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Current Market Outlook


The market performed well last week, and nothing has changed from a top-down point of view—the intermediate-term trend remains up for the major indexes and many stocks, so we remain optimistic the path of least resistance is up. That said, it’s really all about what you own: Many indexes (small- and mid-caps) and sectors (industrials, financials, transports) look OK, nothing great, but growth oriented stocks are lighting up the sky, with more big earnings-induced breakouts last week than we’ve seen in a very long time. In the near-term, these hot stocks might be a bit too hot; some potholes (or even rotation out of them and into the broad market) could certainly be on the table. But we also think that, assuming the general market holds up, the first retreats in many of these names are likely to provide solid entry points, as the fresh breakouts bode well overall. We’re moving our Market Monitor up to level 7.

This week’s list has many of last week’s most powerful gaps and a few others with solid setups and/or persistent uptrends. It was hard to settle on one, but we’ll go with Chegg (CHGG) for our Top Pick, as it just emerged from a picture-perfect consolidation on earnings.

Stock Name	Price	Buy Range	Loss Limit
Atlas Air Worldwide Holdings, Inc. (AAWW)	38.45	36.5-38.5	32-33
Atlassian (TEAM)	182.16	174-179	155-158
Barrick Gold (GOLD)	27.20	25-26.5	22-23
Chegg (CHGG)	74.21	58-62	50-52
MercadoLibre, Inc. (MELI)	980.83	750-790	660-680
Peloton (PTON)	53.03	40.5-43.5	34-35.5
Schrodinger, Inc. (SDGR)	59.05	53-56	45-46.5
TG Therapeutics, Inc. (TGTX)	19.88	17.5-19	14.5-15.5
Twilio (TWLO)	183.39	175-187	149-154
Wingstop (WING)	121.52	116-122	99-103

Current Market Outlook


This morning’s positive news of a possible COVID vaccine helped the major indexes surge, but it also revealed some of the crosscurrents that remain—today saw a big bout of rotation, as leading growth titles were mostly lower while the lagging (usually economically-sensitive) areas did well. Even so, we don’t advise getting too involved in the day-to-day news or gyrations; overall, there’s still more positive evidence than negative, with the intermediate-term trend still up (today’s action helped on that front) and just about every leading stock remaining in a firm uptrend. Given the crosscurrents, we don’t advise going hog wild on the buy side, but we continue to think holding your strong performers (maybe with some partial profits here or there) and looking for decent entry points on strong names is the way to go. While we were going to knock our Market Monitor down late last week, the action of the past two sessions has us keeping it at a level 7.

This week’s list is a bit more diversified than in recent weeks, with strength seen in a few more sectors. Our Top Pick is PayPal (PYPL), which appears to have resumed its run after a multi-month rest period. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Avalara (AVLR)	102.00	97-100	88-90
Beyond Meat (BYND)	132.87	122-128	109-113
Fastly (FSLY)	39.31	36-39	31.5-33.5
Fortinet Inc. (FTNT)	137.53	137-143	123-127
Inphi (IPHI)	120.16	105-110	94-97
MyoKardia (MYOK)	108.56	106-110	92-95
Ollie’s Bargain Outlet (OLLI)	103.94	73-77	64-66
PayPal (PYPL)	147.00	142-147	129-132
Scotts Miracle-Gro (SMG)	155.72	139-145	125-128
Tesla, Inc. (TSLA)	818.87	770-815	680-705

Current Market Outlook


As we’ve been writing for many weeks, most of the primary evidence (trends of the major indexes, action of leading stocks) remains in the plus column, as do some key secondary pieces of evidence (blastoff indicators, number of new lows, etc.), so we’re sticking with a bullish stance. But the near-term should be interesting—the continuing dichotomy in the market means most indexes aren’t far from their 50-day lines, and we’ve started to see more up-down-up-down action, which, after a big, prolonged (13-plus weeks) upmove, tells you that the bulls and bears are beginning to fight it out. None of this is a reason to anticipate something sinister—again, most of the evidence is still positive—but it’s prudent to pick your spots on the buy side and have some stops in place in case the sellers make a stand and/or another bout of rotation takes hold (we started to see that today). We’re nudging our Market Monitor down to a level 7.

