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Cabot Undervalued Stocks Advisor 1221

December 1, 2021

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

The emergence of the Covid Omicron variant has temporarily upended the market’s emerging post-Covid view of the economy. We share our thoughts on this, as well as on Fed Chair Powell’s testimony this week about accelerating the bond-buying taper.

We also comment on how artificial selling pressure as the calendar year-end approaches can drive already-weak stocks to steeply undervalued levels. Several of our recommended names fit this description. Once the calendar year ends, these stocks can have sharp rebounds.

Also included are name-specific updates, with our current thoughts on energy prices and other news.

Earlier this month we moved General Motors (GM) to a Sell and include our rationale from the November 24 Special Bulletin. This investment produced a 70% total return since our initial recommendation on December 31, 2019, and a 146% total return since the current analyst assumed coverage and reaffirmed the Buy rating on July 1, 2020.

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.

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Cabot Undervalued Stocks Advisor 1121

November 3, 2021

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

Rivian Automotive’s (RIVN) initial public offering, which arrives next week at a likely $60 billion valuation, has us thinking more deeply about General Motors (GM). Investors are assigning little value to its EV and other advanced technologies, which strikes us as incompatible with the valuations of Tesla, Rivian and other EV start-ups. But, perhaps this is right, due to the enormous capital spending that GM has committed to. These vast cash outflows may eliminate the present value of the EVs. We share some of our thinking on this.

We also provide earnings updates and note our sale, earlier in the month, of Otter Tail Corporation (OTTR) with a 24% gain since our Buy recommendation about five months ago.

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.

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Cabot Undervalued Stocks Advisor 1021

October 6, 2021

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

Volatility is a value/contrarian investors’ friend. With the markets becoming more volatile, we’ve made some changes to the portfolio this past month. We recently added ConocoPhillips (COP), a major oil and gas producer that is also an undervalued cash flow machine at current commodity prices.

We also raised General Motors (GM) and Dow (DOW) back to Buys as their shares dipped to unreasonably low valuations.

As the market is recognizing the value of Otter Tail Corporation (OTTR), we moved the shares to a Hold and placed the stock under review for either a price target increase or an exit.

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.

Thanks!

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Cabot Undervalued Stocks Advisor 921

September 1, 2021

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

This past week was vacation week – a valuable respite from the stresses of investing and other features of daily life. We now return to the investing desk, ready for what could be a very interesting remaining four months of the stock market year.

There hasn’t been much recent news on our names, so we provide a bit more color on some of the issues surrounding Arcos Dorados (ARCO) and some other names. We would like to see a market pullback to bring shares of otherwise attractive companies back to attractive valuations. However, even in the current market, we are starting to find appealing stocks again and will bring them to you.

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.

Thanks!

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Cabot Undervalued Stocks Advisor 821

August 4, 2021

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

Earnings season is in full gear, and we review the several companies that have reported as well as provide some expectations for those yet to report. General Motors (GM) releases its earnings on Wednesday, August 4, after our publishing deadline – this is a highly anticipated report.

Perhaps the biggest difference between value investing and growth and momentum investing is what to do when a stock price falls. Many investors using growth and momentum strategies have a discipline of selling if a stock price falls 15-20%. This may make excellent sense for these strategies but is the exact opposite of what one using a value strategy should do. With value strategies, one generally should buy when their stocks go down in price. We touch upon this more in today’s note.

I’d like to invite you to our 9th Annual Cabot Investor Conference, held online again this year, on August 17-19, that’s Tuesday – Thursday. You can see presentations by all of our analysts, which will include updates on their areas of expertise and discussions of their best picks.

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.

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Cabot Undervalued Stocks Advisor 721

July 7, 2021

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

The main supports for the market (an improving economy, strengthening earnings, low interest rates and a lack of major negative surprises) remain in place. It looks like a road of green lights well into the future.

One green light has turned yellow, however, with China’s crackdown on Didi Global, owner of the country’s dominant ride-hailing app. We don’t see imminent risk for value-oriented companies, but the long-term risk is rising.

Earnings season starts next week. Earnings reports are often the primary driver of the shares of our undervalued companies. We look forward to seeing how the business fundamentals are improving and listening to managements’ commentaries and outlooks.

I’d like to invite you to our 9th Annual Cabot Investor Conference, held online again this year, on August 17-19, that’s Tuesday – Thursday. You can see presentations by all of our analysts, which will include updates on their areas of expertise and discussions of their best picks.

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.

Thanks!

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Cabot Undervalued Stocks Advisor 621

June 3, 2021

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

Many of our recommended names are at or approaching our price targets. The decision to keep or sell isn’t easy in a strong market. Our patience is being tested (in a good way).

Few people would attend the Indy 500 and think about investment horizons. But, such is the world that your chief analyst inhabits. The race itself was a thrill, as always. It was also a showcase of different investment horizons, featuring that of new track owner Roger Penske.

