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You can analyze omicron’s spike protein, slice and dice the words of the Fed chairman or do a deep dive into last week’s jobs report all you want. But at the end of the day, all that matters now is that the sellers are in control. To be fair, some short-term measures are stretched, so some type of bounce is possible. Thus, if you’re already defensive, we wouldn’t be in a rush to sell a ton of stuff here, but there’s no question the onus remains on the bulls to begin repairing the damage. We’ll keep our Market Monitor at a level 5.

This week’s list is a hodgepodge of strong names, be it due to company-specific moves, earnings or sector resilience. Our Top Pick is a direct beneficiary of all things construction and infrastructure, and its stock is holding up well.

Inflation is back. And it might be for real this time.

Inflation has taken off since the end of the lockdowns this past spring. In September, the inflation rate rose to 5.4%, the highest monthly reading in 30 years. Inflation over the last twelve months is also the highest such measure in 30 years.



This inflation may prove to be a temporary side effect of the pandemic recovery that will fade away over the next year. But maybe not. Once that inflation genie gets out of the bottle it can be hard to put back. There are powerfull reasons why it could be worse than most expect.

The market has had some wobbles after a strong three-week run, and finding good buy points and keeping an eye on earnings reports remains vital. But overall, most of the evidence remains bullish, so we do, too. Most of the stocks we own are acting well, though we’re still wading through earnings season and will react if need be. In the meantime, we’re still aiming to add exposure, and are buying a half-sized position in an old friend tomorrow.

With the short holiday week and only three trading days since last week’s update, we will go directly to a new recommendation. Markets welcomed the nomination of Jerome Powell as head of the Fed for another term, believing that he will keep interest rates low through early next year. As for our stocks, Cloudflare (NET) had a down day yesterday but we have no change in recommendation.

Have a great Thanksgiving holiday.

Today’s new addition is a semiconductor company. It designs products that are the heartbeat of digital technologies. Its content is found in electric vehicles, datacenters, IoT devices, airplanes, mobile devices and more. It is benefitting from surging demand from Apple (AAPL) products, from which it generated 40% of revenue in 2020. While the market cap is a little larger than we typically look for, the opportunity warrants the exception at this time.

The marijuana sector peaked in February, bottomed from late March to mid-April, and since then has been building a base, preparing for a resumption of the big advance.

Fundamentals in the industry remain terrific, as second quarter results have recently revealed, and while the trend toward legalization in the U.S. continues, it’s taken a back seat at the federal level for now, so all the action remains at the state level.



In the portfolio today, we continue to hold patiently, with the portfolio one-third in cash, waiting for a new uptrend—but if you’re eager to buy now (while things look cheap) I do have some suggestions.



Full details in the issue.

While the market is up today, the correction that began a month ago remains in force, making it tough for stocks (growth stocks in particular) to make real headway. Thus we have four Sell recommendations today, as well as one upgrade to Buy.

As for the new recommendation, it’s a solid growth company that dominates a totally unexciting industry in the U.S., and long-term prospects are great.



Details inside.

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

For most of the year, we have an intense focus on long-term business fundamentals and underlying valuations. However, as year-end approaches, artificial selling pressure can create large enough short-term bargains that even we find worthwhile. We discuss several sources of selling pressure that can turn others’ losses into your gains, and list six stocks that look most promising.



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.

While growth stocks had a rough time last week, the broad market remains strong, and thus I continue to think you should remain heavily invested as we head into the last month of the year.

Today’s stock has the potential to be a huge winner as it occupies a central position in a world-changing trend, but risk is high—as it should be when potential is high.



On the sell side, Coupa Software (COUP) gets the ax today, as it is going the wrong way.



Details inside.

Good news was able to outrun the problems in 2021. But the problems are catching up. The economy ran so hot because if was picking up the slack from the pandemic and making up for lost time. But that slack will soon run out.

We are likely heading towards a more normal environment on the other side of the pandemic recovery. It is highly unlikely that market returns going forward are as high as they have been. That pace can’t be sustained. We are likely headed for choppier waters and a more sideways market where stock picking should be more crucial.



Inflation and rising interest rates may not be great for the overall market, but certain sectors can thrive in such an environment. In this issue, I highlight one such stock. The stock should shine on the other side of the pandemic recovery that lies ahead in the new year.

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

Most investors, and the general public, seem to regard the transportation industry as somewhat dull. But transportation is a fundamental component of human existence, and companies must constantly strive for relevance, and must now navigate a secular shift in fuel sources. We discuss five transportation companies that are updating their strategic playbooks with hopes of turning around their prospects.



