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Most stocks on the Cabot Undervalued Stocks Advisor recommended list had strong performance this past week. Part of the strength was perhaps due to money managers’ general optimism that seems to brighten with turn of the calendar. With last year’s bonuses firmly in the bag, professional investors often view January as the start of a new clock. This translates into a higher tolerance for risk-taking, as there are nearly 12 months ahead to make up for any mistakes. Cyclical and value stocks tend to be major beneficiaries of this optimism.

It’s been said that the four most dangerous words in investing are “this time, it’s different.” The stock market’s behavior is clearly pointing to things being different this time.

With all of our stocks now having price targets assigned to them, we thought we’d share with you some of our process behind how we set those price targets.

With the stock market regularly surging to record highs, it may seem like an unusual time to focus on valuation. After all, many stocks are remarkably expensive on traditional measures, and even somewhat lofty on non-traditional measures. But valuation still matters, especially if the market loses its current luster (assuming that is even possible)!

Earnings season is upon us again. This quarterly ritual, when all public companies report their most recent results, is when investors can see hard facts about revenues, profits and balance sheets, as well as hear softer commentary from management about their explanations, outlook and plans.

With low interest rates and easy borrowing terms, and some supportive jaw-boning and incremental buying by the Federal Reserve, new corporate debt issuance in the United States is reaching record highs.

It’s not news that the stock market has been sloppy lately. After the steady march upward to a doubling of the S&P 500 from the early 2020 low, and a 33% increase from year-end 2019 before the pandemic, one can hardly be disappointed in the market’s performance.

The market seems to have settled into complacency. We’re in a period after first-quarter earnings reports and government statistics indicate a surging economy, yet investors rightfully wonder if or when the Fed will raise interest rates and are starting to consider what happens after the post-pandemic boom.

Crista has two rating changes today and reports on another with a good 2020 outlook.

Just like that, the stock market emerged from its dark mood of October 30th to surge 8.6% in six trading days, with reinvigorated optimism following the evaporation of the election cloud and news of a very promising Covid vaccine.

Over the past month or so, it seemed like stocks would continue their frenetic surge. This week, however, the market appears relatively lackluster with a lot less excitement. Some investors may yearn for more fireworks, but as a value investor, I find this calm to be more sane.

This week, we are rolling forward our valuation comments – generally dropping our valuation based on 2021 estimates, where appropriate, while adding commentary based on estimates for 2023. Most analysts project that all of their companies will have higher earnings in future years, so we take the 2023 estimates (which are over two years away) with a grain of salt. And, they almost certainly will be wrong – we just don’t know in which direction or by how much. However, these estimates are helpful in understanding the level and direction of consensus opinion, especially between earnings reports when there is usually little hard news or fundamental data at the company level to support estimate changes.

Today’s note includes earnings updates, ratings changes and the podcast.

Today’s note includes earnings updates on 12 companies, the podcast and the Catalyst Report. We publish the Catalyst Report on the Friday after each monthly issue of the Cabot Turnaround Letter. There were no changes to any of our ratings this week.

Stocks moved lower again this week, though we will say the buyers have at least put up a little bit of a fight, with both Wednesday and (so far) this morning showing some buying.

Today’s note includes earnings updates, ratings changes and the podcast.

Today’s note includes earnings updates, ratings changes, the podcast and the Catalyst Report.

Today’s note includes earnings updates on Duluth Holdings (DLTH) and Signet Jewelers (SIG), the podcast and the Catalyst Report.

Today’s note includes earnings updates on 11 companies and the podcast. On Thursday, we moved shares of Oaktree Specialty Lending Corporation (OCSL) from Buy to Sell.

It’s been a solid, steady post-holiday week for the market, with the major indexes generally flat (small and mid-caps) to up (S&P 500 and Nasdaq) 1% or so. That keeps the intermediate-term trend pointed solidly up, with all indexes we track a few percent above their 50-day lines.