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A strong earnings season has propelled the broad market to fresh highs, and as we enter mid-August, “rotation” has become the buzzword of the moment.

We’ll respect this action by not pressing too hard on the gas today. But at the same time, with a number of attractive setups floating across my screen, we’re not going to be wildly conservative.

We step up to the plate and take a swing at three new positions today.

Two of the past three weeks have had odd mid-week holidays, which combined with the time of year, has led to some pretty slow trading since the tail end of June. We’re now seeing more tightness and legitimate setups out there, so if the buying pressures spread we think there could be a surprising number of names that provide solid entry points. While there are some signs that could be starting, earnings season is set to ramp, and as always, that will likely tell the intermediate-term story. For now, given that the market’s decent-but-tricky evidence hasn’t changed much, our advice isn’t changing, either. Our Market Monitor remains at a level 7.

This week’s list has another batch of intriguing setups that could go if the market cooperates. Our Top Pick has always had a good story and great numbers, and now the stock seems to be ready to move as its sector comes back to life.

While there’s a very possibility of a good market bounce after last week’s washout, the overall picture is still very weak and thus continued defensiveness is still advised.
This week’s recommendation is the world’s largest manufacturer of industrial robots, yet most U.S. investors don’t even know its name. It looks like a great low-risk buy here.


As for the portfolio, we’re selling one stock, a small company in the beleaguered technology sector.


Details inside.

Stay cautious for now as we wait to see whether growth stocks can find their footing (which they’ve done for a couple days in a row now).

Our portfolio has been largely treading water for a few weeks. That’s not surprising given that we’ve been waiting for earnings season to start (it finally has!) and that there’s this persistent sense that bad news for the economy resulting from the coronavirus equal more stimulus and accommodative fiscal policy equals support for equity markets and, in some ways, good news for certain tech and MedTech companies.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the October 2022 issue.

Following the sharp drop in stocks due to fears of a major policy error, we see an opportunity for subscribers to add to their existing positions in many of our recommended names at very attractive prices.

Is a deep recession likely? Perhaps we are instead experiencing an old-fashioned inventory cycle.

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.

This month we’re looking past all the current uncertainty in the market at a profitable, young company that should hold its own during this rough patch then accelerate growth into the back half of 2020 (assuming the pandemic eases as we move into the summer months).

The company offers intelligent identity solutions for global enterprises. These solutions are strategic imperatives because they help workers do their job from anywhere and help companies streamline customer experiences.



It’s not the type of stock that’s likely to surge on expectations of an immediate surge in demand, like Zoom Video (ZM) or Teladoc (TDOC). But with 115% net revenue retention the company should grow with current clients in the near-term, then grab its fair share of new business once economic activity picks up again.



We start today with a half position given the market conditions. All the details are inside.

Current Market Outlook


The downtrend continues, with the major indexes extending their latest leg lower, with most reaching new lows this morning and some (like the S&P 600 SmallCap) falling more than 20% from their all-time peaks. We continue to keep a very open mind, especially given the horrific sentiment environment that’s emerged—various measures tell us investors are beginning to throw in the towel, which, combined with the fact that we still see many resilient growth stocks means it wouldn’t shock us to see another rally attempt unfold. But that’s speculation at this point—with the trends pointed down for the market and most stocks and sectors, you should remain in a defensive stance, with most of your portfolio in cash and, if you buy, buying just small positions.

This week’s list is another that’s full of stocks we think can do very well if the market can get going. Our Top Pick is Tableau Software (DATA), one of the strongest growth stocks in the market today as big investors buy into its transition to the cloud.

Stock Name	Price	Buy Range	Loss Limit
Ciena (CIEN)	44.25	32-33.5	29-30.5
Cree, Inc. (CREE)	67.96	42-44	39-40
CyberArk (CYBR)	111.74	68-71	63-64.5
Franco-Nevada (FNV)	125.51	69.5-72	63-64
MarketAxess (MKTX)	439.96	213-218	200-204
PayPal (PYPL)	147.00	82.5-85	77-78
Pinduoduo (PDD)	87.53	21-22.5	17.5-19
Tableau Software (DATA)	126.42	116.5-121	107-109
Twilio (TWLO)	183.39	85-89	75-77
Twitter (TWTR)	40.37	32-34	29-30.5

In tonight’s issue, we go over all our recent moves, dive into the recent action in one of our stocks and review one of our proprietary indicators that, along with some precedent analysis, adds further evidence to the market’s bullish outlook.

