Explorer stocks are off to a good start in 2026. Alibaba (BABA) shares soared 15.8% this week as it was reported that Alibaba Cloud has captured about 36% of China’s AI cloud market share. Archer Aviation (ACHR) shares followed last week’s 11.5% gain with a 5.8% gain this week as its CEO presented at Bank of America’s Defense and Commercial Aerospace Forum. Alphabet (GOOG) shares gained more than 4% this week as Apple (AAPL) announced that it had selected Gemini to power a more personalized version of its Siri chatbot. And Coeur Mining (CDE) shares were up 7.7% this week following last week’s 8% gain.

Now we look to a region that is in the headlines, performed well last year, and is likely to be at the center of attention this year.

The New Year is shaping up to be different from recent years. And market leadership is already changing.

The economy is transforming.

The positive effects of tax cuts and deregulation are starting to take effect. There are also significantly cheaper oil prices, lower interest rates, and the absence of much of the tariff uncertainty from last year. The chances are good that 2026 will feature the strongest economy of the bull market so far.

Most cyclical businesses benefit from a stronger economy. In fact, cyclical stocks have been the best performing market sectors for the past few months. Bank stocks in particular are in a great position because of cheap valuations, rising earnings, and a likely steepening yield curve.

Banks took it on the chin during inflation and rising rates. Although bank stocks have recovered from the loss, they are still near the same price level they were four years ago. The recovery should have further to go. In this issue, I highlight one of the country’s largest regional banks. The bank has rapidly growing earnings and the stock price has momentum.

*Note: Your next issue of Cabot Profit Booster will arrive next Wednesday, January 21 due to the market holiday next Monday, January 20 in observance of Martin Luther King, Jr. Day.

A broad-based rally carried U.S. equities to fresh record territory last week as investors cheered softer labor data and tilted back toward risk. For the week, the S&P 500 advanced by 1.8%, the Dow climbed 3%, the Nasdaq rose 1.9%, and the Russell 2000 led the charge, adding 4.6%.

January has lived up to its billing so far, with lots of ups and downs among individual stocks and sectors based on a variety of news, rumors and, starting today, some Q4 pre-announcements linked to upcoming conference presentations. Even so, while the action is hectic, the underlying evidence is the same as it has been for the past few weeks: The intermediate-term trend of the major indexes is positive, not powerful, while for individual stocks and sectors, many are acting well, but it depends where you look. If we see a shift in the evidence, we’ll shift our stance, but until then, we’re leaving our Market Monitor at a level 7.

This week’s list is a potpourri of ideas from a variety of different areas that have come into favor this year. Our Top Pick is a solid growth story in the strong aerospace/defense area with big earnings coming. Shares boomed out of a base last week—try to enter on weakness.

Landmines abound out there, especially as it relates to the Fed, with two inflation prints coming this week and the Department of Justice launching an investigation into Jerome Powell. And yet, volatility is low, stocks are near all-time highs, and another potentially strong earnings season gets underway this week. So, there’s reason for optimism, particularly given that growth stocks haven’t gone anywhere since late October. Small-cap stocks are starting to gain momentum, and today we add a Canadian one courtesy of Carl Delfeld, who last month recommended our newest portfolio addition to his Cabot Explorer audience.

Details inside.

*Note: Your next issue of Cabot Options Trader will arrive next Tuesday, January 20 due to the market holiday next Monday, January 19 in observance of Martin Luther King, Jr. Day.

A broad-based rally carried U.S. equities to fresh record territory last week as investors cheered softer labor data and tilted back toward risk. For the week, the S&P 500 advanced by 1.8%, the Dow climbed 3%, the Nasdaq rose 1.9%, and the Russell 2000 led the charge, adding 4.6%.

*Note: Your next issue of Cabot Options Trader will arrive next Tuesday, January 20 due to the market holiday next Monday, January 19 in observance of Martin Luther King, Jr. Day.

A broad-based rally carried U.S. equities to fresh record territory last week as investors cheered softer labor data and tilted back toward risk. For the week, the S&P 500 advanced by 1.8%, the Dow climbed 3%, the Nasdaq rose 1.9%, and the Russell 2000 led the charge, adding 4.6%.

The flip of the calendar has brought some wild action, and overall, growth stocks and funds remain stuck in the mud, unable to make much progress (even including the Nasdaq itself). We remain cautious right now and, in fact, are placing two of our stocks on Hold today as they’ve been weighed down by the environment. That said, while we’re holding lots of cash, we remain flexible, as tons of names are in consolidations and are presenting at key conferences (which have become like earnings reports at times) next week—if we see many breakouts, we’ll pounce, but for now, we advise a bit more patience.

Welcome to our 2026 TOP PICKS issue! This is one of my favorite issues each year as our Cabot analysts take a deep look at their portfolios and share their top stock ideas for 2026.

