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We’re going to step aside from Byrna Technologies (BYRN) today.

Buy Second Half Reddit (RDDT)

Mike, Thanks so much for a great year of stock recommendations! If you only knew how much better you’ve made my life through your service. You’ll never know how grateful I am that I stumbled upon Cabot Growth Investor. I look forward to another stress free investment year in 2014. Thanks again for your service and for all I’ve learned from you, Paul, Tim, etc.
J. Schnereger, Boise, Idaho

By bringing buyers and sellers together, BitAuto is performing a valuable service and enjoying great results.

Despite some heavy selling pressures early last week, the market rallied to close the week following Nvidia’s (NVDA) blowout earnings report that highlighted the growth potential of AI. By week’s end the S&P 500 had gained 1.2%, while the Dow rose marginally and the Nasdaq fell slightly.

Tyler Laundon, Chief Analyst of Cabot Small-Cap Stocks and Cabot Early Opportunities speaks about Software Stocks.

Among the topics he covers:
* A look at current software stock valuations
* Software in context: Trends over the last 25 years
* Software today: More options than ever
* Software stock opportunities for 2021

While the financial news obsesses over what the Fed might have vaguely implied in the latest statement, the world is morphing into a different place. The demographic of humanity is rapidly transforming in a way that will massively affect the flow of money for the rest of our lives. The world is currently undergoing a technological revolution that is transforming society and everyday life.

The aging population and the technological revolution are megatrends that will dominate the investment landscape for years to come regardless of what the Fed does, or GDP in the next few quarters, or whoever gets elected president. It’s not an accident that the best performing stocks in the Cabot Dividend Investor portfolio are in healthcare and technology. Nor will it be an accident that these same stocks continue to dominate from this point forward.

In this issue, I highlight the massive opportunity to position yourself in front of a tsunami that could provide the best investments of your lifetime.

The market had a nice run in October, with the Dow Jones Industrial Average gaining 14% for the month.

The economy continues to look pretty good, with manufacturing steady, construction spending up, and employment still healthy, despite a 200-basis point increase in the unemployment rate, now 3.7%.

The Federal Reserve once again boosted the Fed Funds rate by 0.75% this month, which the markets had already built in. Right now, it looks like Fed Chair Jerome Powell may target rates even higher than the 4.5-4.75% initially projected, but the rate increases might come in smaller doses.

Stocks keep rising to new highs, though only a handful of sectors are truly participating in the rally. That will need to change if the market is to sustain its recent momentum, but for now, we’ll go with the tides and lean into one of the new-age subsectors that’s been attracting major sponsorship: GLP-1, a.k.a. weight-loss drugs. They’re all the rage these days and have driven portfolio holdings Eli Lilly (LLY) and Novo Nordisk (NVO) to great heights. And today, we add a more under-the-radar, indirect play on the trend in the form of a mid-cap health food upstart that was recently recommended by Tyler Laundon to his Cabot Early Opportunities audience.

Details inside.

Current Market Outlook


After two weeks of dreadful action, the perfect storm crashed down on Wall Street this morning, with imploding oil prices and more virus/economic fears causing a panic, though the damage was limited after the open. Short-term, today brought many truly extreme readings (more than 2,800 stocks hit new lows on the NYSE and Nasdaq combined!), so short-term, some sort of bounce or relief rally is possible (even probable). That said, (a) the nature of this decline has been breaking some rules, so there are no sure things, and (b) our focus remains on the intermediate-term, where the trends of just about everything are pointed down. Thus, while we’re keeping our eyes open, we’re focusing mostly on capital preservation and hunting for the potential big winners for the next uptrend.

This week’s list is a great place to start, whether you’re building a watch list or looking to nibble. Our Top Pick is Vipshop (VIPS), which is one of many Chinese stocks that is acting very well.

Stock Name	Price	Buy Range	Loss Limit
eHealth (EHTH)	122.74	125-133	105-108
Etsy (ETSY)	112.97	54.5-57	48.5-50.5
Everbridge (EVBG)	107.90	102-107	91-93
GSX Techedu (GSX)	97.59	38-41	32-34
iRhythm Technologies (IRTC)	51.15	86-89	78-80
Newmont Mining (NEM)	57.31	46-48	42.5-44
Teladoc, Inc. (TDOC)	127.95	123-130	105-108
Tradeweb Markets (TW)	51.44	45.5-47	42-43
Vipshop Holdings (VIPS)	14.25	16-17.5	13-14
ZTO Express (ZTO)	28.84	25.5-26.5	23-23.5

Current Market Outlook


The market continues to gyrate wildly, gapping up or down based on the news of the day. In the short-term, the indexes (and most stocks) have etched out a little trading range, and that could continue for a while longer. But the main trend remains down, so you should be using these bounces as a chance to unload any broken stocks and raise cash if you’ve yet to do so. On the buy side, we are starting to see the wheat separate from the chaff, but it remains too early to put any big money to work; a couple of small positions is fine, but we suggest focusing mostly on preserving capital for the next sustained run—that’s when the big money will be made.

This week’s list includes with some recently strong themes (medical, construction and retail), including a couple of recent IPOs. Our Top Pick is one of those newly-public firms—Planet Fitness (PLNT) has a good story and the stock has shown solid relative strength since coming public.

Stock Name	Price	Buy Range	Loss Limit
Signet Jewelers (SIG)	0.00	135-140	125-127
Post Holdings (POST)	0.00	63-65	59-60
Planet Fitness (PLNT)	0.00	17-19	15-16
PDC Energy (PDCE)	0.00	53-56	48-49
Medicines Company (MDCO)	56.98	38-41	34.5-36
Lululemon Athletica (LULU)	304.69	64-66	60-62
JetBlue Airways Corporation (JBLU)	0.00	23-24	21-21.5
TopBuild (BLD)	111.00	32-34	29.5-30
Anacor Pharmaceuticals (ANAC)	0.00	125-132	118-120
AMN Healthcare (AHS)	0.00	33-35	31.5-32

I previously gave you a heads up that new low-sulfur diesel regulations (IMO 2020) and a serious hog disease in China (African Swine Fever) are quite likely to increase inflation numbers in 2020 and beyond. Are you ready for the next sweeping industrywide change that will be hitting the credit markets?

Fourth quarter 2019 earnings season began yesterday with a few large banks reporting very strong results.

In this month’s issue of Cabot Turnaround Letter, I recommend a company I’ve been fond of all the way back to 7th grade. It’s a household name, but one that’s perhaps been forgotten on Wall Street in recent years. But now, it looks primed for a turnaround.

Details inside.

Another interest rate hike and negative second-quarter earnings growth have done little to slow the bull market rally or investor confidence, so this week we add a “Bull Market Stock” to take advantage of the strength. It’s a term coined by our Mike Cintolo, so naturally, today we add Mike’s favorite Bull Market Stock, one he recently recommended to his Cabot Top Ten Trader audience, a company that benefits directly anytime there’s a bull market and the big institutions are buying stocks hand over fist.