We’re adding what we believe can be a leading glamour stock of the bull market. Elsewhere in tonight’s issue, we write about the recent long-term breakout by Chinese stocks.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Agnico-Eagle Mines (AEM), GE Aerospace (GE), Paramount Global (PARA), Sirius XM (SIRI), Teladoc Health (TDOC) and UiPath (PATH).

Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico-Eagle Mines (AEM).

Trump’s tariffs are directly, or indirectly, roiling some of holdings, including Sirius XM (SIRI) and UiPath (PATH). The favorable long-term outlooks for both stocks remain unchanged, however.

This is, almost certainly, our last update before the Fed starts slashing interest rates for the first time this year. According to the CME Group’s FedWatch Tool, there is now a 100% chance Jerome Powell and company will cut rates by some amount on September 17; 90% think it will be by 25 basis points, another 10% think it will be by 50 basis points, much like last September.

The Dow was up big today but growth stocks are still having a rough time, and I’m growing increasingly concerned that the broad market will eventually roll over, too. The news has been so good, and investors have become so bullish, that eventually we’re going to need a big correction.

Last week I recommended selling four stocks and this week I’m recommending selling two more.



In the meantime, I’ve got to recommend something to buy; that’s the name of the publication! So today’s recommendation is a little-known small company in a solid industry that will likely be substantially larger in years to come.



Details inside.

Stocks spent the holiday-shortened Thanksgiving week getting well and are again knocking on the door of all-time highs after a sharp pullback through most of November. Value stocks never retreated the way growth titles did, though, and are appearing more in favor by the day. That includes consumer staples, which are still undervalued despite recent momentum. In this month’s Cabot Value Investor issue, we add a once-prominent name from that group that trades at less than half its early-2025 highs – and yet the company never stopped growing. In fact, its sales are accelerating, making it a prime buy-low candidate.

Details inside.

This month we’re jumping into a software company that’s developed an innovative product for the emerging gig economy. But it’s not another Airbnb, Lyft or Uber. No apartments for rent or cars for hire here.
Rather, just like eBay and Etsy have created online marketplaces for buyers and sellers of physical goods, this company has created a marketplace that matches buyers and sellers of digital services—things like graphic design, writing and web development.


As the gig economy explodes this company is poised to enjoy rapid growth. And while no company is inoculated from the coronavirus, this one has some protection since it’s part of the digital, not physical, economy.

This month we’re jumping into a company that specializes in precision medicine for cancer.



It has developed a sequencing platform that is able to analyze over 20,000 genes, far more than most competitor solutions. Even better, this platform allows analysis of both tissue biopsies and liquid biopsies.



Ultimately, the company is going after a roughly $40 billion market. Yet its market cap is a mere $1 billion today.



This company is still unknown, but that’s likely to change as it brings new products to market and continues to transform the market for personalized cancer vaccines and next-gen cancer immunotherapies.



All the details are inside. Enjoy!

The market party is on, but someone forgot to tell healthcare stocks.

They’re the only one of the 11 S&P 500 sectors that is actually down in the month since the presidential election. That has everything to do with these five letters: RFK Jr. But are concerns about Trump’s controversial pick to lead the Health and Human Services Department overblown? It appears Wall Street is starting to think so, as the sector has been in steady recovery after an initial sell-off. Still, as a whole, healthcare stocks have been the weakest performers of any major sector this year. And that spells opportunity for value investors.

In today’s issue, we add a big-name, undervalued healthcare stock to our Buy Low Opportunities portfolio. It’s a company whose name you likely know – and that’s showing signs of more consistent profit growth.

Details inside.

The market overall and growth stocks in particular have shown great improvement during the past two to three weeks, with the major indexes hitting new highs and selling pressure drying up.

Granted, it’s late August, so we’ll see what big investors do when they come back from the beach next week, but given the evidence we’re continuing to put money to work. Tonight, we’re adding one new name, leaving us with around 17% in cash.

Nearly impossible to ignore in the financial and mainstream media are updates about the ongoing negotiations to avoid a default on its obligations by the U.S. federal government. Accompanying the news is the countdown to the X Date, the unofficial date when the government will run out of authority to make further payments because it will exceed the $31.4 trillion statutory debt ceiling.

In tonight’s Cabot Growth Investor, we review all our stocks and highlight some names we’re watching, including one that’s set up very well ahead of earnings. We also dive into some details about how we run our ship—we’ve gotten a few questions about this lately, and we think this will clear up any questions you may have.