You’ll find a well-diversified selection of stocks—growth, value, dividend payers, metals, technology, healthcare, retail, manufacturing, and much more!

I hope you’ll find one or more to your liking!

Today we’re diving into a fast‑growing oilfield‑services company that sits at the center of one of the most powerful energy build‑outs happening anywhere in the world.

This company is a pure‑play operator in the Middle East and North Africa (MENA) – home to the steadiest upstream spending on the planet – and it just secured a multi‑billion‑dollar contract that makes it the largest unconventional completions provider in the region.

With national oil companies racing to expand gas production to fuel AI, data centers, and industrial growth, this stock is positioned to benefit from multi‑year demand in the MENA region.

All the details are inside the January issue of Cabot Small‑Cap Confidential.

The bull market enters its fourth year, with no signs of slowing. That bodes well for all stocks; growth is likely to continue to outperform, though the gap between growth and value titles appears to be narrowing. To kick off 2026 in style, today we fuse the two by investing in a traditional growth stock (and a household name) that has been so beaten down in recent months that it is now deeply undervalued, at least compared to its historical norm. We also “Retire” a stock from our Growth & Income Portfolio after it eclipsed our price target in just four months.

Details inside.

Despite a holiday-shortened week and light volume, U.S. stocks pulled back from recent highs last week as year-end positioning and lack of fresh catalysts weighed on sentiment. The S&P 500 and Nasdaq slipped after failing to sustain record levels, while tech and small caps bore the brunt of profit-taking amid mixed breadth. For the week, the S&P 500 fell about 1%, the Dow lost roughly 0.7%, the Nasdaq slid nearly 1.5%, and the Russell 2000 dropped by around 2.1%.

Welcome to 2026! The new year promises more good returns and a broadening rally.

The S&P 500 was up over 16% in 2025 after back-to-back 20%-plus return years in 2023 and 2024. It’s been the best three-year run of the century so far. But the future is what matters now. And the market seems pricey after all these good years.

Welcome to 2026! Sure, the year technically began on Friday. But nobody cared. The Monday after New Year’s is when the rubber really hits the road. And the year is beginning on a positive note.

This is hopefully the year when the bull market broadens beyond technology and AI. The stage is set for that to happen. The rest of the market is a lot cheaper. The economy is forecasted to strengthen. The Fed is in a rate-cutting cycle. Inflation is benign. And earnings growth is expected to improve.

Despite a tumultuous start to 2025, the S&P 500 index finished the year with an impressive 18% gain (including dividends), trouncing widespread expectations for an overall negative performance.

Leading the charge, of course, were the Magnificent Seven stocks, with the AI boom acting as a major catalyst for the market’s strong showing. Analysts seem to be divided as to whether the “all things AI” investing trend will persist into 2026, but many of the leading Wall Street prognosticators nonetheless still expect the bulls to maintain their control of the market in the new year.

Housekeeping: We’re sending out this update a day ahead of time, given tomorrow’s holiday. We hope you have a great end to the holiday season and, of course, a healthy and prosperous new year. Our office will be open Friday, and we’ll be back at it in full next week. Cheers!

WHAT TO DO NOW: Stay flexible. The market’s overall evidence is positive but not powerful, though growth stocks continue to lag, with our growth measures (such as the Growth Tides and Aggression Index) neutral-ish here. We expect volatility over the next few days as the calendar flips, which could provide some opportunities. For now, with most names we own or watch marking time, we’ll hold what we have and see what comes as we hit January. We have no changes tonight.

It was another stellar year for the market. The S&P is up between 17% and 18% with just a couple of trading days left. After two years of 20%-plus returns in 2023 and 2024, the S&P has put together the best three-year run this century.

*Note: Due to the New Year’s holiday, there will be no Cabot Dividend Investor update next Wednesday, December 31. I will be back with our next weekly update on Wednesday, January 7. Have a safe and happy holiday season!

Another strong year in the market is closing out. The S&P 500 is up over 17% for 2025 with about a week to go. This follows two straight years of 20%-plus returns for the market in 2023 and 2024. That’s the best three-year run this century.

Of course, the upside has been overwhelming due to technology. Without that sector, market returns would be rather lame. Now that technology is sputtering, what can we expect in 2026?

It’s been another productive year for the market, with the S&P 500 up more than 17% with a few trading days to spare. Growth stocks continue to carry the day despite recent weakness, advancing more than 22% this year. Value stocks have held their own, up more than 13% and picking up the slack of late as momentum in the growth space has waned. But ultimately, it was yet another year of growth outpacing value.

[Note: Due to the Christmas holiday, there will be no Cabot Turnaround Letter weekly update next Friday. The next monthly issue of the newsletter will be published on December 31.]

The Fed has reversed a long-standing balance sheet tightening phase with its recent decision to expand its balance sheet—a move that has largely fallen under the news radar.

Housekeeping: As the holidays get underway, just a heads up that we’re going to send the next issue of Cabot Growth Investor next Wednesday, Christmas Eve, December 24, likely midday.

