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Back on August 28 after the close, I shared bullish commentary on the cannabis group which was melting down at the time.

Sell Reddit (RDDT) and Second Half of FTAI Aviation (FTAI)

GE Vernova (GEV) and Sportradar (SRAD) Updates

Fill Second Half: Sensient (SXT) and Unity (U)

The news today is all about the tariffs, but to this point, most things are simply hacking around in a range, so we’re fine holding resilient titles and ditching those that crack. Our biggest thought beyond the headline news or daily reactions is that, unless you’re hopping in and out of things every couple of days, there’s no real money being made of late, with selling on strength seen and headline news causing big moves up and down most days. To be clear, that’s more descriptive than predictive, but until something changes, we favor keeping new positions on the small side, holding some cash and practicing patience waiting for this ping-pong action to stop. We’re leaving our Market Monitor at a level 6 today.

We will say, however, that this week’s list is encouraging—it’s very growth heavy, and even after today’s pothole, many names are in position to get going if the market allows it. Our Top Pick is in the midst of a solid-looking nine-week rest after a huge comeback in the second half of last year.

In the March Issue of Cabot Early Opportunities we offer up a diverse mix of growth stocks with exposure to vastly different markets, all of which should be healthy for the duration of 2021.

While it’s been a rough month since the February Issue and investors are still on edge, stimulus checks should be hitting the economy soon and the broader economic picture is a heck of a lot better than even a couple months ago.



Still, on balance it’s best to keep new buying on the small side and average into these positions as the market seeks the firm footing that is needed to launch a sustained advance higher.



Enjoy!

We have one portfolio change today: I’m selling half of Nordic American Tankers (NAT) from the High Yield tier based on the stock’s lousy technical action. But there are still plenty of strong performers in our portfolio, including our newest buys, Mattel (MAT) and CVS Health (CVS). Read on for details on recent earnings reports and more.

The market had another rough go of it last week, as the major indexes finished down more than 4%, though they remain safely above their late-January lows. Overall, the trends of the market and most stocks remain firmly down, and thus the market monitor above remains on the bearish side – and that means you should continue to play defense and buy only small amounts. On a positive note, OptiMo (our stock screening system) is uncovering more stocks meeting with buying pressures – this week’s list contains a few more good stories, and we’re beginning to see signs of group leadership. Gold, coal, metals and now energy stocks (especially energy producers) are sporting more than a few strong stocks, as big investors bet on continued commodity inflation. Our favorite this week is Range Resources (RRC), a mid-sized natural gas explorer that’s hitting new highs. Try to buy on weakness.

Stock Name	Price	Buy Range	Loss Limit
ACI (ACI)	0.00	48-52	-
BVN (BVN)	0.00	63-69	-
CLF (CLF)	0.00	98-108	-
CMO (CMO)	0.00	14-16	-
KGC (KGC)	0.00	20-22	-
OI (OI)	0.00	49-51	-
PRGO (PRGO)	0.00	34-36	-
RRC (RRC)	0.00	52-56	-
SWN (SWN)	0.00	58-62	-
URBN (URBN)	0.00	29-31	-

After shooting to new all-time highs last Wednesday, the major indexes are taking a well-deserved breather this week. The pullback looks orderly and normal so far, and investors with money to put to work can use it as a buying opportunity.

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

The stock market, so far in May, hasn’t continued the robust momentum of the first four months. Treasury Secretary Yellen’s comment about the possible need to boost interest rates to ward off inflation seems to be the catalyst. The market and the broad economy will likely respond differently if rates increase. We briefly outline on our asset allocation philosophy, which helps guide us when the market is edgy, in our economic comments.



Earning and proxy voting are in full swing. We’re updating the earnings as they come in.



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.



I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.

It’s easy to give economists a hard time. But I do have an unsung hero-economist to tell you about, and if you’ve taken a flight on a major airline in the past 30 years, you’ve reaped the rewards of this man’s work.