This week’s list has something for everyone, with stocks of all stripes making the cut. Our Top Pick is Etsy (ETSY), which has come alive after a year-long rest. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Crispr Therapeutics (CRSP)	84.11	71.5-75	62-64
Etsy (ETSY)	112.97	97.5-102	84-86
Farfetch (FTCH)	26.23	16-17.5	14.5-15.5
GenMark Diagnostics (GNMK)	15.47	12.3-13	10.6-11
HubSpot (HUBS)	582.89	207-212	187-190
Inphi (IPHI)	120.16	107-111	98-100
Invitae (NVTA)	32.06	26-27.5	22.5-23.5
Meritage Homes (MTH)	102.20	71.5-74	63.5-65
Plug Power (PLUG)	8.35	7.2-7.6	5.9-6.2
STAAR Surgical (STAA)	57.94	56-59	49-51

The stock market correction came and went rapidly in recent weeks! Granted, stocks are not done bouncing around yet, and a few sectors are lagging the broader market, including energy and healthcare.

Up 61% since Konrad Kuhn’s January recommendation, the small cap Elephant Talk Communications is this year’s best-performing Top Pick so far. “Elephant Talk Communications,...

After a productive but top-heavy first half of the year in the market, we set our sights on the back half of the year, and the potentially shifting winds from mega-cap tech and artificial intelligence into the many other unloved sectors. So to kick off the second half of 2024, today we add a retailer that’s bucking the trend of slowing U.S. retail sales due to its discount offerings – which plays well in an inflationary environment. It’s a new pick from Mike Cintolo in his Cabot Top Ten Trader advisory.

Details inside.

Stocks have hit the pause button in the last week. Is summer malaise already setting in? Or is this merely a deep breath before the buyers gain more fodder in the form of dovish Fed speak or the next round of earnings reports? We’ll see. In case it’s the former, today we add a value stock that potentially has an immediate, near-term catalyst. It’s the first contribution from the newest addition to our Cabot team, Matt Warder, a market veteran and cyclicals/commodities expert who has taken over our Cabot Turnaround Letter advisory. I think you’ll enjoy Matt’s unique, outside-the-box perspective.

Details inside.

California is burning and the rest of the country is in a deep freeze. It seems like a metaphor for the mixed messages we’ve been getting from the market in recent weeks, with stocks running very hot and cold since the start of December as the major indexes have mostly held near their highs but the under-the-surface action has been wobbly at best. The last six weeks have been rough on small caps in particular. As both a value investor and a contrarian, that spells opportunity!

So today, we add one of the highest-profile, more beaten-down small-cap stocks out there to our Buy Low Opportunities Portfolio. The stock is miles from its Covid-era highs, but it’s starting to build momentum for the first time in years: shares have tripled since bottoming five months ago. And it’s a name virtually everyone knows.

Details inside.

The market’s resilience in the face of bad headlines (tariffs, higher inflation, an increasingly cautious Fed, etc.) continues to impress. And with the major indexes currently trading near their 2025 highs despite all the outside attempts to derail them, perhaps the next big market move will be up. With that in mind, today we add to our growth stockpile in the form of a former market (and Cabot) darling that was recently recommended by Mike Cintolo to his Cabot Growth Investor audience. After a rough stretch in mid-2024, the stock is soaring again.

Details inside.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the September 2023 issue.

The attention of most investors, commentators and analysts has been on the winners, notably the Magnificent Seven, driving this year’s stock market rally. As contrarians, we are fine with letting a few overpriced trendy stocks capture the spotlight. One place that draws our attention is the other end of the spectrum – those with the worst performance. While most of these stocks fully deserve the market’s dour judgment, some have favorable changes underway. We look into four large and mid-cap stocks that fit this description and one that does not. We also discuss a tactic to help improve one’s success in investing in out-of-favor stocks.

Our feature recommendation this month is Advance Auto Parts (AAP), one of the four major auto parts retailers. The shares have fallen sharply out of favor, but a comprehensive and much-needed overhaul is now starting.

