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CABOT EVENTS
Cabot Weekly Review (Video)
In this weeks video, small cap expert Tyler Laundon explains why market volatility exploded on Wednesday, what the Fed’s rate cut means and why the market doesn’t love the uncertainty of a looming government shutdown. Tyler then gets into three stock stories, starting with shifting dynamics in the aerospace industry. He then covers a red hot recent IPO before wrapping up the video with a review of an AI networking specialist that looks fantastic.
Stocks Discussed: LOAR, FTAI, BA, TTAN, ALAB
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad discuss the Dow’s 10-day losing streak, an uncharacteristic Jerome Powell press conference following the latest rate cut, and the subsequent market sell-off. Then, they welcome on Steve Reitmeister of WallStreetZen to discuss quantitative trading, his rating metrics and how to use them, and his assessment of the current state of the market and where he’s most bullish going forward. For immediate access to Steve’s new “Stock of the Week” picks, visit cabotwealth.com/street.
Cabot Webinar
Quarterly Cabot Analyst Meeting
The recording of the Cabot Prime Members Meeting with the Analysts 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 Plus 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 December 12: After an amazing run higher, growth stocks hit an air pocket this week, with many highfliers coming down and some abnormal action being seen. We haven’t exactly floored the accelerator during the past few weeks, and we took our cues from individual stocks, paring back this week and leaving us with a good-sized cash position. That said, we’re not making any major market call--the trends remain up, and many growth stocks are acting OK--so while we want to see how growth reacts from here, we’re flexible and could put some money back to work soon if key names stabilize.
Bi-weekly Update December 19: First and foremost, all of us here at Cabot wish you a very Merry Christmas and a happy holiday season. Just a heads up that we’ll be publishing our last issue of Growth Investor this year next Thursday (December 26).
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WHAT TO DO NOW: Remain close to shore. Given the huge run, elevated sentiment and some cracks in growth stocks, we pared back fairly aggressively a couple of weeks ago, coming into this week with 37% in cash. And today we’re paring back further as the under-the-hood selling has come to the surface this week—we’ll take the rest of our profit in Cava (CAVA) and cut our loss in ProShares Russell 2000 Fund (UWM), which will leave us with around half in cash. We are flexible and could do a little buying if the bulls pounce on this dip, but right now we’re OK being cautious. Details below.
Cabot Top Ten Trader
Weekly Issue December 16: After a huge run, last week definitely showed some short-term character changes for many stocks, especially leading titles, with some flashing legitimate abnormal action; even among the top-down evidence, we’ve seen sluggishness, with the broad market showing wear and tear as sentiment remains relatively buoyant. That said, there are still plenty of stocks either holding their own or still doing well, too, including some growth-y themes that are seeing fresh buying of late, a sign big investors aren’t going into hibernation. When you put it all together, we do think paring back some and seeing how things play out makes sense, but it’s as important as ever to take things on a stock-by-stock basis. We dropped our Market Monitor to a level 6 and will leave it there today, but we’re flexible and could ratchet it higher if growth stocks start to rebound strongly.
This week’s list has a wide assortment of names—but nearly all of them are growth-oriented, which we take as a good sign. Our Top Pick is a mega-cap that staged an awesome breakout on earnings last week. Near-term wobbles are possible, but we think big investors will support any dip.
Movers & Shakers December 20:While the big-cap indexes were acting fine, we had been writing about an increasing number of yellow flags out there—it started with secondary measures like sentiment (which got buoyant in the weeks after the election), and early last week, we saw the first signs that some key leading stocks were coming under pressure. Indeed, we came into this week with our Market Monitor down to a level 6.
Cabot Value Investor
Monthly Issue December 5: The market party is on, but someone forgot to tell healthcare stocks.
They’re the only one of the 11 S&P 500 sectors that is actually down in the month since the presidential election. That has everything to do with these five letters: RFK Jr. But are concerns about Trump’s controversial pick to lead the Health and Human Services Department overblown? It appears Wall Street is starting to think so, as the sector has been in steady recovery after an initial sell-off. Still, as a whole, healthcare stocks have been the weakest performers of any major sector this year. And that spells opportunity for value investors.
In today’s issue, we add a big-name, undervalued healthcare stock to our Buy Low Opportunities portfolio. It’s a company whose name you likely know – and that’s showing signs of more consistent profit growth.
Details inside.
Weekly Update December 19: The Dow is in a tailspin.