WHAT TO DO NOW: Remain cautious. Growth stocks tried to come out of their corrective phase following the mid-November low—but that bounce has faded, with our Growth Tides and Aggression Index still struggling. We’ve gone slow of late, holding half the portfolio in cash, and tonight we’re going to mostly stand pat and look for signs the correction will end. Our only change tonight is placing CrowdStrike (CRWD) on Hold.

A quick Holiday schedule note. We won’t publish our regular weekly update next Thursday since it will be Christmas and our office will be closed. Also, with the New Year’s holiday the following Thursday – and the first Thursday of January – we will push the January 2026 issue of Cabot Small Cap Confidential back a week, to January 8.

Happy Holidays! On to the market.

For a second straight fall, the Federal Reserve has slashed interest rates three times from September through December. The result? What was a two-decade-high federal funds rate (5.25%-5.5%) 15 months ago is now down to a far more palatable 3.50-3.75% range. That’s still higher than at any point since before the Great Recession, so from a 21st-century perspective, interest rates aren’t exactly “low.” Usually, when interest rates are this high, stocks underperform their historical norm. In fact, prior to this recent stretch, it had only occurred two other times this century. Here were the results …

The artificial intelligence trade was under pressure last month. But it recovered over the last three weeks. The back and forth has again taken a negative turn after AI bellwethers Oracle (ORCL) and Broadcom (AVGO) reported earnings that didn’t impress investors.

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

As I expected, President Donald Trump’s executive order (EO) to reschedule cannabis was a sell-the-news event.

We’re going to continue with our strategy of locking in modest, but relatively quick, profits on some positions while they’re available.

Cannabis stocks were soaring Friday morning on a Washington Post report stating that President Donald Trump plans to go forward with rescheduling. The report cites six sources.

WHAT TO DO NOW: The market continues to act fairly well, though most of our timing indicators haven’t really kicked into gear. We’re OK extending our line, but we’re also going slow and honoring stops on what we own as there are still lots of crosscurrents out there. Today’s bulletin is about Alnylam Pharmaceuticals (ALNY), which we’re selling today after it’s come under pressure this week following no addition to the S&P 500. We’ll hold the cash for now (near 60%) but could redeploy later this week.

Shares of Argan (AGX) are trading down as of midday after the company missed revenue expectations in Q3 FY26 but beat on EPS. The pullback likely signals that AGX stock will be rangebound for a while – possibly in the 300 - 400 range – not that the run in shares is completely over.

CEO Special Bulletin: Position Updates

Sell a Quarter of Centuri Holdings (CTRI)

We’re going to continue to hold our position in Credo Tech (CRDO), which is now up over 145% (since June), following the company’s strong Q2 FY26 report.

We’re going to take a swing at Natural Grocers (NGVC) today by filling the second half of our position. It’s foolish to think you can time a “bottom” perfectly, but there’s enough evidence here to suggest we can buy the stock at a solid discount now and, hopefully, catch a significant updraft in the weeks and months ahead.

Sell Life360 (LIF)

I want to point out a problem that I foresee, potentially on the scale of the technology bubble in 2001 and the housing bubble in 2007. I think we’re going to have an “inverse ETF bubble.”

The fundamentals of value investment have been time tested. Followers of the value philosophy such as Warren Buffett, Seth Klarman and Howard Marks have amassed billions of dollars in their lifetimes. In a nutshell, here are the basic tenets of value investing.

One of the things many investors like best about dividend income is that it can qualify for the lower Federal capital gains tax rate. But not all dividends and distributions qualify.

We recently added a new real estate investment trust (REIT) to the High Yield Tier. REITs can be a great source of high income, but they have some unique features that investors should be aware of.

For growth stocks, buying low usually doesn’t mean you’re getting a bargain. It usually means you’re buying a laggard! That’s right—believe it or not, in the market, strength tends to lead to strength, while weakness tends to lead to weakness.

So how can you pick stocks that have a good chance to become winners? Interestingly, the best way is by looking backwards!

Here’s how Cabot Trend Lines, Cabot Tides and the 7.5% Rule can keep you on the right side of every market.

Our entire selling philosophy, especially when it comes to growth stocks, revolves around a concept we call “Tight to Loose.” We’re also big fans of a few key chart-based sell signals that tell you a stock is coming under distribution by deep-pocketed investors.

I’ve heard from a few subscribers recently who want to know if it’s time to sell their big winners, like Wynn Reports (WYNN), which is up 48% since I recommended it in April of last year.

Some stocks in the Model Portfolio and others we’ve recommended have had great runs during 2017 but have come under pressure recently. And that’s naturally led to a lot of questions about how exactly to handle big winners, so that’s what we’ll dive into today.

Here are some of the sources that I have found most useful, reliable and unique. One of them may be able to give you a new perspective on some of the stocks you own.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.