The market’s intermediate-term trend briefly turned positive last week, but the quick rejection of the indexes on Thursday and today’s battering clearly tell you that sellers are still lurking. That said, we would avoid any big-picture predictions—the weakness of last Thursday and today might mean the downtrend is resuming ... but the market could also be in a bottoming process, which often has many ups and downs as investors place (or take off) their bets. Either way, for an investor in leading stocks, there’s not much to do here; while some stocks have perked up, few have made any real progress, and to this point, most names that poke into new-high ground are quickly swarmed with sellers. Thus, our Market Monitor will remain neutral; some new buying here or there remains fine, but keep cash on the sideline and don’t get aggressive until the market kicks into gear.

This week’s list is a potpourri of differing sectors and stories, though there is a retail bent to the list. Our favorite of the week is Coinstar (CSTR), a company with a solid history of growth that might now have (another) new concept to keep the bottom line humming. The stock has built a solid base during the market’s correction.

Stock Name	Price	Buy Range	Loss Limit
CSTR (CSTR)	0.00	64-66	-
eBay Inc. (EBAY)	0.00	41-43	-
HTWR (HTWR)	0.00	83-85	-
MDC (MDC)	0.00	28-29.5	-
Medivation (MDVN)	0.00	82-85	-
NetSuite, Inc. (N)	0.00	49-51	-
PetSmart (PETM)	0.00	64.5-66.5	-
SolarWinds (SWI)	0.00	42-44	-
VSI (VSI)	0.00	52-54	-
Zumiez (ZUMZ)	0.00	37-38.5	-

Although the S&P is currently down around 2% from a week ago, new highs on both exchanges have been encouraging lately. This underscores that a broad array of industries have held firm despite softness in the tech space. Understandably, in this mixed environment, cyclical names are outperforming as traders hedge against possible AI sector weakness, with utilities, consumer staples and healthcare names acting well, but there has also been solid participation from highly economically sensitive areas of the market like transport, discretionary retail and hotel/lodging stocks. Not surprisingly, many of the names in this issue are scattered across these categories. We’ll keep our Market Monitor at a level 6, but we’re still fine nabbing some shares in some of the stronger names out there.

This week’s list contains a nice mix of names across several of the stronger industries—including both defensive and cyclical. Our Top Pick is a water transport name benefiting from a robust start to the annual cruise season.

The tech sector is propping up this market, but there are plenty of cheap technology stocks still out there. And these two will lead a coming revolution.

This is a fantastic environment for income. The upward bias of the market is creating high call premiums. And certain pockets of the market still offer deep value and higher dividend yields than have existed in many years.

In this issue I identify three excellent dividend stocks to buy now.



One is a high yielding energy play with a stratospheric, but safe, yield. Another is one of the most defensive and reliable income generating stocks in the market that still offers good value and a strong yield. And the third is a technology stock that sells at a reasonable price with an incredibly strong catalyst for the stock price to shoot up in the future.



The issue also includes covered calls on these same stocks that will provide a double digit income in a short time if the stocks move higher, and a great income return if they don’t.

After a horrid start to the week, the market actually began finding support last Tuesday and has bounced a bit since. To us, it’s a baby step, and ideally the start of a near-term rally phase that will allow us to not just judge the strength of any recovery efforts, but to also see if any fresher growth stocks per up. However, for the here and now, the intermediate-term trend of the major indexes and vast majority of stocks is pointed down, so we’re remaining mostly in our bunker. If we do see some upside follow-through this week, we could become a bit more optimistic but we’ll wait to see if that happens.

This week’s list is another hodgepodge, with some zingers, some defensive titles and a name or two that are dancing to their own drummer. Our Top Pick has a unique story, and now perception is increasing as demand and pricing picks up.

The market has begun 2019 with a bang, and it well could go on longer—though prediction is a fool’s game. It’s far better to simply follow proven systems of investing, whether growth or value or hybrid, and continually work to maintain a portfolio of high-potential stocks.
This week’s recommendation, for example, is a solid grower, nothing fancy. But the stock withstood the selling of December and is now at an attractive entry point, primed to break out to new highs in the weeks or months ahead.