Cabot Prime Week Ending July 23, 2021

Cabot Prime Week Ending July 23, 2021

Stock Recommendation Tracker

The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any changes to our recommendations over the previous week. We include this table at the bottom of the Weekly Summary, and provide a link here at the top to the Stock Recommendations Tracker.

Cabot Weekly Review (Video)

In this week’s stock market video, Tyler Laundon discusses how the S&P 500 has bounced back to trade near all-time highs after a few weeks of choppy action and a big selloff on Monday. He zeroes in on three small and mid cap stocks that should be of interest to investors today and which offer exposure to different trends, including COVID-19 vaccine manufacturing, sporting goods, and social media management. Tickers mentioned include: MRVI, ASO, SPT, NET, CRWD.

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Advisory Services

Cabot Growth Investor

Bi-weekly Update July 22: The sharp dip and rapid snapback in the market is impressive, especially with many growth stocks showing eye-opening strength. However, the bulls still have a lot to prove—our Cabot Tides are neutral at best, most stocks are still under resistance, plus earnings season will surely have a big impact on things. Even so, we’re going to put some money to work tonight, adding three half-sized positions: One in Asana (ASAN), a new addition; and averaging up in both DocuSign (DOCU) and Floor & Décor (FND). Even with these moves, the Model Portfolio will still be 37% in cash, and we have two names on tight leases that we could dump if the market falls apart.

Special Bulletin July 19: Remain cautious. The selling pressure that has been spreading is really hitting the major indexes today—though, interestingly, many growth stocks are finding support as fears of the Delta variant of the virus spread. At this point, our Cabot Tides have flashed a sell signal and the onus is clearly on the bulls to step up. While we’re keeping our eyes peeled, our only change in the Model Portfolio is placing ProShares Ultra S&P 500 Fund (SSO) on Hold; we have a couple other names on tight leashes and have brief remarks on all of them below. Our cash position remains just over 50%.

Bi-weekly Issue July 15: Because most of us are long-only players (focusing our time looking at what to buy, not short), we usually think of things from the perspective of buyers. There’s nothing wrong with that, per se—a lot of my commentary and analysis is focused on whether or not we’re seeing big, institutional buyers show up. Especially at key levels, such evidence is vital; when a stock is trying to break free of a multi-month range, for instance, the volume surrounding the liftoff is one of your best indicators of whether the move will hold.

Cabot Top Ten Trader

Movers & Shakers July 23: It’s been a very, very interesting week in the market. From a top-down perspective, it wasn’t the biggest deal: As we enter today, most major indexes are up in the 1% to 1.5% range on the week. At best, this puts the intermediate-term trend back to neutral for the major indexes, while most stocks (north of 60% of them) are still languishing below their respective 50-day lines.

Weekly Issue July 19: The evidence has been steadily improving, but July has changed that—first came a lot of narrowing (most stocks below their 50-day lines even though the big-cap indexes were near new highs) along with a lack of breakouts, then came last week’s selling pressure (that saw many growth stocks show real slippage), and today we saw the sellers really start to hit things left and right. Mike’s Top Pick is Marvell Technology (MRVL), a leading chip maker that’s pulling back normally after a persistent move to new highs.

Cabot Undervalued Stocks Advisor

Weekly Update July 21: In this market, it’s a trader’s nightmare. Sentiment shifts sharply on unpredictables that include the course of the pandemic, the political fate of various trillion-dollar federal spending proposals, the relevance of “peak earnings and economic growth,” the inflation outlook, and even whether China will invade Taiwan (the chairman of Taiwan Semiconductor made some blunt comments on this matter recently). Even longer-term investors can be caught glancing at the exits. With valuations elevated across the board, it seems like an easy decision to unload some cyclical stocks. Reflecting this, the Dow Jones Industrial Average, which is cyclical-heavy, dipped 2.1% on Monday.

Monthly Issue July 7: At the mid-point in the year, the investing environment seems to be exceptionally favorable. The U.S. economy is recovering robustly with promises of ongoing strength as the jobs market recovery accelerates and as international economies more fully reopen. Earnings growth for the S&P 500 this year is estimated to be 35%, followed by 21% growth in 2022. Not only are these growth rates exceptionally healthy, but analysts seem to be underestimating the strength. S&P 500 earnings estimates typically decline as a year progresses, but over the past three months, the consensus estimate for 2021 earnings of $191 has been increasing – and by a record amount (+9%).

