Latest Summary
CABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, Mike Cintolo talks about the week’s selling, which was concentrated in many leading growth titles and resulted in more than a few breakdowns. That said, the broad market is still holding, the overall intermediate-term trend remains up and many stocks are still acting normally and/or base-building heading into earnings season. Mike reviews all the good and bad and reviews a bunch of names in both camps to have you ready for next week.
Stocks Discussed: LLY, ONTO, ASML, NTRA, META, ANET, NVDA, PLTR, WIX, ZETA, FANG, WFRD, CRS, COIN, KRYS, NBIX, AEM, PAA, SBX, KKR, TOST
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad discuss the recent pullback in big tech and signs of anxiety across the market. They break down Crowdstrike’s (CRWD) disastrous day as well as corrections in ASML Holding (ASML) and Taiwan Semi (TSM) after their respective earnings reports and headlines about further export restrictions on chips. Then they look at gold, which has dipped after hitting fresh all-time highs a few days ago. To wrap up the episode, they share their perspectives on Cathie Wood’s “explanation” for selling out of Nvidia (NVDA) before its meteoric run higher.
Cabot Webinar
Will be announced soon!
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 July 11: We’ve been around a while, but this is one of the most unusual environments we’ve seen, with today’s major rotational action another example of a pickup in volatility while few names are really making much sustained progress. Taking things on a stock-by-stock basis, we’ve pared back some in recent weeks, yet because most of the names we’ve been targeting for buying are just sitting there, has led to an increasing cash position--now up to 41% after a partial sale of Cava Group earlier this week.
The good news is that the mostly sideways action from much of the market has led to many setups heading into earnings season, which results in a straightforward game plan -- we’re holding our cash tonight, but we’re aiming to grab some fresh breakouts if they occur.
Bi-weekly Update July 17: WHAT TO DO NOW: Today is a horrid day for most growth and AI-related stocks, continuing the rotation that began last week. All in all, there remain lots of crosscurrents, with our market timing indicators now positive, but individual growth stocks remain very hit or miss, all while earnings season is starting to rev up. Thus, we continue to favor holding a chunk of cash on the sideline while taking things on a stock-by-stock basis. In the Model Portfolio, we did some buying earlier this week, adding half-sized stakes in the ProShares Russell 2000 Fund (UWM) and Robinhood (HOOD), though tonight we’re going to sell our remaining small position in Uber (UBER) while placing Pure Storage (PSTG) on Hold as it takes on water with most peers. Our cash position is around 36%, which we’ll hold onto tonight as we watch to see how the rotation progresses from here.
Cabot Top Ten Trader
Weekly Issue July 15: We rarely draw major conclusions from a couple of days of trading, but there’s no doubt the action since last week’s inflation report is very interesting, with the broad market coming alive, though that’s happening as some extended tech leaders wobble a bit. All in all, the intermediate-term trend is turning up and we are seeing a few more names emerge, though to us, it remains a stock-by-stock environment, so we’re focused on great setups and potential breakouts in stocks showing relative strength. We’ll leave our Market Monitor at a level 7.
This week’s list is very eclectic, with everything from precious metals to bull market stocks to AI plays to biotech—a sign the broad market is kicking into gear. Our Top Pick is a mid-cap in the biotech space with very strong sales and earnings projections as their new drug grows rapidly.
Movers & Shakers July 19: It remains very unusual times in the market, with a big rotation and then this week’s selloff that’s included most names, all on a bevy of news and rumors (chip sales restrictions to China, China/Taiwan tensions, a massive tech snafu this morning due to a CrowdStrike gaffe, etc.). We have many thoughts, and we’ll go through them point by point here.
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 July 18: Stock market trends last longer than anyone expects.
That was the oft-repeated adage of my former boss, Cabot legend Tim Lutts. And he was right. For all the tsk-tsking about the current bull market being long in the tooth, it’s actually tied for the shortest bull market (21 months) in history at the moment, according to data from Ryan Detrick of Carson Research Group. The average bull market lasts 61 months – nearly three times the length of the current one!
Cabot Stock of the Week
Weekly Issue July 15: The bull market finally expanded to more than just a select few names last week, with small caps, Chinese stocks and other sectors finally getting some love. It’s a good sign for the rally’s longevity and could be a boon for our diverse portfolio. So today, we add another non-AI, non-tech stock that’s been attracting some overdue buying. It’s a big-name, resilient growth company whose stock consistently outperforms the market – and yet is undervalued at the moment. It’s a recommendation I just shared with my Cabot Value Investor readers, and today it joins our Stock of the Week portfolio.
