Search

Talking about sell disciplines can feel like admitting defeat, but it’s not.

Halloween was Monday, but it seems like the stock market has been playing tricks on investors all year.

An undisciplined trader will want to dive back in at the first decent bounce.

Stay flexible and be willing to adjust to the evidence that comes at you.

Chip stocks that were cheap after being dumped are climbing now with the market.

That tech stocks would cool a bit has been one of my key themes over the past few issues; and September has seen it come to pass.

Market goes up, get in. Market goes down, get out.

Four of our stocks reported first quarter earnings.

Many analysts have been touting the coming correction, which has not yet appeared.

Here are some questions members often ask our analysts or make an important point. It’s a good place to look first if you need an answer to your own question.

Current Market Outlook


The market’s immediate post-election action was divergent and confusing, with some stocks soaring and others plunging, and most indexes still confined to sideways trends. But that’s changing—by our measures, the intermediate-term trend has turned up, joining the longer-term trend in positive territory. And we’re now seeing more solid set-ups (and a few breakouts) in growth stocks, which are joining many Old World stocks and sectors at new high ground. Even the S&P 500 and Nasdaq are getting in on the fun, as both tested virgin turf today. It’s not all peaches and cream, but after nudging up our Market Monitor one notch last week (to level 5), we’re pushing it up two more slots this week (to level 7), reflecting the more positive environment.

This week’s list goes along with the strength we’re seeing in the market, as financial, gaming construction/metals, biotech, cybersecurity and transportation stocks are all represented. Our Top Pick is MGM Resorts (MGM), a big-cap name that’s showing excellent power since its earnings report two weeks ago.

Stock Name	Price	Buy Range	Loss Limit
Charles Schwab (SCHW)	0.00	35.5-37.5	31.5-32.5
Commercial Metals (CMC)	0.00	19.5-20.5	17.5-18
Exelixis (EXEL)	27.35	15.5-16.5	13-13.5
Granite Construction (GVA)	0.00	55.5-57.5	51-52
Inphi (IPHI)	120.16	44-46	41-42
MGM Resorts (MGM)	0.00	27-28.5	25-26
Micron Technology, Inc. (MU)	43.31	18.5-19.5	16.5-17.5
Palo Alto Networks (PANW)	236.92	172-180	156-162
Terex (TEX)	0.00	26.5-28	24.5-25
United Continental Holdings (UAL)	96.76	64-67	57.5-59.5

Current Market Outlook


The major indexes actually made decent gains last week, though that came on the heels of a major breakdown the week before. In the short-term, last week’s show of support was encouraging; it could be the start of a multi-week bottoming process following the extreme selling pressure. If you want to trade stocks, taking small positions on dips could be worthwhile. However, remember that the bigger picture remains bearish—the major trends of the indexes are clearly down and most stocks have a ton of overhead supply to deal with. Thus, you should remain overall defensive, holding lots of cash and focusing more on building a watch list than trying to make a bunch of money here.

This week’s list has some steady growth stories as well as a few earnings winners from last week. Our Top Pick is Dycom (DY), a leading provider of construction services to the telecom industry, which is dramatically expanding its bandwidth. It’s not a long-term growth story but should be in great shape for at least another few quarters.

Stock Name	Price	Buy Range	Loss Limit
Vantiv (VNTV)	0.00	43-45	40-41
Under Armour (UA)	0.00	95-97	89-90
Tyler Technologies (TYL)	0.00	135-138	116-120
TransDigm (TDG)	599.41	224-232	213-215
Sarepta Therapeutics (SRPT)	120.93	35-36.5	30-31
Incyte Corporation (INCY)	76.98	116-120	96-100
Flotek (FTK)	0.00	18-19	16-17
Express (EXPR)	0.00	19-20	17.5-18
Dycom Industries (DY)	0.00	65-68	59-60
Buffalo Wild Wings (BWLD)	0.00	188-194	179-180

Current Market Outlook


A batch of disappointing earnings reports combined with the 2015 overhead resistance areas (around 2,080 to 2,140 on the S&P 500 and 5,000 to 5,200 on the Nasdaq) to bring out the sellers last week, especially in some big, old tech stocks, which drove the Nasdaq below its 50-day line. However, the other indexes are in good shape, and while a few stocks have cracked on earnings, most are holding up just fine. The bottom line is that, to this point, not much has changed—the market still doesn’t have the leadership we’d like to see, but the trend is up and the broad market is in good shape. Thus, you should be holding your top performers (though booking some partial profits here and there is always smart) and using normal retreats in strong stocks as buying opportunities.

