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Following the huge lift-off in February, a pullback was likely, and the Ukraine-related tensions have been the excuse for persistent selling (especially among growth stocks) during the past couple of weeks. At this point, we think it’s fair to say the situation is on the fence—many leading stocks are down to key support, so if all’s well, the major indexes and individual names should find support soon. If they don’t, it’s likely that the market is in for a deeper consolidation; if they do (today was a decent start), then this news-driven pullback could be near an end. We’ll be watching.

In the meantime, this week’s list has many new names, including many that have just began their major advances within the past few months. Our Top Pick is Freescale Semiconductor (FSL), part of the strong chip group and a stock that is pulling back for the first time since an ultra-powerful breakout.

Stock Name	Price	Buy Range	Loss Limit
XPO Logistics (XPO)	0.00	30-31.5	28-28.5
Tesla, Inc. (TSLA)	818.87	220-235	190-200
TripAdvisor (TRIP)	55.14	100-105	91-92
Salix Pharmaceuticals (SLXP)	0.00	108-112	97-99
Palo Alto Networks (PANW)	236.92	74-77	68-69
Ligand Pharmaceuticals (LGND)	267.14	75-77	64-66
GT Advanced Technologies (GTAT)	0.00	16-17	13-14
Freescale Semiconductor (FSL)	0.00	21-22.5	19-19.5
Diamondback Energy (FANG)	0.00	62-64	56-57
AngloGold Ashanti (AU)	20.45	18-19	16-17

From an intermediate-term perspective, the pieces continue to fall into place for the bulls--recently, our Two-Second Indicator has joined our trend-following indicator on the bullish side of the fence, while things like our Aggression Index and the trend in interest rates remain encouraging. Short-term, we are finally seeing some signs of churning in extended leaders, so we’re continuing to move gradually, picking our stocks and spots carefully. Last week, we did a little more buying in DUOL and started a position in ANET, and today we’re starting one more half-sized stake that will diversify the portfolio a bit.

Some retail-related stocks are poised to benefit from Black Friday and beyond.

Then yesterday, I sent out some stock trading ideas, and the dam burst. I heard from at least a dozen investors who are clamoring for specific trading ideas. Great!

Now that investors finally have a handle on artificial intelligence, a new cutting-edge technology is emerging: quantum computing … and it should be on your radar.

The proposed merger between Union Pacific (UNP) and Norfolk Southern (NSC) throws into sharp relief an accelerating—some would say disturbing—trend of mega-consolidation across a number of key industries.

MarketWatch columnist Peter Brimelow features Cabot Market Letter in his column titled, “A Bull Feels Vindicated,” referencing the current position of all of its market indicators—long-, medium- and short-term bullish.”

These healthcare stocks are hitting new highs as they and the rest of the world search for a cure for COVID-19. Call them coronavirus stocks.

Autonomous driving is a $556 billion industry waiting to explode. But these self-driving car stocks are already taking off.

Consider these points to before determining how you feel about network neutrality.

The so-called FAANG stocks have led the bull market rally over the past few years. Now, they’re showing signs of weakness. Where does each go from here?

Current Market Outlook


After another week of major selling in the market (the S&P 500 is down 8% this month, while the Nasdaq is off 10.3%), there’s not much left to say except the obvious—the sellers remain in control of nearly every stock and sector, and thus we continue to advise a highly defensive stance. Of course, the market is also very oversold, and at some point there will be a snapback rally (likely to last more than just a few days) that will take the indexes and many stocks higher. But until we see some definitive signs of support, it’s best to stay mostly on the sideline and wait patiently for legitimate set-ups to occur.

This week’s list has a variety of resilient names; some are defensive, some have solid growth stories and others are special situations. Our Top Pick is Chuy’s Holdings (CHUY), a small (and thinly traded) cookie-cutter story whose stock has been amazingly resilient this month.

Stock Name	Price	Buy Range	Loss Limit
Ryanair DAC (RYAAY)	0.00	81-84	75-76
MACOM Technology Solutions (MTSI)	0.00	34-36	31.5-32
Intuitive Surgical, Inc. (ISRG)	0.00	535-555	500-505
Alphabet, Inc. (GOOGL)	0.00	695-720	640-645
Flir Systems (FLIR)	0.00	30-31	27.5-28
Five Below (FIVE)	134.58	32-34	29-29.5
DreamWorks (DWA)	0.00	24-25.5	22-23
CubeSmart (CUBE)	0.00	29.5-31	27.5-28
Chuy’s Holdings (CHUY)	0.00	32.5-35	29.5-30
Abiomed (ABMD)	0.00	83-87	77-78

Starting next Monday, August 31, before the market opens, the Dow Jones Industrial Average will have a new look.

After an ugly day October 10, the major indexes showed solid overall support last week, but under the hood was another round of volatile action, The market’s intermediate-term trend continues to tilt up, though we’re still taking things on a stock-by-stock basis and are closely watching earnings season, which is about to rev up. In the meantime, we’re just following the plan that’s been working for us: Being selective on the buy side, holding strong names (albeit with some partial profits on the way up) and also raising stops as time passes. We’ll again stick with a level 7 on the Market Monitor.

This week’s list is a mixed bag in terms of sectors and setups, with some we’re considering entering on strength and others on pullbacks. Our Top Pick is likely in for years of accelerating growth, and after a big run into early October, the recent pullback looks normal. We’re OK starting small here or on a bit more weakness.

For my last issue of 2011, Editor Elyse Andrews interviewed me to get my thoughts on the market.

I’m really trying to avoid buying high—so today’s selection is an undervalued stock that recently had a great correction and is now working its way back up.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the September 2020 issue.

With earnings season mostly completed, the markets have drifted upwards in the waning days of this otherwise unusual summer. Some splashy IPOs and stock splits have provided some excitement, but the bigger and more enduring news came from the Fed’s official change in its priorities. We discuss our thoughts on this shift in the letter.



We also introduce price targets for several recommended stocks. Over the next few weeks, we will provide targets for the remaining stocks and all newly recommended stocks. Price targets help stay the course when our stocks weaken on noise, and provide a tangible exit point. The assumptions behind the price targets provide a roadmap to gauge the company’s recovery process.



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.

Crista Huff, Chief Analyst of Cabot Undervalued Stocks Advisor, shared 7 Undervalued Growth Stocks with Rising Dividends for This Market. You can download the slides here.

In August 2016, I recommended a bank stock that has since produced a return of 98%. Despite that huge run-up, it’s still undervalued.

Artificial intelligence has been the talk of Wall Street for this entire bull market, but there’s one AI infrastructure investment the market is ignoring.