We also include our recent Sell recommendations: Toshiba (TOSYY), Holcim AG (HCMLY), First Horizon (FHN) and ESAB Corporation (ESAB), and our suspension of our rating of shares of Kopin Corporation (KOPN).

We are entering the heart of earnings season. So far, the results are unimpressive. The entire retail sector is on alert after Walmart’s pre-announcement about weaker earnings due to their accelerating efforts to offload surplus inventory.

Current Market Outlook


Last Monday we wrote that the next few days would be telling—and given the action, it’s clear the onus remains on the bulls to show they have sufficient strength to halt the market’s downtrend. There are some positives, including the fact that the indexes have held above their late-August lows for five weeks and, believe it or not, the broad market is in slightly better shape now than in late August. But, as always, it’s best to just take the evidence as it comes—today, that means holding lots of cash and limiting new buying as we patiently wait for a bottom to form.

This week’s list has a big-cap feel to it as investors seek out some dependability. Our Top Pick is Salesforce.com (CRM), whose stock is big, liquid and remains resilient.

Stock Name	Price	Buy Range	Loss Limit
Vantiv (VNTV)	0.00	43.5-45	41-41.5
Starbucks (SBUX)	64.49	55-57	51-52
Nike (NKE)	89.77	118-123	112-113
Nordic American Tankers (NAT)	0.00	14.5-15.5	13.5-14
Medicines Company (MDCO)	56.98	37.5-39	35-36
JetBlue Airways Corporation (JBLU)	0.00	24.5-25.5	21.5-22
Imperva Inc. (IMPV)	0.00	63-66	58-59
Salesforce.com (CRM)	0.00	68-71	64-65
Chipotle Mexican Grill (CMG)	773.32	700-720	675-680
Big Lots (BIG)	43.12	46-48	43-44

Current Market Outlook


The market had a mini-crash this morning, as what looked like forced liquidation took the Dow down more than 1,000 points before a gigantic snapback. Today’s wash-and-rinse action (and the many climactic readings we saw) raises the prospects that a near-term bottom is in and that a bottoming process (weeks of vicious ups and downs) could begin. That said, the main trend of the market is down, so we’re advising a defensive stance—focus on capital preservation and building a watch list for the next sustained advance, while keeping new buys small. In time, we’re going to see some incredible winners set-up, but patience is required first.

This week’s list has a few solid growth stories, though they skew toward the conservative side of the spectrum. Our Top Pick is Chipotle Mexican Grill (CMG), which has the trading volume, growth prospects and dependability to keep big investors interested.

Stock Name	Price	Buy Range	Loss Limit
Tempur Sealy (TPX)	85.53	69.5-72.5	67-68
Mohawk Industries (MHK)	0.00	187-194	182-183
Lennar (LEN)	61.85	49.5-51.5	47.5-48
IntercontinentalExchange, Inc. (ICE)	0.00	222-232	213-215
Heron Therapeutics (HRTX)	35.25	32-35	29-30
Global Payments Inc. (GPN)	0.00	104-108	99-100
CyrusOne Inc (CONE)	0.00	30.5-32	28.5-29
Chipotle Mexican Grill (CMG)	773.32	695-715	670-675
CDW Corporation (CDW)	0.00	36.5-38	35-35.5
Alaska Air Group (ALK)	0.00	71.5-74.5	67-68

Current Market Outlook


The market’s action last week—three days up and two days sideways in the S&P 500 and a run to new highs by the Nasdaq—looks excellent, and we think it’s time to put a little more of your sidelined cash to work. Yes, it’s a light-volume summer rally and earnings season will provide plenty of landmines to go along with the blastoffs, so we’re not advising going all in. But given last week’s early progress and stubborn refusal to give any of its advances back, we will bump our Market Monitor up by one step, putting it in the green. As always, we will listen to what the market tells us from here.

This week’s list has a couple of newcomers, including one of three Chinese stocks that have been making great strides. A few stocks with long Top Ten histories also made the grade. Our Top Pick is a Chinese retailer, JD.com (JD), that’s growing revenue at a blazing rate.