This week’s list is a hodgepodge of stocks from all over the map, including some growth, commodities and turnarounds. Our Top Pick is Teck Resources (TCK), a giant turnaround play in the commodity space—the firm remained profitable throughout the bust, and after a great quarterly report, earnings are expected to boom in the quarters ahead.

Stock Name	Price	Buy Range	Loss Limit
United States Steel Corporation (X)	0.00	19-20	17-18
VCA Inc. (WOOF)	0.00	61.5-63	57-58
Teck Resources Limited (TCK)	0.00	11-12	9.5-10
Square, Inc. (SQ)	91.04	13.5-14.5	12.5-13
Monster Beverage Corporation (MNST)	0.00	145-150	134-136
Core Laboratories (CLB)	0.00	125-129	113-115
Boardwalk Pipeline Partners (BWP)	0.00	15-15.5	14-14.5
Boston Scientific (BSX)	0.00	21-22	19.5-20
Banc of California (BANC)	0.00	19-20	17-17.5
Amazon.com (AMZN)	2.00	660-680	605-615

The market is at a crossroad.

It is possible that we could get through this cycle soon and without a recession. The market could rally to new highs without much more trouble. On the other hand, a more hawkish Fed or deeper economic downturn than currently anticipated could cause another market plunge.

You could just bet on one scenario and hope for the best. But there might be a better way to navigate these waters. Instead of gambling on a certain outcome, we can buy stocks that should thrive in both bull and bear markets.

In this month’s issue, I highlight four current portfolio positions that are “all-weather” stocks. These stocks should do just fine if the market takes off and doesn’t look back in a soft landing. But they should also perform relatively well in case a more ugly scenario unfolds. They should be solid in almost any kind of market environment and pay you a great income in the meantime.

The markets traded sideways through most of April. But since then, the choppiness has returned—along with worries about the uncertainty regarding the debt ceiling, the expiration of the immigration-limiting legislation, and ongoing debate about the possibility of a recession.

Yet, economically speaking, the trends are still healthy. Manufacturing has held up, employment continues to rise, and job openings are still underutilized (as you can tell if you’ve been in a restaurant lately!).

It’s election week, and it will be the elephant in the room for investors until a winner is declared. Will that be before the market opens on Wednesday, as in 2016? Will it take until this weekend, like it did in 2020? Or could this toss-up election drag out even longer, a la Bush/Gore in 2000? Either of the two former scenarios probably wouldn’t impact the market much. The latter would, at least for a time. So let’s all hope for a quick result. Sprinkle in the latest round of Fed cuts later in the week, plus more than a handful of earnings reports for Stock of the Week stocks, and it’s an incredibly pivotal week for the market.

With so much up in the air, today we add a relatively “safe” large-cap stock with a decent yield, low beta and impressive earnings growth. It’s been a staple of Tom Hutchinson’s Cabot Dividend Investor portfolio for quite some time.

Details inside.

This year’s strong market has surprised most pundits. Hopefully, the good times last. Anything is possible.

I don’t want to get into the business of trying to predict what the market will do over the rest of the year. Even if you get things right, some stupid headline can come out of nowhere and change all the math. There’s a much better way than market timing.

Buying good stocks cheap is perhaps the best way to assure good returns over time. Different market sectors go in and out of favor all the time. Technology stocks were out of favor at the beginning of this year. No one wanted energy stocks at the beginning of 2021.