After Wednesday’s Fed-ignited selloff, the 118-year-old index has now fallen for 10 consecutive days – its longest string of down days since 1974. Prior to yesterday, the index hadn’t fallen much during the first nine days of this losing streak, down just 3.47%; but yesterday’s 2.58% decline stretched those losses to an even 6%. So what once was a modest pullback is now hurtling toward a correction.
Cabot Stock of the Week
Weekly Issue December 23: Jerome Powell went full Grinch last week, sparking a brief market selloff after saying the Fed would cut rates at a slower pace than expected in 2025. Prior to that, there were some obvious cracks beneath the market’s surface, so Powell’s downer of a press conference served more to expand the selling than cause it. But the nice rebound in the last two trading days shows the bulls are still mostly in charge, which means it’s a good time to add a mid-cap water stock that Tyler Laundon just introduced to his Cabot Early Opportunities audience.
Happy Holidays!
Cabot Explorer
Bi-weekly Issue December 19: As we head into the end of the year, markets have paused though are still bullish. A little bit of worry is a sign of a healthy market and some of the pullback is no doubt taking profits for tax reasons.
The budget showdown in Washington, which needs to be settled by Saturday, is not helpful.
The Federal Reserve cut interest rates by a quarter point yesterday and in a preemptive move, suggested only two more reductions next year. This is a signal that interest rates will remain somewhat elevated as inflation that has come down significantly remains a stubborn trend.
Bi-weekly Update December 12: I recently noticed a few popular stocks such as MicroStrategy (MSTR) offering exposure to leveraged Bitcoin which to me seems like excessive risk and a sign of potential trouble.
This is like pouring gasoline on a roaring fire. It reminds me of a quote from Edward Chancellor’s book The Price of Time, which offered this gem:
“……as a rule, panics do not destroy capital; they merely reveal the extent to which it has previously been destroyed by [the taking on of excessive leverage in good times].”
Cabot Small-Cap Confidential
Monthly Issue December 5: Today’s opportunity skews toward the more speculative end of the spectrum, which is part of why I find it so darn enticing.
If you’re interested in a gold miner that also has an angle to help the U.S. produce a critical element, antimony, currently in short supply outside of China, Russia and Tajikistan, none of which are cozying up to the U.S. right now, this is the stock for you.
While we began a position in this stock via yesterday’s Special Bulletin, all the details are inside this month’s Issue.
Weekly Update December 19: Note: Due to the Christmas holiday, there will be no Cabot Small-Cap Confidential update next week. Happy holidays!
In last week’s update I spoke about the potential for a market retreat early in 2025 given that investors are sitting on sizeable paper profits, and selling after December 31 would allow them to postpone capital gains taxes.
My projection may have been off by a week and a half.
Cabot Dividend Investor
Monthly Issue December 11: It’s been a great year in the market with the S&P up 27%. And there is good reason for optimism about 2025.
We are in a bull market that began in October of 2022. Bull markets don’t usually run out of gas after just two years, especially recent ones. The Fed has begun a rate-cutting cycle that is likely to last for the next two years. Plus, the economy is solid and expected to get stronger. Rate cuts in a strong economy are unusual, but the combination should be great for stocks.
One sector may have a better 2025 prognosis than the overall market: Financial stocks have been on a tear since the summer. The Financial Select Sector SPDR Fund (XLF) is up 33% YTD and 22% since early August. Despite the recent spike, many financial stocks are still cheap after a decade and a half of underperformance.
Financial stocks are dependent on yield spreads, economic growth, and relaxed regulations. All those areas are improving or expected to improve as a result of the election.
In this issue, I highlight one of the highest-growth companies in an industry that is on the rise. It is the leading all-digital bank in the country. Unlike many other industry-leading stocks, it is still well below the high because of a recent temporary stumble which has likely only delayed its price spike.
Weekly Update December 18: It looks like the election euphoria has run out of gas. The market has digested the election and is now back to business as usual.
The Dow Jones Industrial Average has lost ground for nine consecutive sessions. Most of the S&P 500 sectors have been down over the past month. Of course, the S&P is still within a whisker of the high. It hasn’t pulled back. But it hasn’t gone up in a while either.
Cabot Early Opportunities
Monthly Issue December 18: We wrap up a fruitful year with a December Issue of Cabot Early Opportunities highlighting five names spanning everything from bottled water to social media to bitcoin mining.
I like the diversity of this Issue, which has something for everyone.
Cabot Profit Booster
Weekly Issue December 17: For the second straight week the leading indexes went in vastly different directions as the S&P 500 fell 0.6%, the Dow lost 1.9%, and the Nasdaq gained 1%.
Cabot Income Advisor
Monthly Issue December 17: By most measures, 2025 looks pretty good for stocks.
