small and/or aim for dips.

Stock Name	Price	Buy Range	Loss Limit
Cimarex Energy (XEC)	49.1	44.5-47.5	39.5-41.5
Enterprise Products Partners L.P. (EPD)	23.3	22-23.5	19.5-20.5
Farfetch (FTCH)	58.8	56-58.5	51-52.5
Guardant Health (GH)	160.0	152-162	132-137
Halozyme Therapeutics (HALO)	48.3	45-48	40-41.5
Shake Shack (SHAK)	111.7	106-110	91-94
Sonos (SONO)	27.0	25-26.5	22-23
TG Therapeutics, Inc. (TGTX)	50.2	46.5-49.5	41-42.5
The Timken Company (TKR)	85.0	81-85	74-76
Upwork (UPWK)	40.7	37.5-40	33.5-35

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the February 2021 issue.

We briefly comment on how the response by hedge funds to the Reddit trades may have led to last week’s sell-off and this week’s rebound in the stock market. Is there a bubble? Yes, and our note touches upon how all four ingredients of a bubble, outlined in a recent book on bubbles, are in place.



Earnings season is upon us. We review the reports from Dow (DOW) and JetBlue (JBLU), and look forward to six more reports in the coming week.



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