You may not think there are a lot of bargains anymore. Sure, it’s a bull market for the indexes. But it is still the darkest days of the bear market in certain places. Defensive stocks in utilities and other sectors are wallowing near the lows of last October while the indexes are whooping it up.

In this issue, I highlight three defensive portfolio positions. These stocks are all selling near 52-week lows and, in some cases, multi-year lows. But operational results at these companies have been as strong as ever. And all these currently out-of-favor stocks have long histories of superstar performance that blows away the returns of the overall market.

Forget the Fed, and inflation, or the velocity of the landing. Buying some of the very best dividend stocks on the market near the lowest valuation at which they ever sell should be a money-making strategy regardless of what happens with all that other stuff.

In January’s Issue of Cabot Early Opportunities we take a trip down memory lane to January 2020, and try to take some of our own advice that seems even more timely now.

We also dig into five stocks that cover a wide variety of end market exposures. We unpack a small stock that represents a play on infrastructure and clean energy, two rising stars in MedTech, a consumer name that just won’t quit and even a beaten down growth stock that should recover as people get back out there later in 2021.



As always, there should be something for everyone!

We started to see the market shake and bake a bit last week, which isn’t unusual considering the heady run the indexes and dozens of growth stocks have had since the late-June low. Exactly what happens next is anyone’s guess; our feeling is simply that the next month will probably be more difficult than the last month, so you should expect a few potholes or sudden selloffs. But with the main trend still pointed up, we think higher prices are likely in the weeks and months ahead. Thus, while plunging into a bunch of stocks right now probably isn’t the best idea, we do think you should work to remain (or work toward becoming) heavily invested.

This week’s list has some old friends and a couple of new faces. There’s lots of strength to choose from, but our favorite is Michael Kors (KORS) a fashion house with ambitious growth plans.

Stock Name	Price	Buy Range	Loss Limit
Under Armour (UA)	0.00	69.5-71.5	64-65
Ocwen Financial (OCN)	0.00	49.5-52	45.5-46.5
LKQ Corp. (LKQ)	0.00	28.5-30.5	25-27
Michael Kors Holdings Limited (KORS)	73.22	69-72	63.5-64.5
Jazz Pharmaceuticals (JAZZ)	0.00	77-80	74-75
Harman International Industries, Inc. (HAR)	0.00	66-69	59-60
Facebook, Inc. (FB)	0.00	37.5-39.5	32-33
Cubist Pharmaceuticals (CBST)	0.00	59-62	52-54
Baidu (BIDU)	0.00	130-136	118-120
Activision Blizzard, Inc. (ATVI)	0.00	17-18	15.5-16

Current Market Outlook


The market has been shaking and baking during the past three weeks on lots of headline (mainly currency-related) news, but while there has been some damage, the major indexes are holding key support and relatively few stocks have fallen apart. Of course the evidence can change at any time, and if the market really breaks down, we’ll turn cautious. But, despite the whippy day-to-day action, we’re sticking to our bullish stance, and believe holding your best performers, and even doing a little buying at opportune times, will prove fruitful.

This week’s list is once again heavy on the medical and retail sectors, though there are a few other tempting ideas out there, too. Our Top Pick is Urban Outfitters (URBN), which has come back to life after a long period out of the limelight.

Stock Name	Price	Buy Range	Loss Limit
WisdomTree (WETF)	0.00	20-21	18-19
Vulcan Materials Company (VMC)	137.10	80-83	75.5-76
United Therapeutics (UTHR)	0.00	164-168	158-160
Urban Outfitters (URBN)	0.00	43.5-45	38-39
SunEdison (SUNE)	0.00	22.5-24	20.5-21
IPG Photonics (IPGP)	0.00	96-99	87-89
Horizon Therapeutics (HZNP)	49.89	21-23	19-19.5
GrubHub (GRUB)	140.03	42-44	39-39.5
Foot Locker (FL)	0.00	59-62	56.5-57
American Eagle (AEO)	0.00	16.5-17.5	15-15.5