Stock Name	Price	Buy Range	Loss Limit
ASML Holding (ASML)	350.01	147-151	136-138
Huazhu Group (HTHT)	30.89	89-93	82-85
JD.com (JD)	39.58	41.5-43.5	38-39
JinkoSolar Holding (JKS)	0.00	26-27.5	24-25
Littelfuse (LFUS)	0.00	177-182	169-173
Netflix, Inc. (NFLX)	423.92	182-188	168-173
NRG Energy (NRG)	0.00	23.5-25	20.5-22
TD Ameritrade (AMTD)	0.00	45-46.5	42-43
Vertex Pharmaceuticals (VRTX)	230.36	152-160	140-145
Workday (WDAY)	194.88	101-104	93-95

The market didn’t do all that much during the holiday-shortened week, so our overall stance is unchanged—we’re still leaning bullish but are also holding some cash and are more focused on being patient and buying stocks at lower-risk entries. That said, we have seen a (very) subtle shift during the past couple of weeks; some of the defensive-type names have stagnated, with growth and speculative stocks acting a bit better. It’s too early to conclude that a big shift has occurred, but it’s something to watch closely—a movement back into growth stocks would be very encouraging.

In the meantime, we’re looking for newer names that have shown excellent power of late. This week’s list is chock-full of them, and our Top Pick is Biogen Idec (BIIB), a big biotech firm with big earnings growth coming. The stock just gapped out of a multi-month zone on favorable news.

Stock Name	Price	Buy Range	Loss Limit
Workday (WDAY)	194.88	78.5-81.5	75-75.5
Johnson Controls International plc (JCI)	0.00	48-50	43-44
Gogo Inflight (GOGO)	0.00	27-30	22-23
First Solar (FSLR)	83.74	59-61	49-51
Fifth & Pacific (FNP)	0.00	30.5-32	27.5-28
New Oriental Education (EDU)	113.97	28.5-30	26-26.5
Dexcom (DXCM)	421.36	33-35	29-30
Canadian Solar (CSIQ)	0.00	29-30.5	23-24
Bitauto Holdings (BITA)	0.00	29.5-31	25-26
Biogen (BIIB)	0.00	285-295	267-268

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

Current Market Outlook


With the broad market zooming, finding strong stocks is easy these days. But while buying any strong stock might work, your best odds will come from buying strong stocks that have set up well. That means they have a base, where supply and demand have stabilized for a while, or they have a breakout, which can kick off a new advance, or other supportive patterns. What you don’t want to do in a market this strong is buy (or own) laggards. Make hay while the sun shines! (And take advantage of what are traditionally the two last months in the market’s favorable November-April season.)

Our Top Pick this week is WABCO Holdings (WBC), a global supplier of technology systems for commercial trucks, buses and trailers. Business is booming and the stock has great and growing sponsorship.

Stock Name	Price	Buy Range	Loss Limit
WABCO Holdings (WBC)	0.00	116-118	103-105
Norwegian Cruise Lines (NCLH)	0.00	47.5-49.5	43-43.5
IntercontinentalExchange, Inc. (ICE)	0.00	230-236	220-222
Hilton Worldwide Holdings (HLT)	0.00	28-29	26-26.5
Salesforce.com (CRM)	0.00	68-70	60-62
Cracker Barrel Old Country Store (CBRL)	0.00	149-152	133-136
Cavium (CAVM)	0.00	68-70	62-64
Acuity Brands (AYI)	0.00	155-160	144-146
Akorn (AKRX)	0.00	51-53	46-48
Agrium (AGU)	0.00	110-114	104-106

Current Market Outlook


Not surprisingly, we saw some selling come into the market last week, as many stocks and indexes were stretched to the upside and some near-term sentiment measures (put-call ratios, etc.) showed complacency. In the short-term, such wobbles could easily continue, as we’re seeing some bigger names get hit on decent volume. Intermediate-term, though, we’ve seen very little abnormal action among individual stocks and the trends of the major indexes are pointed up. It’s still a good idea to go slow and look for solid entry points, and don’t forget to book some partial profits on the way up. But with the evidence still bullish, we’re remaining heavily invested.

