Cabot Prime Pro Week Ending August 6, 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, Mike Cintolo is still seeing the same thing: The market itself is choppy and challenging, with incessant rotation and crosscurrents, but he’s still seeing a gradual improvement among growth stocks, with more names popping to new highs. If some upside follow through comes, it could be time to get heavily invested, but for the time being he continues to pick his spots and go slow.
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Advisory Services
Cabot Growth Investor
Bi-weekly Update August 5: Continue to take steps into the market, but pick your spots and keep some dry powder available. The overall market remains mostly sideways and most stocks are still stuck in the chop (good few days followed by a bad few days), but we’re also seeing more growth stocks act well. We’re making one new addition tonight, adding a full-sized stake in Dynatrace (DT), which will leave us with a still-healthy 30% in cash. Details below.
Bi-weekly Issue July 29: In our opinion, there are three main things about the market that make it difficult for most investors to succeed. The first is its contrary nature—oftentimes, many of the same qualities that help you succeed in the real world (never give up, look for bargains, etc.) can get you into a lot of trouble in the market. The second is, especially with growth stocks, your portfolio will be skewed, meaning a large chunk of your profits will end up coming from relatively few trades, with the rest basically canceling each other out.
Special Bulletin July 27: After a nice few days, growth stocks (and the market as a whole) are getting walloped today, a sign that the market hasn’t broken free of the endless chop. To be fair, many growth names are still in good shape, but our Cabot Tides remain on the fence and much of the broad market is flopping around at best. In the Model Portfolio, we put some money to work last week, but today we’re going to punt on one of our weaker names—we’re selling our half-sized stake in Progyny (PGNY) and holding the cash. That will leave us with a cash position around 42%.
Cabot Top Ten Trader
Movers & Shakers August 6: It’s been a modestly positive week in the market, with a few intraday wobbles but nothing overly stressful. And, encouragingly, growth stocks led the way—the Nasdaq came into today up around 1.5%, while the rest of the major indexes were flat to up a touch and growth-y funds and indexes outperformed broad market ones. Not much has really changed when looking at the overall market: The overall intermediate-term trend is sideways, the majority of stocks are stuck below their 50-day lines (just 36% of Nasdaq stocks are above their 50-day lines!) and upside follow-through is relatively tough to find—most stocks and sectors that do well for four or five days tend to slough off soon after.
Weekly Issue August 2: From a top-down perspective, the issues that have surrounded the market are still hanging around—the intermediate-term trend is basically neutral, relatively few stocks are plowing ahead (many below their 50-day lines, fewer names hitting new highs, etc.) and every week or so there’s usually some news-driven rotation into or out of one section of the market. Mike’s Top Pick is Align Technology (ALGN), which has finally broken out of an early-stage base after months of ups and downs.
Cabot Options Trader and Cabot Options Trader Pro
Note that the current week’s Weekly Update, earnings updates, position updates and stocks on watch are posted on the website in the Market Update section, which is deleted each week.
Cabot Options Trader Basic & Pro Trade Alert August 6: Buy the Morgan Stanley (MS) January 100 Calls (exp. 1/21/2022) for $7.60 or less.
Cabot Options Trader Basic & Pro Position Update August 5: Let’s start with Canopy Growth (CGC) which will report earnings tomorrow before the market open. Headed into the event we are down on our stock purchase, though the August 25 call that we sold for $0.52 is at a nice profit. Big picture, our position is at a loss, and we want the stock higher.
Cabot Options Trader Basic & Pro Stocks on Watch August 4: Yesterday, and again today, option activity has gone WILD in Pfizer (PFE). For example, yesterday calls outpaced puts on a ratio of 4:1 (383,000 calls vs. 95,000 puts) targeting short-term upside calls, mid-term upside calls, and longer-term upside calls.
Cabot Options Trader Pro Weekly Review August 2: Long positions: CLF, KWEB, CSCO, CGC, BSX, NKE. Bearish Positions: SPY
Cabot Options Trader Basic Weekly Review August 2: Early last week the major indexes hit record highs, only to pull back and close modestly lower for the week following a couple rocky days of earnings reactions. As a result, at least from an index returns perspective, it was a dull week.
Cabot Undervalued Stocks Advisor
Monthly Issue August 4: As value investors, we look for companies whose shares are out of favor. Typically, these companies have little revenue or earnings growth – maybe their product or service offerings are in slow-growth industries or maybe aren’t quite as in-sync with customer demand as competitors, or perhaps they are pharmaceutical companies with patent expirations looming in the future. There are other potential overhangs, such as sub-par margins, poor capital allocation, temporary regulatory or legal issues or involvement in a recent spin-off transaction.
