Each month, Timothy Lutts assesses the investment landscape and selects a single favorite stock in his Cabot Stock of the Month. Here, he reviews some of these top picks, covering aerospace, solar power, and electric cars.

Steve Halpern: We're here today with Timothy Lutts, editor of Cabot Stock of the Month. How are you doing Timothy?

Timothy Lutts: Great, Steve, glad to be here.

Steve Halpern: For those not familiar with your work, the Cabot publishing group includes 11 newsletters, edited by some of the nation's top advisors; then each month in your newsletter, Cabot Stock of the Month, you consider the recommendations from all the advisors in the Cabot Publishing Group and select a single favorite idea. What criteria do you look for when choosing your top pick each month?

Timothy Lutts: I start by looking at the market environment to see whether we're in a trend or a downtrend. Today we're in a long uptrend, as we've been for all of 2013.

And then I look closer to see if we're ready for a corrective move in that major trend, and having decided where the market might go in the weeks ahead, because I only do this once a month, so it has to fit into the major market cycle.

Then I look at the stocks themselves and I decide whether I want an aggressive growth stock, or a momentum play, or a value play, or something even on US, like for stuff in China or other emerging markets.

Then I look at the stock's particulars, which have already been through by the other editors, so I don't have to do a lot of research in the stocks, but mainly it's a matter of picking the right stock for the current market.

Steve Halpern: One of your recent top picks was Boeing (BA), which you note has recently recorded excellent earnings. Could you share your thoughts on this stock?

Timothy Lutts: Boeing is very well known, obviously. The strongest feature of Boeing was that it spent three years going sideways as a stock.

All the while that Boeing was gearing up with this Dreamliner, the orders were rolling in, but the cash wasn't, and now that they're delivering planes, the money is going to roll in fast, and the stock hasn't discounted this well enough yet.

So, the stock actually got moving earlier this year, and its going full speed now, and every year earnings report kicks it up higher, so I think is a good trend that's going to last quite a while longer.

We really don't know how good the airline business is going to get in the months/years ahead, but people tend to underestimate what's possible, and so I'm betting that this trend goes farther than people expect today.

Steve Halpern: Another trend that a lot of people have dismissed, but you've been bullish on, is the solar sector and you recommended First Solar (FSLR). What's your outlook there?

Timothy Lutts: I like all the solars, generally. First Solar is one of the less volatile ones, still a volatile sector, no matter where you go. They're a leading institutional-size installation company, and again, the stock is moving in the right direction.

Again, this is more volatile and will have its ups and downs, but I think, in general, the major trends are the costs are coming down in the industry, the demands are ramping up, and those are going to help all the leading providers.

The industry has consolidated quite a bit, and this is definitely one of the leading survivors of the industry, so I think, in the long run, it will treat it well.

Steve Halpern: You've also been a fan of Tesla (TSLA). In fact, you've been recommending the stock for a long time, and talked about it long before it came into favor on Wall Street. Now that so many people are talking about Tesla and the stock has moved up so strongly, do you still like the company's long-term prospects?

Timothy Lutts: My first buy in Tesla was mid-December of last year when it was at 29, and that was on a nice gentle pull back in a modest uptrend. Technically, it was attractive, but it wasn't a hot stock, but I did like the fundamentals.

The stock really got rolling in the second quarter this year and then it became very popular and hot, and as some people would say, overvalued, which doesn't matter to me at all.

In the past month, well, let's say a few weeks, it's cooled off and I have rated it hold now for those with big profits. It's not rated buy anymore; I think it needs to cool off, for, perhaps quite a while.

We have a philosophy about these stocks that go through, first a romance phase, when reality isn't there yet but the stock is going up, and that was early Tesla.

Then the transitional phase, which I think it's entering into it now, where reality catches up with the stock and valuation gets a little more reasonable. Then eventually, the reality phase.

I'm very bullish on it long-term, both in the company, and the stock. I think the whole electric car model is going to be huge and Elon Musk is going in the right direction.

Steve Halpern: Now with the market hitting highs in recent days, what's your outlook for the stock market in general?

Timothy Lutts: Still bullish. I think short-term we could have a correction, but the market trends are strong. The reason, not that we need to explain it, but the reason might be that bond money is just coming from bonds, going to stocks, simple as that.

Steve Halpern: Well, thank you very much for joining us. We appreciate your insights.

Timothy Lutts: Thank you Steve.

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