Earning season has concluded, so it has been a slow period for company-specific news, although Tyson (TSN) announced the surprise departure of its new CEO. Some companies, including Bristol-Myers (BMY), Cisco (CSCO) and Dow (DOW) are presenting at various investor conferences. These can be worthwhile to watch and are free to the public, with replays available in addition to the live presentations.

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.

Thanks!

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Cabot Undervalued Stocks Advisor 521

May 5, 2021

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.

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Cabot Undervalued Stocks Advisor 421

April 7, 2021

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

As value investors, we look for companies that are selling at a discount to their underlying value. But how do we measure that value? In this issue, we briefly describe and discuss the EV/EBITDA metric, which is our preferred valuation tool.

While our stocks generally did well this past week, there wasn’t much news. With earnings season starting next week, most companies are remaining fairly quiet.

One change we made was to reduce our rating on Tyson (TSN) from a Buy to a Hold. The shares have about 8% upside to our recently raised price target. From here, we’d like to learn more about its earnings power, which hopefully will be provided in its fiscal second quarter report, before deciding to either raise or sell.

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.

Thanks!

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Cabot Undervalued Stocks Advisor 321

March 3, 2021

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

As value investors, we follow the goings-on at Berkshire Hathaway, and comment briefly on its earnings and Warren Buffett’s annual shareholder letter, released this past Saturday. Your chief analyst owns some Berkshire shares (the lower-priced Class B shares), but isn’t a full-fledged Berkshire “groupie.”

We also discuss our new Buy recommendation – British insurance company Aviva, Plc (AVVIY). This company is emerging from a period of global sprawl and weak leadership, led by a new and impressive CEO.

Currently-recommended Dow (DOW) is a strong beneficiary of the global economic re-opening, with higher earnings likely ahead, so we are raising our price target to reflect this still-undervalued stock’s potential.

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.

Thanks!

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Cabot Undervalued Stocks Advisor 221

February 3, 2021

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

We briefly comment on how the response by hedge funds to the Reddit trades may have led to last week’s sell-off and this week’s rebound in the stock market. Is there a bubble? Yes, and our note touches upon how all four ingredients of a bubble, outlined in a recent book on bubbles, are in place.

Earnings season is upon us. We review the reports from Dow (DOW) and JetBlue (JBLU), and look forward to six more reports in the coming week.

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.

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Cabot Undervalued Stocks Advisor 121

January 6, 2021

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

With the turning of the calendar, we list eleven long-term secular trends that we see shaping the world for years to come. We also include four additional trends that investors may think are enduring yet which we have less certainty about their ability to continue indefinitely.

Contrarian investors can benefit from considering these trends. Sometimes the most appealing stocks are those that superficially go against them.

The current recommended list includes 14 names, with Merck (MRK) and U.S. Bancorp (USB) added this month. Earning season is starting soon, so we’ll get updates on how these companies are faring and provide our commentary and analysis on them.

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.

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Cabot Undervalued Stocks Advisor 1220

December 2, 2020

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

We briefly share our thoughts on the surging stock market and run through some valuation math that looks out a few years. Our conclusion: the market’s earnings growth, even side-stepping the pandemic’s effects, doesn’t look that impressive, while the market’s valuation is on the high side of average. It is starting to look like a good time to be pickier about which stocks to own.

With this thought in mind, we are moving Broadcom (AVGO) from a Hold to a Sell, as the shares have essentially reached our price target.

It’s been a fairly active month for a value-oriented newsletter, adding three new names and selling six, including Broadcom. This leaves the holdings list at 12 names. We anticipate expanding this roster over the next month or two, as there are many interesting value ideas out there.

We also tweaked the descriptions under the portfolio titles to more accurately reflect what types of stocks we look for. This should also help add some clarity to the differences between the two categories.

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.

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Cabot Undervalued Stocks Advisor 1120

November 4, 2020

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

We briefly discuss the soon-to-evaporate election cloud, the merits of holding value stocks when growth/momentum stocks tumble, and highlight one of our portfolio stocks that had some earnings issues along with several others that reported strong earnings that lifted their share prices meaningfully.

Earnings season is in full swing. Six portfolio companies report later this week. We encourage subscribers to visit the reporting companies’ websites to review their earnings-related slide presentations and listen to the post-earnings conference call. These are all available to the public under the “Investor Relations” tab. Sometimes what portfolio companies actually do can seem murky – a quick visit to their website can help clarify, and (at least to me, a certified investment geek) provide some fascinating reading.

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.

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Cabot Undervalued Stocks Advisor 1020

October 6, 2020

This month and early November will be jammed with possibly market-moving events: earnings season, presidential (and now importantly, vice presidential) debates, the actual elections, a likely new federal stimulus package, possible change (in either direction) in the pandemic’s course, and perhaps news about a vaccine solution.

But for now, we’re stuck in Limbo-Land, with the worst (hopefully) of the pandemic behind us, yet so many unknowns just ahead. We outline some basic suggestions that we follow when in this type of market.

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