Details inside.
Cabot Explorer
Bi-weekly Issue July 18: Markets and especially the tech-heavy Nasdaq index led by semiconductor stocks sold off yesterday. Reasons include perceived rising protectionist and isolationist pressures in both Europe and America. Meanwhile, small-cap stocks continue to rally, and some overseas markets were also up.
As one would expect, our tech stocks pulled back somewhat while all three of our dominator stocks gained ground this week.
Bi-weekly Update July 11: Explorer stocks put in a solid performance this week as Federal Reserve Chairman Jerome Powell was on Capitol Hill for two days of testimony. His remarks were parsed as if he were an oracle, but the takeaway seems that we are moving towards a rate cut dependent on labor markets cooling off a bit more.
I really don’t like paying too much attention to macro issues like interest rates and would rather focus on new ideas that most investors are not following closely. Right now, in a market so dependent on a small number of leading stocks, you can reduce your portfolio’s overall risk profile by adding some stocks in countries and sectors where expectations and downside risk are low.
Cabot Small-Cap Confidential
Monthly Issue July 3: In 2022 new management took the helm of a small, deli-focused food company that was underperforming its potential. Fast forward a couple of years and management is executing an ambitious growth plan, while consumers are flocking to the deli section like never before.
This month’s Issue tells the story of a micro-cap company that’s hitting its stride a century after the woman it’s named after completed the journey from Italy to Brooklyn, NY.
Weekly Update July 18: All of a sudden small-cap stocks are the talk of the town.
I guess that’s what happens when the asset class posts its best five-day streak since April 2020!
Despite the recent move, Barclays reports that Commodity Trading Advisor (CTA) positioning is still neutral on small caps (overweight S&P 500 and Nasdaq), leaving ample room for more buying.
Cabot Dividend Investor
Monthly Issue July 10: Clean energy is the future. But not for a while.
This country and the world still rely heavily on fossil fuels for more than 80% of energy needs, and these conventional energy sources will likely remain dominant for decades. Meanwhile, many stocks of companies that benefit have strong earnings and great value.
Fossil fuel proportions are expected to move toward natural gas in the years ahead. A recent study estimates that global natural gas demand will soar 34% between 2022 and 2050 with the strongest growth in the natural gas realm to be liquid natural gas (LNG), with demand expected to more than double in the same time frame.
In this issue, I highlight one of the best natural gas companies on the market. It is a newly formed company in the business of exporting abundant and cheap American natural gas overseas. It’s big business. In a short time, this company has become one of the world’s largest natural gas exporters.
Weekly Update July 17: There isn’t much not to like about this market. After a strong first half of the year, the market is having a great July. And the rally is broadening out. It’s not just technology anymore.
Cabot Early Opportunities
Monthly Issue July 17: In the July Issue of Cabot Early Opportunities, we continue to lean into the strong market and focus our attention on the small end of the market cap curve.
We have small and mid-cap players in the software, semiconductor, green energy, industrial tech and AdTech spheres, each of which has compelling reasons propelling shares higher.
Cabot Profit Booster
Weekly Issue July 16: While I rarely highlight the gains/losses of the Russell 2000 (IWM) as the group has been mostly a dog for the last year-plus, last week the small-cap index came alive on Thursday and Friday, far outpacing its index peers with a gain of 5.25% on the week.
And while the other indexes couldn’t keep up with the IWM the S&P 500 gained 0.8%, the Dow rallied 1.5%, and the Nasdaq fell 0.35%.
Cabot Income Advisor
Monthly Issue June 25: AI is the catalyst driving the technology sector, which is driving the market higher. Over the last month, the tech sector is up 10.42% while the S&P is up 2.95%. Seven of the 11 sectors are negative for the past month.
But technology stocks may be running out of gas. Without the heavy lifting from technology, it’s easy to see the overall market trending sideways or down, at least for a while.
Income is king in markets like this. The register still rings when the market stumbles. There’s also an opportunity right now. With the S&P and many stocks near their 52-week highs, it’s a good time to get high call premiums. Also, you can lock in strong total returns from these stocks if they are called.
Even the best bull markets have ups and downs. We can play the increased likelihood of a flat or down market by priming the income pump to pay us through the rough patch. In this issue, I target another covered call that will enhance the already exquisite income of a monthly dividend stock.
