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CABOT EVENTS
Cabot Weekly Review (Video)
In this week’s video, small cap stock expert Tyler Laundon explains why the market has enjoyed a nice rally and what investors should look forward to in the upcoming Holiday-shortened week. Tyler runs through the last week’s numbers, highlighting small caps’ outperformance, the pullback in yields and the uptick in rate cut expectations for June. He gives a few nuggets of insight into Trump 2.0 (starts Monday) then moves onto 10 names from across sectors and market caps that are worthy of your consideration now.
Stocks Discussed: SF, SN, RDDT, AS, OS, RIVN, LMAT, QTWO, REVG, MMYT
Cabot Street Check (Podcast)
This week on Street Check, Chris and Brad debate whether cooler inflation stemmed the bleeding in the bull market and discuss first impressions of bank earnings and the market’s possible response to President-elect Trump taking office. Then, they break down six earnings “hotspots” to watch as Q1 earnings season heats up, including retail, electric vehicles, airlines, insurance, and more. For more information on this week’s offer for Cabot Top Ten Trader, visit cabotwealth.com/street.
Cabot Webinar
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 Pro 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 January 10: It’s not 2022 or 2008, of course, but the vast majority of stocks out there are in correction mode, and that includes the growth arena, which after a huge run began to hit turbulence in early December and has generally been under pressure since. Now, there are some rays of light out there, which we discuss in this issue, and we’re not having trouble keeping a full-ish watch list for the next upmove, but we’ve been favoring a cautious stance for a while now and think that remains the right move, as we’ve trimmed further this week and now have 60% on the sideline.
In tonight’s issue, we do write about one big positive factor out there (no strength in defensive stocks), talk about the allure of buying former winners “cheap” and, of course, write about all of our names and a bunch we’re watching for when the buyers retake control.
Bi-weekly Update January 16: WHAT TO DO NOW: Remain cautious but stay alert. The five-week drubbing for the broad market and many growth titles has caused sentiment to really drop (a good thing), and this week’s bounce (as interest rates dipped) is intriguing … but at this point, we’ve seen one decent day of action after five tough weeks, so we’ll stand pat with our large (60%-ish) cash position and watch closely to see how this rally develops.
Cabot Top Ten Trader
Weekly Issue January 13: The market and some growth stocks held their own around year-end and popped to start the year, but last week was a bad one, with the sellers hitting most everything. There are tons of crosscurrents out there, and we’re starting to see some oversold measures really get stretched, so we’re not hibernating in a bear cave. But the bottom line is that the intermediate-term trend of most indexes, sectors and stocks are down so we continue to favor being cautious. Our Market Monitor now stands at a level 5.
This week’s list has something for everyone, with a lot of good setups for if/when the market does turn up. Our Top Pick has hung in there very well in recent weeks despite the market’s tumble.
Movers & Shakers January 17: After a tedious five-plus weeks in the market that saw most everything hit the skids, this week has been very encouraging, thanks in large part to the market’s reaction to Wednesday’s inflation report. On the week, the big-cap indexes are up 2% to 3% while the broader measures (which got hit hardest in the past month) are up 4.5% or so.
Cabot Options Trader and Cabot Options Trader Pro
Cabot Options Trader Pro Weekly Update
Cabot Options Trader Weekly Update
Cabot Value Investor
Monthly Issue January 8: California is burning and the rest of the country is in a deep freeze. It seems like a metaphor for the mixed messages we’ve been getting from the market in recent weeks, with stocks running very hot and cold since the start of December as the major indexes have mostly held near their highs but the under-the-surface action has been wobbly at best. The last six weeks have been rough on small caps in particular. As both a value investor and a contrarian, that spells opportunity!
So today, we add one of the highest-profile, more beaten-down small-cap stocks out there to our Buy Low Opportunities Portfolio. The stock is miles from its Covid-era highs, but it’s starting to build momentum for the first time in years: shares have tripled since bottoming five months ago. And it’s a name virtually everyone knows.
Details inside.
Weekly Update January 16: Fourth-quarter earnings season is underway, and while expectations are high at an estimated 11.9% average year-over-year growth among S&P 500 companies, according to data collected by Factset, the actual numbers probably won’t matter much to the market’s short- and intermediate-term direction.
Ignore inflation numbers too. CPI and PPI – this week’s dual reports of the December results – were encouragingly cooler than expected. But in the end, what really matters is how they impact the Fed’s decision-making, which we probably won’t know until at least the end of the month.