Weekly Update July 28: The stock market reached yet another record high on Monday, but it just doesn’t seem the same as earlier records. Investors (and everyone else) is starting to wonder if Covid is now endemic – an inherent component of everyday life. Will cases surge in the winter months and just after holidays instead of going away with a single vaccine cycle? We won’t likely be going back to widespread lockdowns, but previously unfettered socializing and traveling could be restrained, thus suppressing earnings and valuations for many companies.
Cabot Stock of the Week
Weekly Issue August 2: The bull market is alive and well, with major indexes hitting new highs just last week. Growth stocks are still struggling to put together a cohesive advance, which means it’s easy to enjoy recommending undervalued stocks as we did last week. Tim’s featured stock DocuSign (DOCU), is known as the hands-down leader in e-signatures (there is competition from the likes of Adobe, but DocuSign is clearly #1), which is an idea that simply makes sense—whether it’s signing mortgage refinancing documents, offer letters, work orders, invoices, reviews, contracts or legal documents, e-signatures save ridiculous amounts of time and money, not to mention reducing risk (standardized processes and electronic trails).
Cabot Explorer
Bi-weekly Issue August 5: The paradox of clean tech is that the critical materials needed to produce cleaner electricity – such as cobalt, gallium, lithium, germanium, and rare-earth elements – are far more scarce than petroleum, suggesting that global shortages and strife over vital resources is inevitable. Carl’s new recommendation Novonix (NVNXF), is an Australian technology and advanced materials supplier to the electric vehicle and storage battery industry. Founded by members of a research team at Canada’s Dalhousie University, the company has become an integrated developer and supplier of high-performance materials, equipment, and services for the global lithium-ion battery industry with a focus on North America.
Bi-weekly Update July 29: Chinese stocks were hit this week both on American exchanges and overseas as Chinese regulators ratcheted up the pressure through antitrust and regulatory steps that caught many executives and investors off guard. The Golden Dragon index of Chinese technology stocks fell by 15% in two days before rebounding after regulators tried to reassure markets.
Special Bulletin July 26: Due to escalating regulatory risk by Chinese authorities, please sell Pinduoduo stock. Carl will have more in this Thursday’s update but, in short, the Chinese are exerting their authority on Chinese companies that have used offshore entities to list on U.S. markets. China wants these companies to list in Hong Kong or Shanghai. There may be some trading and arbitrage opportunities developing, but the risk for Pinduoduo is now too high.
Cabot Small-Cap Confidential
Special Bulletin August 6: Avalara (AVLR) shares are rising today after the company beat expectations and gave a solid outlook for the rest of the year. Maintaining at buy.
Special Bulletin August 5: Revolve (RVLV) beat expectations in Q2 but concerns that the story has been “as good as it can get” and that things will slow down in the coming quarters, in part due to Delta variant circulation curbing going-out activities, are hammering shares today (-20% at the worst, better now). All things considered the selling appears overdone and I expect a bounce in the coming days. How RVLV acts in the near future will determine its standing in our portfolio, but at the moment aggressive investors may want to step in to buy. Formally, we are maintaining at hold to see how this earnings report is digested over the coming days.
Monthly Issue August 5: Tyler’s new recommendation JOANN (JOAN) is one of the largest U.S. retail chains in the $40 billion arts and crafts category. It has an omnichannel sales platform, with 855 stores across the U.S., a mobile-first website (joann.com) and a popular mobile app that has been downloaded over 12 million times. The company is the market leader (over 30% market share) in fabric and sewing supplies, which account for half of total sales. It is also the craft retailer of choice for people that self-identify as somewhat experienced.
Special Bulletin August 4: Inspire (INSP) is soaring this morning as the company trounced Q2 estimates and management raised guidance. Revenue was up 335% to $55 million (beating by $9.1 million) while EPS of -$0.48 improved from -$0.88 in the year-ago quarter and beat by $0.14. Driving the results was the addition of 63 new U.S. centers (well above expectations for 35 to 40) and a jump in covered lives. Results were strong both in the U.S. (up 349% to $49.4 million) and Europe (up 201% to $3.6 million) with average prices of both $23.9K and $23.4K (U.S. flat, Europe up modestly).
Weekly Update July 29: The U.S. economy is growing more quickly than before the pandemic, both the S&P 500 and S&P 600 are up modestly over the past week and, so far, this earnings season has been a massive improvement over the train wreck of the first-quarter reporting season. There are, of course, a plethora of issues. The GDP numbers represent anything but a normal economy. The Delta variant is sparking concerns over transmission and elevated tempers around mask wearing. And prices are not going down.