Weekly Update July 16: Wow. Just wow. Not only has this market rally continued to forge on, it’s broadened out too. After a 14.5% gain in the first half of this year, the S&P is putting together an impressive July with a better than 3% gain so far.
The latest leg of this rally has been sparked by a better-than-expected June CPI report. Interest rate optimism abounds. Consensus now expects a Fed rate cut before the end of the year and an increased expectation that overall interest rates have peaked and are likely to trend lower for the rest of the year.
Cabot Turnaround Letter
Monthly Issue June 26: In this month’s issue of Cabot Turnaround Letter, I recommend a company I’ve been fond of all the way back to 7th grade. It’s a household name, but one that’s perhaps been forgotten on Wall Street in recent years. But now, it looks primed for a turnaround.
Weekly Update July 19: V.F. Corporation (VFC) announced the sale of Supreme, the famed streetwear brand, to EssilorLuxottica, the owner of Ray-Ban, for $1.5 billion, leading to a 13.6% surge in VFC’s shares on Wednesday. Supreme, a New York City skate shop turned global fashion icon since 1994, became renowned for its exclusive collaborations with luxury brands like Louis Vuitton and Nike. VFC acquired Supreme in 2020 for $2.1B, hoping to leverage its trendy image to boost its portfolio. However, the huge debt load and miserable margins took their toll, and by last year the company had written down two-thirds of Supreme’s value.
Cabot Cannabis Investor
Monthly Issue June 26: Cannabis stocks are unloved and in the doldrums.
Typically, in the stock market, that’s the best time to buy.
Neglected stocks offer the best value, as long as there are potential catalysts on the horizon.
I believe that is the case with cannabis. You’ll just have to be patient. I think it is worth being patient for the possibility of 30%-50% gains when a catalyst strikes. There is no guarantee this will happen, but as I discuss below, the odds are good.
Monthly Update July 10: Old-school value managers like Benjamin Graham and Warren Buffett used to have a funny way of describing their investing style.
They said value stocks were like cigar butts on the sidewalk that had a few puffs left in them.
I’d like to offer an updated version of this metaphor. I think cannabis stocks have a few more puffs left in them between now and the end of the year.
Cannabis names are thoroughly unloved and abandoned once again.
Cabot Money Club
Monthly Magazine July: We may hate to talk (or even think) about it, but we all understand the importance of proper estate planning. And if you’ve spent a lifetime accumulating assets to pass down to those you love, the next best thing you can do is to make sure you’ve taken the right steps to avoid leaving your heirs with a headache on top of their inheritance. This month, let’s explore the steps you can take right now to help make sure your wishes are honored and that your family doesn’t spend months or even years duking it out in court.
Stock of the Month July 11: Sideways appears to be the rule of the markets these days—at least until the election is over and the Federal Reserve begins lowering rates. No rate cut this time, and now Fed watchers are saying we’ll be lucky to see just a one-quarter-point reduction this year.
Inflation—at 3.3%—is on the right track but has still not reached the Federal Reserve’s target rate of 2%, so the Fed is not anxious to begin reducing interest rates.
Ask the Experts
Prime Question for Chris: Hi Chris, a question for you regarding the SPY compared to the RSP.
After reading both Carl Delfeld’s article and yours, correct me if I’m wrong, but it seems Carl has a different view regarding the two (index funds) than you have, as you have spoken about it. I am wondering if you can clear it up for me. As you have stated, it seems the RSP does not make much (gain) compared to the SPY. However, Carl has a much different belief about the RSP, and the interest it earns compared to the SPY, if one owns it.
I do not know if the RSP earns good interest or if it is not good to own, but the SPY is much better. The reason I am asking is because it is less risky to own an index as opposed to individual stocks, or to at least own as part of a portfolio.
Chris: I think Carl and I are talking about two totally different timelines here. I’m just talking about the RSP’s underperformance this year – and really since the start of 2022 – relative to SPY. The Equal Weight index is essentially flat since the start of 2022, while the S&P (SPY) is up 18% during that time. I measured from the start of 2022 because that’s when the bear market got underway, and most stocks backtracked. While we’ve now been in a bull market since October 2022, headline indexes like the S&P and especially the Nasdaq have made huge strides, while the RSP….hasn’t.
Carl is probably right that the RSP has outperformed the SPY over the last two-plus decades. But that only enhances my point – that the complete underperformance of the RSP the last 2.5 years really stands out, and is reflective of the fact that SO many stocks and sectors have yet to truly participate in this 21-month rally.
Hope that makes sense. Thanks for reading!