Cabot Stock of the Week

Weekly Issue July 19: The bull market is alive and well, with major indexes hitting new highs in recent days. However, growth stocks in particular have been hit hard recently, and that requires some selling. Tim’s featured stock Driven Brands (DRVN), has evolved into the largest automotive services company in North America. Along the way it has acquired many brands, which today are represented in the six core brands of Maaco, Meineke, CARSTAR, 1-800-Radiator, Take 5 Oil Change and International Car Wash Group.

Cabot Explorer

Bi-weekly Issue July 22: Now that Blue Origin’s and Virgin Galactic’s successful launches are in the books, Wall Street is assessing the profit potential of space tourism. UBS projects the space tourism business segment to be around $4 billion but the broader space sector to be worth $400 billion, which could grow to $900 billion by 2030. Carl’s new recommendation Pershing Square Holdings (PSHZF), is Bill Ackman’s largest investment vehicle, structured as a closed-ended fund with about $10 billion of net assets. Ackman, a well-known value investor, founded Pershing Square Capital Management in 2004 with $54 million, much of it his own money.

Bi-weekly Update July 15: After last weekend’s successful space flight of Sir Richard Branson, one would have expected Virgin Galactic (SPCE) stock to soar on Monday. Instead, it lost altitude. Sure, the announcement of a $500 million secondary offering leading to dilution was not welcome news, but part of the reason the stock fell is that investors asked, “what next?” and sold some shares. What comes next is indeed the right question since markets always look forward.

Cabot Dividend Investor

Weekly Update July 21: What a week! The bears sure enjoyed a rare day in the sun on Monday. The Dow had its worst day of the year, down more than 3%. Pessimists haven’t loved life like that since March of 2020. The culprit was the Delta variant coronavirus strain. Investors fretted that the growing cases could return us to 2020-style lockdown mode. But not so fast. After Monday, stocks have sprung right back as investors realize that probably won’t happen. It’s a summer market. And summer markets are notoriously headline sensitive.

Monthly Issue July 14: Remember income? It used to be so easy. But good yields from traditional investments have gone the way of the eight-track tape. A 10-year Treasury bond pays just 1.4%. A three-year CD pays less than 1%. A 20-year AAA-rated municipal bond pays 1.2%. After taxes and inflation, you don’t even break even. And that’s not to mention the fact that bond prices can plummet if interest rates rise. Tom’s featured stock is Blackrock Enhanced Capital and Income Fund (CII).

Cabot Marijuana Investor

Weekly Update July 21: Our worst-looking stocks are Canopy Growth (CGC) and HEXO (HEXO). Both are Canadian and investors are still avoiding Canadian marijuana stocks. We have a big long-term profit in CGC, and good reasons to hold long term, but HEXO is our biggest loser—and also our most recent buy, and thus the easiest one to sell. Out it goes.

Monthly Issue June 30: In the early years of marijuana legalization in the U.S., when the main action was in Colorado and the three West Coast states, there were no major multistate operators (MSOs). Instead, hundreds of small-time businesses sprang up, and in the competitive environment that followed, many found it difficult to compete with the established illegal market, which didn’t pay taxes. But many survived, and because of that, those early states still have a very fragmented industry. Today, as the country is perhaps halfway (a very rough guess) toward national legalization, the state of Michigan, where legal adult-use sales began in December 2019, provides some interesting data.

Cabot Early Opportunities

Monthly Issue July 21: The Fed will need to taper bond purchases at some point and interest rates, at least in a rational market, seem like they can only go up. Yet rates remain low, somewhat confusing the growth vs. value argument (for those that feel a need to go one way or the other). Tyler’s Top Pick Upstart Holdings (UPST), operates a cloud-based artificial intelligence (AI) lending platform that goes beyond simple FICO-based models to better match borrowers and lenders. Upstart-powered banks are better able to identify risk and can generate higher approval rates and experience lower loss rates, while customers enjoy the benefits of a digital-first borrowing experience.

Special Bulletin July 6: Today we’re going to part ways with two positions that we added in May and which we’ll make a little more than 10% on. Both positions were trading higher a couple weeks ago but have lost some momentum recently. Sell WHD and APP.

Cabot Profit Booster

Weekly Issue July 20: After a volatile week, the major market indices all closed out with losses. The S&P 500 fell 0.97%, the Dow lost 0.52%, and the Nasdaq declined by 1.87%. And the bearish sentiment continued on Monday as the S&P 500 lost another 1.6%. Jacob’s new stock recommendation is Marvell Technology Group (MRVL).