Cabot Dividend Investor
Weekly Update August 4: The earnings extravaganza is in full swing. It’s the peak of the season that marks the peak earnings growth of this extraordinary recovery. And the market is sort of yawning it off. Part of the issue is summer malaise. People just tend to focus more on enjoying the waning days of summer than stocks this time of year. But it also may be that this quarter just isn’t as important one might expect.
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 August 4: Innovative Industrial Properties (IIP) yesterday announced that it closed on the acquisition of a property in Illinois and entered into a long-term lease with a subsidiary of 4Front Ventures. IIP already owns and leases to subsidiaries of 4Front a cultivation, processing and dispensing facility in Massachusetts and a cultivation and processing facility in Washington, and this brings to 73 the number of properties that IIP owns in the industry nationwide. The stock is up today and still aiming for its February high of 222. And the company is expected to release its second-quarter report after the market close today.
Monthly Issue July 28: Tim remains cautiously optimistic that the sector’s uptrend will resume soon; the stocks have fallen far enough, and the fundamentals of the industry remain terrific. But until we see real strength, there’s no reason to be aggressive. The portfolio is already heavily invested, but not fully, and when we do buy more, it will almost certainly be of the strongest stocks, which today are IIPR, GTBIF and GRWG. For now, the one change he will make today is to sell half our position in TerrAscend (TRSSF) and put it into Innovative Industrial Properties (IIPR).
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 August 3: The overall market continues to trade without much conviction at the moment. Last week, the S&P 500 fell 0.37%, the Dow declined 0.36% and the Nasdaq pulled back 1.11%. As Jacob has pointed out over the past few weeks, the bullish surge has been somewhat tainted by what has been going on below the market’s surface recently. Ideally, in a bullish environment, we would see healthy participation in most stocks, but that just hasn’t been the case over the past few weeks. Jacob’s new stock recommendation is Dynatrace (DT).
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 Micro-Cap Insider
Weekly Update August 4: Typically, stocks take a breather in August and September. So don’t be surprised if the market pulls back. Now for the bullish data point. According to Detrick, “The S&P 500 is up 17.02% YTD at the end of July. Since WWII, this has happened only 12 other times and the rest of the year was higher 11 times. The only time it didn’t work was ’87, but it was up 32% YTD right now (stretched rubber band).” In other words, stocks in motion tend to stay in motion.
Special Bulletin August 3: This morning, we received bad news from Medexus. Medexus announced that it has received a complete response letter from the FDA related to Treosulfan, its newly in-licensed drug that was expected to drive substantial revenue growth. What is a complete response letter? This is a good explainer article, but in summary it means the FDA told Medexus that it isn’t comfortable approving Treosulfan before certain issues are addressed.
Monthly Issue July 14: Rich’s new recommendation Performant Financial (PFMT) has a fast-growing healthcare business which is being obscured by its declining legacy student loan recovery business. The healthcare business is poised to grow 30%+ for the foreseeable future. Despite its fast growth, the company is trading at a big discount to a competitor which was recently acquired. My price target implies ~61% upside, but longer term, this could be a multi-bagger.
Cabot Income Advisor
Weekly Update August 4: It’s a crazy earnings season that the market is treating like a boring one. The second quarter marked the near-full opening up of the economy after the pandemic. It is compared to last year’s second quarter when the economy crashed amidst the lockdowns. Analysts are expecting average earnings growth of 74% for S&P 500 companies, one of the highest quarterly growth rates ever recorded.
Monthly Issue July 28: It’s been a sideways summer market for a while. Sure, the indexes have been making a series of new highs. But the S&P 500 is just 1.2% higher than it was in early May. This week inflation is the worry. Last week growth was the problem. The market can’t seem to make up its mind and nothing seems to get any real traction. Any move higher gets tempered by a pullback. Any significant selloff is followed by a quick recovery. But earnings could change things.
Cabot Turnaround Letter
Weekly Update August 6: Today’s note includes earnings updates on 11 companies and the podcast. On Thursday, we moved shares of Oaktree Specialty Lending Corporation (OCSL) from Buy to Sell. Tomorrow, Berkshire Hathaway (BRK.B) reports earnings, and next week six companies report, including Viatris (VTRS), Elanco Animal Health (ELAN), Meredith Corporation (MDP), Organon & Co. (OGN), Toshiba (TOSYY) and Macy’s (M).
Special Bulletin August 5: This afternoon we are moving Oaktree Specialty Lending Corporation from BUY to SELL. Oaktree reported a reasonably strong quarter, with net investment income (adjusted for the merger with Oaktree Strategic Income) of $0.19/share, sharply higher than $0.12 a year ago and the consensus estimate for $0.14. Net asset value, or NAV, increased 2% from the prior quarter and 19% from a year ago (despite paying out roughly 8% of its NAV in dividends during this period).