Cabot Stock of the Week
Weekly Issue Weekly Issue January 13: The market is in a tough spot, and has been for about a month and a half. It doesn’t mean the bull market is on borrowed time – remember, we had a much deeper correction in July and August, only to have stocks roar to all-time highs by Labor Day – but it does make for a tricky environment in the short term. A news-heavy week (inflation data, the start of earnings season, two big industry conferences) could potentially help turn the tide. But right now, the bears are in control. One subsector that has mostly avoided the recent selling is the airlines. So today, we add one of the stronger airline stocks, courtesy of Cabot Turnaround Letter editor Clif Droke.
Details inside.
Cabot Explorer
Bi-weekly Issue January 16: In theory, and often as we prefer, in practice, corporate profits drive stock prices.
J.P. Morgan’s (JPM) booming profits are a testament to this, but what’s behind the profits?
It seems that recently, and perhaps even more in 2025, macro issues will drive the direction of markets and sector trends.
Identifying trends and allocating money to the right sectors and picking the leaders in these sectors is increasingly important. Those that follow the Fed and try to predict the direction of interest rates are one example of this macro-oriented strategy.
Bi-weekly Update January 10: Markets were closed yesterday in honor of the late President Jimmy Carter.
No matter your politics, the service was well done and inspirational.
It was a solid opening this first week of 2025: new recommendation American Superconductor (AMSC) shares were up 10%, Centrus Energy (LEU) shares were up about 8%, and Cloudflare (NET) shares were up 7.5%, and Dutch Bros (BROS) shares were up 7.3%.
Cabot Small-Cap Confidential
Monthly Issue January 8: Editorial Note: With the market closed tomorrow, January 9, we’ve bumped up this week’s Issue to today.
At the end of 2024, we were in a “buy now to win tomorrow” type market. Now, we’re in more of a “buy now to win in the coming quarters” type market.
Given this backdrop, our first portfolio addition of the year is a lower-risk, high-quality software company specializing in digital banking solutions. It’s the fastest grower in its space and is on pace to deliver its first full-year profit in 2025.
Like a lot of stocks in both the software and financial arenas, shares of this company have been a little weak lately. I think that’s good – we can step in at a price modestly lower than just a few weeks ago.
Weekly Update January 16: The market’s trends were looking pretty iffy until better-than-feared inflation data came out on Tuesday (PPI) and Wednesday (CPI).
Those data releases finally gave Treasuries a boost and knocked the 10-year yield down from last week’s level of 4.8%, which was the highest since November of 2023 (the 10-year yield hit 4.74% last April, which was close, but not quite as high as last week).
Cabot Dividend Investor
Monthly Issue January 8: While the outlook for 2025 is positive, things are changing.
Sure, this bull market has driven the S&P 500 nearly 70% higher. But most of the gains are from technology stocks. Until this past summer, nearly all the bull market returns were driven by technology. The rest of the market had done very little.
But the rest of the market is waking up. While artificial intelligence (AI) will likely continue to be a powerful growth catalyst, its dominance over everything else might not be as pronounced in 2025 as it has been in the past. Earnings for other stocks are catching up.
The earning growth difference between the “Magnificent 7” companies and the other 493 S&P 500 companies is expected to plummet from 27.8% last year to 8.3% this year. The rest of the market is cheap, has momentum, and will likely get hot this year as stocks experience an earnings growth spike that could last for years.
In this issue, I highlight a healthcare stock that looks highly promising in 2025. It is poised in front of the aging population megatrend, which makes a successful pick so much easier, and it will likely experience a sizable earning spike in the years ahead. It is an existing portfolio stock of which half the shares were sold last year. It’s a great time to buy back the other half.
Weekly Update January 15: Things are getting dicey in the market.
The problem is interest rates. Growth expectations are strong following the election. At the same time, inflation has been sticky and not moving lower. Investors were already expecting higher rates for longer when they got a gut punch with last week’s strong jobs report.
Cabot Early Opportunities
Monthly Issue January 15: Our first Issue of 2025 highlights a variety of solid growth names that have been acting well despite the recent dip in the market. As always, this Issue should have something for everyone.
Cabot Profit Booster
Weekly Issue January 14: *Note: Your next issue of Cabot Profit Booster will arrive next Wednesday, January 22 due to the market holiday next Monday, January 20 in observance of Martin Luther King, Jr. Day.
Interest rate worries continued to weigh on the market last week as the S&P 500 lost 1.6%, the Dow fell 1.5%, and the Nasdaq declined by 2.3%. This week will have plenty of market-moving events, including the start of earnings season, so expect continued volatility.