Update July 19: On Friday our MRO and SGMS call positions expired worthless, leaving us with only our stock positions. And while Jacob debated selling new calls to lower our cost basis, the market is weak, and these stocks have fallen below our initial stop levels. For that reason, Jacob is going to sell both MRO and SGMS stock positions today, and prepare to move this capital into better ideas.

Cabot Income Advisor

Weekly Update July 21: Stocks had one of the worst days of the year yesterday as investors fear the spreading Delta variant coronavirus strain could hamper growth. The market hasn’t seen ugliness on this scale since October. Indexes had been somewhat flat and bouncing around near the highs as investors weighed the booming economy against inflation fears, a falling 10-year rate and growth concerns after the pandemic recovery. But the growing virus fears hit an otherwise lackadaisical summer market hard.

Monthly Issue June 23: The sideways market finally got some action. It went the wrong way. But it showed signs of life nonetheless. Last week, the Dow Jones Industrial Average posted its worst week since last August, down more than 3.4%. The main culprit was the Fed. At last Wednesday’s meeting, the central bank announced its intention to start hiking the federal funds rate – in two years. That is sooner than the market had anticipated. And investors freaked.

Cabot Turnaround Letter

Weekly Update July 23: Covering recent news and analysis for our portfolio companies and other topics relevant to value investors.

Monthly Issue June 30: Major pharmaceutical stocks are clearly not “the place to be” in today’s market. Investors much prefer fast-growing yet expensive technology (including biotech) and cyclical re-opening stocks. After years of stagnant share prices while the S&P 500 surged, the group now sells at about a 40% price/earnings discount to the market, its largest in decades and well below the historical premium valuation. Bruce’s has one buy recommendation: Organon & Co. (OGN).

Ask the Experts

Cabot Early Opportunities

Question: I joined your advisory in June. Would you recommend starting to build a portfolio from that time going forward, or adding stocks that were already in the existing advisory and still rated a buy?

Tyler: I would consider both new and older positions. The reality is that in a year or two all the stocks we still have from the current portfolio will seem “old”. But good stocks keep going up! Naturally, you’ll have a different entry point from what the portfolio has on the ones that we have previously added, but I wouldn’t get hung up on that.

Quarterly Cabot Analyst Meeting

The recording of the Cabot Prime Members Meeting with the Analysts from July 14, 2021 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 member benefits.

Stock Recommendations Tracker

The table below lists all of the stocks held in any Cabot portfolio.
Updated or revised recommendations from the past week are in purple text.
Stocks added to a portfolio are highlighted in green text.
Closed stock positions in the past week are highlighted in red text.

Stock	Cabot Explorer	Cabot Growth Investor	Cabot Marijuana Investor	Cabot Stock of the Week	Cabot Undervalued Stock Advisor	Cabot Dividend Investor
ABBV						Buy
AGC	Buy
AGNC						Buy
ARCO					Buy
ASAN		Buy
ASML				Buy
AVGO				Buy		Buy
AVVIY					Buy
BIP				Buy		Buy
BMY					Strong Buy
BSCL						Hold
CBT	Sell
CCHWF			See Advisory
CGC			See Advisory
CII						Buy
CRLBF			See Advisory
CSCO					Buy
CURLF			See Advisory
CVX						Hold
DLR						Hold
DOCU		Buy Another Half
DOW					Hold
DRVN				Buy
DVN		Hold
EPD						Buy
FIVE		Hold		Hold
FND		Buy Another Half		Buy
FSR	Hold
GM				Hold	Hold
GOLD					Buy
GRWG			See Advisory
GTBIF			See Advisory
HTHT				Sold
HUBS				Buy
IBM	Buy
IIPR			See Advisory
JUSHF			See Advisory			Hold 2/3
KKR						Buy
KO					Buy
LLY						Hold
MRK					Buy
MRVI				Sell
MRVL	Buy
NEE				Buy		Buy
NET	Hold 1/2	Buy
NVCR				Buy
NVDA				Buy
O						Buy
OGN					Buy
OKE						Buy
OTTR					Buy
PDD	Hold 1/2			Hold
PGNY		Hold		Hold
PGX						Hold
PLTR	Buy			Sell
POAHY	Buy
PSHZF	Buy
QCOM						Buy
RBLX		Sold		Sell
SE	Buy 1/2			Buy
SLB				Sell
SPCE	Hold 1/2			Sold
SSO		Hold
ST				Buy	Buy
STAG						Hold
TAP				Hold	Buy
TCNNF			See Advisory	Buy
TPB			See Advisory
TRSSF			See Advisory
TSLA				Buy
TSM	Buy 1/2
USB						Buy
VLO						Buy
VZ						Hold
XEL						Buy