The Fed has begun a rate-cutting cycle that should last for the next two years. Historically, stocks do well when the Fed is cutting rates and there is no recession. And the economy has been solid. This bull market is just 25 months old and has returned 65%. Bull markets usually don’t just run out of gas after two years. In fact, the average bull market has lasted 50 months and returned 152%.
But stocks are expensive. The S&P currently sells at 22.3 times forward earnings compared to an average of 16 times over the last twenty years. The market returned 26% in 2023 and about 28% this year with two weeks to go. It might be tough for stocks to deliver another consecutive year of 20%-plus returns.
It may be that a lot of the easy upside is behind us. Stocks can still perform well, but they’ll probably have to earn it in 2025.
In this issue, I highlight a stock that is poised for a strong earnings rebound in 2025. It is a stock that bounces a lot between the highs and lows. And it is currently well below the high. It is also one of the best healthcare companies on the market at a time when the population is older than ever before and aging at warp speed.
Weekly Update December 10: The post-election bounce is over. But stocks could still finish the year higher. These are good times. The S&P 500 is up about 30% year to date. This adds to a 26% return for the index in 2023.
Cabot Turnaround Letter
Monthly Issue December 18: Many are surprised to learn that the concept of telehealth wasn’t a direct result of the Covid pandemic in 2020. Indeed, the practice of online consultations between patients and medical personnel has been practiced for over 20 years, and this month’s featured company is arguably the first one to bring it to global prominence.
Weekly Update December 20: In today’s note, we discuss developments and institutional ratings upgrades for some of the stocks in the portfolio, including Agnico-Eagle Mines (AEM), Atlassian (TEAM), GE Aerospace (GE), SPDR S&P Retail ETF (XRT) and Starbucks (SBUX).
Cabot Cannabis Investor
Monthly Issue December 24: Cannabis stocks are set to close out the year with a punishing 14% decline. Cannabis investors need help from anywhere they can get it.
It looks like it could come from an unusual place in 2025. The future of the cannabis industry is now in the hands of President-elect Donald Trump.
If anyone told me a few years ago this would be the case, I might have asked them what they are smoking.
However, the reality is that during his presidential campaign, Trump endorsed all three of the main reforms that would legitimize the industry and boost cannabis share prices: Rescheduling, bank reform known as SAFER banking, and legalization of recreational use. Trump endorsed the first two outright. He implicitly endorsed legal rec-use because he supported the Florida referendum which would have made this change. At the very least, he has openly endorsed decriminalization.
Monthly Update December 11: May the buyouts begin. Poor sentiment has pushed the values of cannabis companies so low, the strong are now buying the weak. Like the recent cannabis company insider buying, this is a signal that valuations may be close to bottoming here.
However, realistically, it could be a while before the sector recovers since we are dependent on politicians for progress.
Cabot Money Club
Monthly Magazine December: Stocks may be trading at all-time highs, but economists and analysts are looking for even more gains going into 2025. So, with meaningful catalysts still on the horizon, here are the strategies you can use and the steps you can take right now to take advantage of the continuing bull market.
Stock of the Month December 12: The markets reacted strongly—and bullishly—to the results of the presidential election and also found favor after the Federal Reserve’s quarter-point rate reduction.
As of today, they’ve pulled back a bit, awaiting the latest inflation report.
However, the economy continues rolling along. Unemployment remains steady, and consumer sentiment is positive. And while the housing market continues to be challenged by low inventory and rising prices, on the local level, I’m seeing improvement in both categories.
Ask the Experts
Prime Question for Chris: Hi Chris: I try to allocate nearly equal dollar amounts of each stock that I purchase.I have already purchased my ‘normal’ amount of Cigna Group (CI) at the time you recommended it.The price has dropped dramatically. I am concerned about the future of this company. At the same time I am tempted to deviate from my equal dollar allocations and purchase additional shares of Cigna.I am reluctant to chase falling prices as they continue to drop. This is generally a poor approach.Should one stick with current paper losses or attempt to reduce my cost-basis by purchasing more at a significantly lower price? Can you offer any advice?
Chris: Very good question. Yes, Cigna is not off to the best start for us. But, it’s early yet, and this level of selling seems overdone. Like you say, I wouldn’t “try to catch a falling knife” – I’d wait for CI to establish a clear bottom, and preferably start going up again, before adding to your position. I think purchasing more at a lower price is not a bad approach. But I think you can wait to do that until the current relentless selloff has passed, and the stock looks like it wants to go up again.
Hope this helps.