The market has a bias against stocks that trade at low prices, making this a go-to source of contrarian investment ideas. We make our case for five such stocks.

This is a great time to sell covered calls.

The recent upward movement in the market increases upside speculation, and call premiums have risen. It’s a great time to take advantage of the recent surge in certain stocks to secure a high-income return. Even if the stock gets called, you are taking profits in a very high market ahead of what is likely a choppier environment.



In this issue, I highlight a covered call on the recently red-hot Qualcomm (QCOM). The stock soared 50% in a little over a month but has leveled off in recent days. It’s a great time to secure a huge call premium and lock in a huge income to go along with recent appreciation.

This month’s issue of Cabot Marijuana Investor comes a week early, due to Thanksgiving holiday next week. And that’s good, because the sector is finally looking healthy again.

In last week’s update, I recommended averaging up in two stocks and buying two new stocks, and in this week’s issue, I give you the whole picture. It’s not too late to buy.



Full details in the issue.

You can still find sky-high yields.

Despite the recovery in the overall market, there are still lingering pockets of high yields. It reminds me of the years following the financial crisis. You could still find good stocks that paid a sky-high income relatively easily. But the situation didn’t last. Those high yields on quality stocks evaporated as investors realized the opportunity.



Some of the current high yields probably won’t last long either.



At the same time, it’s a great time for cyclical stocks. The economy is still booming. Plus, we are likely at the point in the economic cycle where such stocks tend to do best. We are likely still in the early stages of a bull market and recovery.



In this issue, I found a stock that benefits from both opportunities. It has a stratospheric 11.5% yield that likely won’t last. At the same time, the yield should be safe and growing as the company is highly cyclical.

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

Volatility is a value/contrarian investors’ friend. With the markets becoming more volatile, we’ve made some changes to the portfolio this past month. We recently added ConocoPhillips (COP), a major oil and gas producer that is also an undervalued cash flow machine at current commodity prices.

The marijuana sector peaked in February, corrected strong for a couple of months, and since then has been sinking slowly lower, shaking out weak hands as it prepares for its next upmove.

Fundamentals in the industry remain terrific, as I am confident third-quarter results will soon reveal, and while the trend toward legalization in the U.S. continues, it’s taken a back seat at the federal level for now, so all the action remains at the state level.



In the portfolio today, we continue to hold patiently, with the portfolio more than one-third in cash, waiting for a new uptrend—but if you’re eager to buy now (while things look cheap) I do have some suggestions.



Full details in the issue.

Last week we sold four stocks from the portfolio, clearing away the weakest stocks and giving us some breathing room (and cash), so this week there is no need for more selling But I do have two downgrades to hold (CSCO and SE).

As for today’s recommendation, it’s a household name whose stock is temporarily on sale—and you get a nice dividend too.



Details inside.

The market situation is changing. Amidst persistent high inflation and concerns about future economic and earnings growth, investors are adjusting. Energy is up nearly 40% YTD as that sector benefits from inflation. Utilities and Consumer Staples are also thriving as investors focus on value, defense, and income in the market uncertainty.
Many stocks in the CDI portfolio have performed well and are likely to continue doing so. But because of the high prices they are rated a HOLD. However, there are two standout positions. In this month’s issue, I highlight two stocks that have what it takes in this market. They both benefit in the current environment, sell at reasonable valuations, and pay sky-high yields.


The market situation is changing for the worse overall. But there are still great opportunities if you know where to look.

The market remains healthy and thus I continue to recommend that you remain fully invested in a diversified portfolio. My last two recommendations were chip companies that consumers can’t really “see,” but this week’s recommendation is a consumer-facing company, so you can easily “kick the tires.”
As for the current portfolio, there are no sales, but four stocks get downgraded to Hold, for various reasons.


Details inside.

From a top-down perspective, there’s really not many stones you can throw at the market given where it was just three weeks ago. However, when looking at individual stocks, it remains a tricky environment—specifically, most stocks that have approached their old highs have either stagnated or been soundly rejected, with the action has thus far been concentrated in the worst performers of the prior few months. To be clear, we see this more as descriptive than predictive, but we’ll have to see the selling-on-strength vibe change if the upmove is going to continue to gather steam.



This week’s list is again a mixed bag, with some growth but a lot of commodities and cyclicals, too. Our Top Pick is a big player in the steel space that just recently emerged from a big rest period.