Cabot Prime Core Week Ending June 7, 2024

Latest Summary

CABOT EVENTS

Cabot Weekly Review (Video)

In this week’s video, Mike Cintolo talks about the market’s continued mixed environment, where most stocks, sectors and indexes continue to chop sideways in the intermediate-term. Mike remains extremely bullish longer-term (which he’ll talk about more in his webinar coming June 18), but right now he’s holding some resilient names while also sitting on some cash as he waits for the market to show its hand.

Stocks Discussed: VRT, CEG, FTI, FANG, GWRE, GE, ONTO, PINS, TER, AVGO, PSTG, RCL, APPF, NXT, RDDT

Cabot Street Check (Podcast)

This week on Street Check, Chris and Brad discuss the market setting fresh all-time highs, NVDA overtaking AAPL as the second-largest company by market cap and a major anecdotal top signal, and the 10% sell-off in Mexican stocks following that country’s presidential election. Then, they welcome on Tom Hutchinson, Chief Analyst of Cabot Dividend Investor and Cabot Income Advisor, to talk all things dividend investing, which sectors he likes, and the value of adding dividend-paying stocks to your portfolio.

Cabot Webinar

June 18, 2024 Webinar

2024 Mid-Year Outlook: Secrets to Profits in Today’s Challenging Market

Join renowned small-cap and early-stage investing expert Mike Cintolo, Chief Analyst of Cabot Growth Investor and Cabot Top Ten Trader, for this exclusive live event.

Quarterly Cabot Analyst Meeting

The recording of the Cabot Prime Members Meeting with the Analysts from January 24, 2024 is now available for you to listen to at your convenience—click here for access. This private call with our analysts is one of your exclusive Cabot Prime Core member benefits.

RECENT BUY AND SELL ACTIVITY

This table lists stocks bought or sold in the most recent Issues or Updates.

PORTFOLIO UPDATES THIS WEEK

Cabot Growth Investor

Bi-weekly Issue May 30: The market’s rally has run into trouble, with our Cabot Tides and Two-Second Indicator effectively back on the fence. When it comes to growth stocks, most are acting more resiliently than the broad market, but even there it’s hit and miss, with lots of air pockets though many names that are acting well, too. Because of the divergent action, we’ve had a flurry of moves since the last issue, paring back or selling three names, but putting money to work in two names (including a new addition last week). All told, we’ll still have about 27% in cash and have a few stocks that look great, but are also keeping a close eye on a couple that remain iffy.

In tonight’s issue, we go over all our thoughts on the market and our various moves, as well as write about the solar sector that may be getting going after a long slumber, as well as small caps in general, which could finally get going ... if interest rates behave themselves.

Bi-weekly Update June 6: WHAT TO DO NOW: With the market’s intermediate-term evidence mixed, you should take things on a stock-by-stock basis—holding what’s working but selling what’s not, while holding some cash as we wait for the market and growth stocks to show their hand. Our Cabot and Growth Tides remain neutral and our Two-Second Indicator is iffy, so even though we do see a few tempting names, we’re going to hold our 35% cash position tonight and see if the bulls can step up for more than a few hours. We have no changes tonight.

Cabot Top Ten Trader

Weekly Issue June 3:After a sharp correction in early April, the market posted a nice, but not powerful, rebound for four weeks but the past two weeks have definitely hurt the near-term evidence, whether you look at the overall market or leading stocks, where some abnormal action has appeared. There’s still more positive evidence than not, but at this point it’s very much a mixed bag, with some stocks acting fine, some coming under the gun and lots of up-and-down action. We’ll leave our Market Monitor at a level 7, but it’s vital to be in the right names and sectors.

This week’s list has many resilient names, including a few that have been out of the spotlight for a while. Our Top Pick is a small medical device outfit that, thanks to a good-sized acquisition of late, looks like a major player in the spinal surgery area, with new products and technology selling well.

Movers & Shakers June 7: This week was a lot like the overall environment—mixed—with the big-cap indexes and most growth measures up 1%-ish, while the broader market has struggled, down 1% to 2% on the week, give or take.

Cabot Value Investor

Monthly Issue June 6: Renewable energy stocks have never lived up to their considerable promise, having peaked more than 16 years ago. And yet, there’s rarely been a bigger gap between the stocks’ value and the industry’s growth in the wake of the Inflation Reduction Act. Renewable energy projects – solar in particular – have taken off since President Biden signed that bit of eco-friendly legislation, in August 2022. Most solar companies are reporting record revenues these days. But the stocks haven’t followed suit, trading at 2018 levels.

That seems like a pretty extreme divergence between the industry and its companies’ share prices. So in this month’s issue of Cabot Value Investor, we add a solar company that’s capitalizing on the global investment in alternative energy, but is still woefully undervalued, trading at a mere 0.18x record sales.

Details inside.

Weekly Update May 23: “Markets are never wrong, only opinions are.” – Jesse Livermore

Few quotes related to investing have stuck with me more than that one.

