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Consumer discretionary is reporting the second-highest yearly earnings growth rate of all S&P 500 subsectors, which sets up an opportunity in overlooked retail stocks.

WHAT TO DO NOW: Hold your strong stocks, but near-term, it’s OK to sit on your hands a bit and see how things shake out. The overall evidence remains bullish, but there have been some yellow flags of late and yesterday’s broad, sharp decline is likely to have some near-term reverberations. We took partial profits in Arista (ANET) yesterday, selling one-third of our shares, and placed Pulte (PHM) on Hold, leaving us with around 33% in cash—and some great performers. We’ll stand pat tonight, though if things settle down for a couple of days, we could put some of our cash back to work.

Identity theft is big business, and identity theft protection is more important than ever. Here’s how to profit from the companies keeping your ID safe.

Most of the evidence remains bullish, so we continue to hold our winners and selectively put money to work — but the fact is that most growth stocks have been chopping sideways overall for a month or two, so we’re OK holding some cash and waiting patiently for the market and leaders to show their near-term hand. Tonight, we’re booking a little more partial profits in one of our winners, but are standing pat otherwise and will follow the lead of the market—and of leaders—going ahead.

Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the March 2024 issue.

We discuss the similarities between poker and value investing. This past month we moved two stocks from Buy to Sell – Allison Transmission (ALSN) as it reached our price target, and Sensata Technologies (ST) as its management continues to take a path that is not shareholder friendly.

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.

ESG (Environmental, Social and Governance) investing is morphing into “transition investing.” Here’s what it means, and three funds to consider for investors.

After years of being either ignored or sold off, value stocks are finally having a moment on Wall Street. The Vanguard S&P 500 Value Index Fund (VOOV) is up 25% in the last five months and is actually outpacing growth titles over the last month. Still, it’s a bull market, and growth stocks are king. How to compete as value investors in a growth-minded market? By seeking growth stocks at value prices.

Today, we do just that, adding a household name that’s been rejuvenated thanks to a shift in industry trends. The stock is up 18% year to date, and yet its shares remain dirt cheap by virtually every measure.

Enjoy!

When it comes to the market and especially leading, Top Ten-type stocks, we’re increasingly seeing a game of ping pong occur—one day, the market and most stocks are up, but a day or two later will see selling, with many names that were perking up smacked right back down. We learned long ago not to anticipate things, so we continue to lean bullish but are also being selective. We’ll move our Market Monitor back to a level 7, but the real key is to remain flexible and take things on a stock-by-stock basis.

Meanwhile, our screens continue to find strong situations, including some decent setups should the market get moving. Our Top Pick this week is a name from the chip sector that erupted after earnings in February, but has spent two months calming down and is now standing just above support. A resumption of the rally from here would be tempting.

AI is everywhere these days, including your bank and brokerage accounts. Here are 11 ways you can expect artificial intelligence to impact your finances.

Using ETFs to add a gold inflation hedge to your portfolio is far simpler than investing in physical gold, here are two options I like.

It is with mixed emotions that I am writing my last Cabot Value Investor issue. My nearly four years as part of the Cabot team have been exceptionally rewarding. I have had the opportunity to work with an exceptional research team – who bring talent, dedication and investment results that readily match and likely exceed most Wall Street sell-side and buy-side analysts. Our Cabot analysts, despite their very different investing styles, have helped me become a better investor.

With declining investor interest and widespread criticism of “woke capitalism,” socially conscious investing is ditching the “ESG” label in favor of a more pragmatic strategy: transition investing.

Rising prices could readily prompt short covering in the energy sector, and these two oil stocks are prime candidates for a short-covering rally.

It’s been an encouraging week in the market—both the S&P 500 and Nasdaq are up in the 2% range, while broader indexes and growth-heavy measures are up more.


For much of 2022 and 2023, buying pressures weren’t able to persist—yes, there were rallies, but they usually went just three to five weeks before the bulls pulled in their horns, leading to renewed downside.

Sizing up a merger arb opportunity requires more than just garden variety equity analysis. In his famous letter to Berkshire Hathaway shareholders in 1988, Warren Buffett laid out four questions to answer regarding arbitrage situations:

1. How likely is it that the promised event will indeed occur?
2. How long will your money be tied up?
3. What chance is there that something still better will transpire – a competing takeover bid, for example?
4. What will happen if the event does not take place because of anti-trust action, financing glitches, etc.?

Today, we add a new Cabot Turnaround Letter recommendation that we think comes close to answering all four.

Copper prices and copper stocks have been sizzling of late, and these two stocks are primed to benefit in a world with growing copper consumption.

Most growth leaders and even the Nasdaq itself has been churning since early February, with a lot of ups and downs but not much price progress—but this week has been more encouraging, as the selling pressures have been unable to persist and the major uptrend may be reasserting itself (basically the opposite situation that was seen repeatedly in 2022-2023). That doesn’t mean it’ll be smooth sailing from here, so we’re still being discerning on the buy side, but we’re holding our winners and remaining in an overall optimistic stance.

In the Model Portfolio, we cut bait on one half position earlier this week that was heading in the wrong direction, but we’re holding our strong performers and tonight are putting a chunk of money to work.