Monthly Issue July 28: It’s been a remarkably strong market, not just since the bottom of the pandemic-driven sell-off a little more than a year ago, but over the past decade. The 10-year annualized total return of the S&P 500 was 14.8% at the end of June, one of the strongest decades in history. Shorter-term gains have been even sharper: the 17.7% annualized return over the past five years, which bridges the pandemic sell-off, is simply stunning. Bruce’s has one buy recommendation: Walgreens Boots Alliance (WBA).
Ask the Experts
Cabot Profit Booster
Question: What advantage do we have by staying in the MRVL covered call position? Looks to me the upside is maxed out.
Jacob:There is still another $0.20 left to capture in our trade, though yes, we are running out of profit potential fast (good “problem”).
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 Pro 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 Small-Cap Confidential | Cabot Explorer | Cabot Growth Investor | Cabot Marijuana Investor | Cabot Stock of the Week | Cabot Undervalued Stocks Advisor | Cabot Dividend Investor |
|---|---|---|---|---|---|---|---|
| ABBV | Buy | ||||||
| ACCD | Buy | ||||||
| AGC | Buy | ||||||
| AGNC | Buy | ||||||
| ARCO | Buy | ||||||
| ARNA | Buy | ||||||
| ASAN | Buy | ||||||
| ASML | Buy | ||||||
| AVGO | Buy | Buy | |||||
| AVLR | Buy | ||||||
| AVVIY | Buy | ||||||
| BIP | Buy | Buy | |||||
| BMY | Strong Buy | ||||||
| BSCL | Hold | ||||||
| CCHWF | See Advisory | ||||||
| CGC | See Advisory | ||||||
| CII | Buy | ||||||
| CRLBF | See Advisory | ||||||
| CRNC | Buy | ||||||
| CSCO | Buy | Buy | |||||
| CURLF | See Advisory | ||||||
| CVX | Hold | ||||||
| DLR | Hold | ||||||
| DOCU | Buy Another Half | Buy | |||||
| DOW | Hold | ||||||
| DRVN | Buy | ||||||
| DT | Buy | ||||||
| DVN | Hold | ||||||
| EPD | Buy | ||||||
| EVBG | Buy | ||||||
| FIVE | Hold | Hold | |||||
| FND | Buy Another Half | Buy | |||||
| FSR | Buy | ||||||
| FVRR | Hold | ||||||
| GM | Hold | Hold | |||||
| GOLD | Buy | ||||||
| GRWG | See Advisory | ||||||
| GTBIF | See Advisory | ||||||
| HUBS | Buy | ||||||
| IIPR | See Advisory | ||||||
| IBM | Buy | ||||||
| INSP | Buy | ||||||
| JOAN | Buy | ||||||
| JUSHF | See Advisory | Hold 2/3 | |||||
| KKR | Hold | ||||||
| KO | Buy | ||||||
| KRNT | Buy | ||||||
| LLY | Hold 2/3 | ||||||
| MRK | Buy | ||||||
| MRVL | Buy | ||||||
| NEE | Buy | Buy | |||||
| NET | Hold 1/2 | Buy | |||||
| NVCR | Buy | ||||||
| NVDA | Buy | ||||||
| NVNXF | Buy | ||||||
| O | Buy | ||||||
| OGN | Buy | ||||||
| OKE | Buy | ||||||
| ONTF | Buy | ||||||
| OTTR | Buy | ||||||
| PDD | Sold | Sold | |||||
| PGNY | Sold | Hold | |||||
| PGX | Hold 1/2 | ||||||
| PLTR | Buy | ||||||
| POAHY | Buy | ||||||
| PRCH | Buy | ||||||
| PSHZF | Buy | ||||||
| QCOM | Buy | ||||||
| QTWO | Hold | ||||||
| RGEN | Buy | ||||||
| RVLV | Hold | ||||||
| SE | Buy 1/2 | Buy | |||||
| SPCE | Hold 1/2 | ||||||
| SPT | Buy | ||||||
| SSO | Hold | ||||||
| ST | Buy | Buy | |||||
| STAG | Hold | ||||||
| TAP | Hold | Buy | |||||
| TCNNF | See Advisory | Hold | |||||
| THBRF | Buy | ||||||
| TPB | See Advisory | ||||||
| TRSSF | See Advisory | ||||||
| TSLA | Buy | ||||||
| TSM | Buy 1/2 | ||||||
| USB | Hold | ||||||
| VLO | Buy | ||||||
| VZ | Hold | ||||||
| XEL | Buy |