Jesse Livermore, of course, is an investment legend who, in the early 20^th century, pioneered day trading and who was the basis of the best-selling Edwin Lefevre book, Reminiscences of a Stock Operator – considered by many to be the investing Bible. Many of his words are relevant to today’s market, nearly 85 years after his death. And I think the above quote is as evergreen as any and is important to remember in bull markets like this one.

Cabot Dividend Investor

Monthly Issue May 8: The market has rallied for more than a year in the happy space between inflation and recession. But that dynamic is unlikely to persist. Amid persistent inflation, it is likely that the market will have to contend with high interest rates or a faltering economy. Each one is problematic.

In a flatter or faltering market, dividends provide a bigger part of total returns. Let’s get ahead of the curve and get a big fat yield.

In this issue, I highlight a stock with a massive dividend yield that has shown good price stability for several years. The company can also thrive amidst inflation and high or rising interest rates and can provide a high income return even if the market struggles through an inflation/recession catch-22.

Weekly Update June 5: It’s been a great market for a while. But it has leveled off since the middle of May. I expect more of the same going forward.

The S&P 500 pulled back in early April after a five-month rally as sticky inflation soured the interest rate narrative. The index then recovered to new highs in the middle of May on an improved interest rate outlook. But stocks have since leveled off as the interest rate outlook got stuck in the mud.

Cabot Early Opportunities

Monthly Issue May 15: In the May Issue of Cabot Early Opportunities we dig into prospects across next-gen AI-enabled devices, emerging markets, meal replacement shakes and picks-and-shovels type infrastructure plays.

Cabot Income Advisor

Monthly Issue May 28: It’s a great time for income. The market is at an all-time high. The May through November period is historically a more lackluster period for stocks. Income generation is an ideal way to generate positive returns when stocks aren’t rising. But not if the stocks generating the income get knocked down by rising rates.

There is a great answer: midstream energy stocks. These are companies that transport and store oil and gas for a fee. The subsector is among the highest yielding of all income-generating stocks. And unlike many dividend stocks, they have thrived over the last few years of rising interest rates. For the most part, these stocks are not interest rate sensitive and can endure inflation or recession. They have proven to be the perfect sector to generate a high income in this market environment.

In this issue I highlight a stock that has been the very best income generator in the Cabot Income Advisor portfolio. It has been held profitably in the portfolio on three past occasions. Each time it delivered a positive total return along with several covered calls for huge income. It’s a tested and true income-generating superstar.

Weekly Update June 4: The market has leveled off since the middle of May. I expect more of the same going forward.

Cabot Turnaround Letter

Monthly Issue May 29: Sizing up a merger arb opportunity requires more than just garden variety equity analysis. In his famous letter to Berkshire Hathaway shareholders in 1988, Warren Buffett laid out four questions to answer regarding arbitrage situations:

How likely is it that the promised event will indeed occur?
How long will your money be tied up?
What chance is there that something still better will transpire – a competing takeover bid, for example?
What will happen if the event does not take place because of anti-trust action, financing glitches, etc.?

Today, we add a new Cabot Turnaround Letter recommendation that we think comes close to answering all four.

Weekly Update June 7: Earnings season is largely over, so there were no companies that reported earnings this past week. However, we do have at least one company reporting next week – Ammo, Inc. (POWW). And the next earnings season is frankly just around the corner, with Walgreens Boots Alliance (WBA) announcing they’ll release their next round of results the last week of the month.

Cabot Money Club

Monthly Magazine May: Household debt is rising, and consumers are feeling the squeeze of higher interest rates everywhere, from mortgages to auto loans to credit cards. In this month’s issue we’ll share ten warning signs that signal financial trouble ahead and the ten bad financial habits you need to drop now to avoid it.

Stock of the Month May 9: It was more of the same for the markets this past month—some momentum, but ultimately, we ended up in just about the same place.

Investors are a little gun-shy as most were expecting Fed rate cuts to begin in the latter half of the year. But as the inflation beast is proving harder to tame than expected, Fed Chair Powell has indicated it may take longer before we see a rate cut.

ASK THE EXPERTS

Prime Question for Jacob: Jacob, I noticed several analysts, including some Cabot recommending airline stocks such as United Airlines (UAL). However, the options have been very negative as you noted, even to the point of considering puts on JETS. What do you do in these situations?

Thank you for your input and guidance during these screwy markets.

Jacob: Great question ... and yes, it can be a touch confusing to get different messages.

I would say this: for me, option activity is the holy grail. That doesn’t mean it will always be right, but in terms of judging a stock in the short to medium term, I will lean on hedge funds/institutions putting big money to work, repeatedly, over a Wall Street analyst who could be targeting a move on a multi-year horizon.

Of note, American Airlines (AAL) cut guidance recently, which sent the airlines to recent lows, and again highlights how often these big put buyers get it right.