Cabot Income Advisor
Monthly Issue December 17: By most measures, 2025 looks pretty good for stocks.
The Fed has begun a rate-cutting cycle that should last for the next two years. Historically, stocks do well when the Fed is cutting rates and there is no recession. And the economy has been solid. This bull market is just 25 months old and has returned 65%. Bull markets usually don’t just run out of gas after two years. In fact, the average bull market has lasted 50 months and returned 152%.
But stocks are expensive. The S&P currently sells at 22.3 times forward earnings compared to an average of 16 times over the last twenty years. The market returned 26% in 2023 and about 28% this year with two weeks to go. It might be tough for stocks to deliver another consecutive year of 20%-plus returns.
It may be that a lot of the easy upside is behind us. Stocks can still perform well, but they’ll probably have to earn it in 2025.
In this issue, I highlight a stock that is poised for a strong earnings rebound in 2025. It is a stock that bounces a lot between the highs and lows. And it is currently well below the high. It is also one of the best healthcare companies on the market at a time when the population is older than ever before and aging at warp speed.
Weekly Update January 14: Uh oh. The rally is in trouble.
The market sort of wobbled into January after a rough December. It started good but things turned a little ugly last week after a better-than-expected jobs report and worries about sticky inflation.
Cabot Turnaround Letter
Monthly Issue December 18: Many are surprised to learn that the concept of telehealth wasn’t a direct result of the Covid pandemic in 2020. Indeed, the practice of online consultations between patients and medical personnel has been practiced for over 20 years, and this month’s featured company is arguably the first one to bring it to global prominence.
Weekly Update January 17: In today’s note, we discuss pertinent developments and ratings changes for some of the stocks in the portfolio, including Alcoa (AA), Atlassian (TEAM), GE Aerospace (GE), SLB Ltd. (SLB), Starbucks (SBUX), Super Hi International Holding (HDL) and Teladoc Health (TDOC).
Cabot Cannabis Investor
Monthly Issue December 24: Cannabis stocks are set to close out the year with a punishing 14% decline. Cannabis investors need help from anywhere they can get it.
It looks like it could come from an unusual place in 2025. The future of the cannabis industry is now in the hands of President-elect Donald Trump.
If anyone told me a few years ago this would be the case, I might have asked them what they are smoking.
However, the reality is that during his presidential campaign, Trump endorsed all three of the main reforms that would legitimize the industry and boost cannabis share prices: Rescheduling, bank reform known as SAFER banking, and legalization of recreational use. Trump endorsed the first two outright. He implicitly endorsed legal rec-use because he supported the Florida referendum which would have made this change. At the very least, he has openly endorsed decriminalization.
Monthly Update January 8: Here are my top eight predictions for the cannabis sector for 2025.
1. Cannabis rescheduling goes through
Promises made, promises kept. Trump loves a “deep state” challenge. Put these two together, and it seems probable that rescheduling could happen in 2025.
Cabot Money Club
Monthly Magazine January: Inflation is still a problem for many Americans, and it feels unavoidable when it shows up every day at the dining room table. We may not be able to control the price of goods, but this month we’re fighting back against inflation by spending smarter with nine tips that can help keep inflation from busting your budget.
Stock of the Month January 10: Welcome to our 2025 TOP PICKS issue! Our Cabot analysts have kindly shared their top stock ideas for this year. And you’ll find that they include a variety of companies that should be attractive to investors of all styles—growth, value, dividend payers, and companies on the cusp of turning around—as well as small, mid, and large-cap stocks. I hope you’ll find one or more to your liking!
But first, let’s take a look at the economy and the markets and talk about what’s in store for this year.
Ask the Experts
Prime Question for Mike: Mike, what about Nvidia (NVDA)? I was browsing LinkedIn and noticed a half dozen videos about a new Nvidia project called DIGITS. It’s a tiny supercomputer that does AI computing. It’s going to be about $3,000 and is reported to be a game changer. NVDA is down to 135 from 150 over the last 5 days. Might NVDA be a buy now b/c of this?
Mike: I’m not bearish on NVDA per se, and I’m all for it finding support, but using our methodology, it’s not a buy here – the stock hasn’t gone anywhere for six months, underperforming the market, and now the market itself is in a downtrend. As for the new product, not sure if/when that will affect investor perception but it hasn’t yet so we’d hold off, at least in any major size. But it’s certainly worth keeping an eye on – I could see the stock moving if/when the market does, but who knows if that’s next week or in two months.