This week’s list is centered on growth ideas, including a few that have emerged after nice rest periods. Our Top Pick is Okta (OKTA), an early-stage leader that just busted loose from a three-month zone on huge volume.

Stock Name	Price	Buy Range	Loss Limit
BJs Wholesale (BJ)	36.69	29-31	27-28
Glaukos Corp. (GKOS)	67.84	59-64	51-53.5
HubSpot (HUBS)	582.89	146-152	134-137
Match (MTCH)	0.00	50-52	45-46.5
NuVasive (NUVA)	66.00	67-69.5	61.5-63
Okta, Inc. (OKTA)	148.41	68-72	58-60
Palo Alto Networks (PANW)	236.92	229-236	210-214
Ulta Beauty (ULTA)	331.95	272-283	249-254
United Continental Holdings (UAL)	96.76	84-86	78-79
Yext Inc. (YEXT)	21.32	24.5-26	21.5-22.5

Current Market Outlook


While the major indexes took another hit last week, we actually saw a few encouraging signs from the market—the broad market, for instance, continues to display some positive divergences (i.e., it’s in better shape now than back in February, when the indexes were at a similar level) and many leading stocks held key support (often near their 50-day lines), with a few actually shooting to new highs. All of that is a good reason to keep your antennae up—but with the major indexes still in intermediate-term downtrends, we’re keeping our Market Monitor in neutral territory. If this is the start of a sustained rally, there will be plenty of opportunities to jump on, but right now it’s best to mostly stand pat, holding resilient stocks but also keeping some cash on the sideline.

This week’s list is a mixed bag, with lots of turnarounds and some growth stocks sprinkled in. Our Top Pick is Etsy (ETSY), which, despite a big run, has refused to budge during the market’s latest downdraft.

Stock Name	Price	Buy Range	Loss Limit
BofI Holding (BOFI)	42.93	39-41	36.5-38
Delek (DK)	0.00	39.5-41.5	36-37.5
Etsy (ETSY)	112.97	26-27.5	23.5-24.5
Kirby (KEX)	0.00	79-81.5	73.5-75
LGI Homes (LGIH)	86.04	69-73	64-66
NetApp (NTAP)	0.00	61-64	56-58
New Relic (NEWR)	103.70	72-74.5	65.5-67
Planet Fitness (PLNT)	0.00	37-39	34-35.5
Proofpoint (PFPT)	113.79	113-118	104-106.5
Urban Outfitters (URBN)	0.00	36.5-38.5	33.5-35

Current Market Outlook


Out-of-the-blue tariff threats emerged over the weekend, which roiled markets overnight and led to the usual spate of predictions as to what comes next in the U.S.-China trade saga. But when things get volatile, it’s even more important to simply stick with the facts and not get caught up in the guesses of what may come. Today, while the major indexes were down, they held well above support, which keeps the intermediate-term trend pointed up. And leading stocks fared even better, with many actually finishing up after horrid opens. Of course, it’s always possible that this is the start of a more meaningful pullback/correction, and if the uptrend is cracked, we’ll take a more cautious stance. But so far, the facts remain bullish, so you should remain heavily invested.

This week’s list is relative mixed, with a wide variety of stocks, sectors and growth stories represented. Our Top Pick is Inphi (INPH), a smaller chip and networking firm that looks to be a big beneficiary of the new networking boom.

Stock Name	Price	Buy Range	Loss Limit
Abercrombie & Fitch (ANF)	15.37	28-29.5	25.5-26.5
Coupa Software (COUP)	262.20	102-105	92-94
Enphase Energy (ENPH)	46.70	12.5-13.5	10.2-10.9
Exact Sciences (EXAS)	116.91	101-105	90-93
Harris Corp. (HRS)	198.60	174-179	161-164
Inphi (IPHI)	120.16	48-51	43-45.5
Lattice Semi (LSCC)	23.92	13.5-14.5	12-12.6
LPL Financial Holdings (LPLA)	85.22	80.5-84	73-75
MercadoLibre, Inc. (MELI)	980.83	550-575	475-495
Strategic Education, Inc. (STRA)	182.36	158-164	144-148