Today’s addition is a play on the growing shift toward healthier eating habits and nutritional supplements. It’s a small, U.S.-based natural foods grocery chain that’s growing, profitable, pays a dividend and has very little exposure to tariffs.

It offers considerable upside potential but also should have decent downside protection. In other words, a good stock for the current environment!

Today’s addition is a profitable small-cap MedTech company specializing in products to treat peripheral nerve injuries.

Management has a number of growth-oriented irons in the fire. And I think the company could be an attractive acquisition target.

While the sock has been relatively stable in this increasingly volatile market, we’ll still start with a half-sized position, just in case.

Today’s new addition is an emerging MedTech company that’s developed a whole-organ therapy system to treat liver-dominant cancers.

These are very difficult-to-treat cancers where survival rates are low. But this company’s system, which was just approved for its first indication last summer, is improving the odds.

It’s an exciting story, both from a treatment and investment perspective.

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.

Today’s opportunity skews toward the more speculative end of the spectrum, which is part of why I find it so darn enticing.

If you’re interested in a gold miner that also has an angle to help the U.S. produce a critical element, antimony, currently in short supply outside of China, Russia and Tajikistan, none of which are cozying up to the U.S. right now, this is the stock for you.

While we began a position in this stock via yesterday’s Special Bulletin, all the details are inside this month’s Issue.

Today we’re jumping into a small-cap recovery story that appears to be in its early innings. It’s a familiar name, and we’re not the first to jump on it. Bank of America just put out a very bullish note after the company posted a big earnings beat.

But this stock isn’t a consensus buy, far from it. There’s a lot of work to be done before Wall Street jumps on board. That spells opportunity.

I don’t think it’ll be a small-cap stock for long. Because of the crazy week with the election and FOMC meeting we will start with a half-sized position with today’s stock.

Surging data center demand. Electric vehicles. Heat pump HVAC systems. Severe weather events. Hurricanes. Rising sea levels. North Carolina flooding.

This is just a short list of the drivers behind rising electricity demand, the harsh realities of being behind the curve when it comes to global warming, and the resulting push toward energy efficiency and greenhouse gas emission reductions.

Today’s portfolio addition is a small and still-unknown company that helps solve these challenges, moving the country toward a more sustainable, clean-energy future.

I think you’ll find it interesting.

Everybody is talking about the potential of generative AI. But a lot of organizations haven’t yet organized their digital data in such a way that they can leverage it for AI, let alone protect it once AI applications gain access.

Today, we’re jumping into a steady-growth software company that helps solve this problem.

Infrastructure has been a hot topic for the last couple of years given passage of a bipartisan bill to finally spruce up the U.S. and try and address climate change.

This month we’re jumping into a pure-play infrastructure company that owns railroads and deep-water ports supporting crude oil and clean fuel shipments, as well as a modern power plant that’s getting tons of calls from AI data centers.

One thing – the company reports quarterly results after the bell today!

In 2022 new management took the helm of a small, deli-focused food company that was underperforming its potential. Fast forward a couple of years and management is executing an ambitious growth plan, while consumers are flocking to the deli section like never before.

This month’s Issue tells the story of a micro-cap company that’s hitting its stride a century after the woman it’s named after completed the journey from Italy to Brooklyn, NY.

In 2000 a small company began selling a proprietary surgical adhesive to seal up arteries. Over the next two decades that company would acquire several highly specialized products for patients undergoing heart surgery.

Today, the company is hitting its stride as surgeons and patients (and the FDA) see how much better its solutions are.

This month’s Issue has all the details.

The digital marketing world has been turned upside down as new privacy measures make it more challenging to track consumers across online and in-app activities.

But one company has been building out a unique opt-in data set and the backend technology to do just that. It sells this information to the biggest companies in the world so they can reach consumers with personalized marketing messages. With the new privacy measures, business is strong.

All the details are inside the May Issue of Cabot Small-Cap Confidential.

Where to begin.

Let’s start here. I think the idea that the Trump administration had a perfectly executed strategy that included tanking the global equity markets and sending the bond market into utter chaos, to get to the point of announcing 10% tariffs across the board as a major “win,” excluding China, is a stretch.

The S&P 600 SmallCap Index is flat over the last week.

The upside move from the extreme oversold conditions that began two weeks ago has faded as the market grapples with tariff uncertainty.

Uncertainty will continue to linger even though Trump clarified part of his tariff plan last night through an executive order imposing permanent tariffs on autos not produced in the U.S.

Today’s Weekly Update will be short and sweet. I am traveling back to the U.S. after a March break vacation with my wife, kids, parents and brother and sister’s families in the Bahamas.

The main market event of the week was yesterday’s FOMC meeting, which concluded with the Fed opting to hold rates steady. During his press conference Fed Chair Jerome Powell used the word “uncertainty” about a thousand times.

The market enjoyed a little bounce yesterday but is still working to find a level of support from which to mount an eventual recovery. This is a process, not an event. Nobody knows if we have reached that level yet.

We’ve been through these types of volatile markets many times in the past. While the drivers of the volatility are often different, one of the consistencies is that it is best to exercise patience and let new leaders show themselves. They always do.

In this case, the main drivers of the current market correction are Trump’s tariffs/trade war and massive disruptions in the federal government.

While the broad market has stabilized a little over the last couple of days, we are still very much in a risk-off environment. As we all know, the market hates uncertainty. And we’re getting plenty of it these days

On-again, off-again tariff threats are the big story this week with Trump’s latest comments reiterating March 4 as the date for Mexico and Canada tariffs and April 2 as the date for reciprocal tariffs (tariffs that match those levied by other countries on U.S. exports), and an additional 10% tariff on China as of that date.

At the index level, small caps have hardly changed since last Thursday, but it sure feels like there’s a lot of downward drift out there.

I could say the same thing for the broad market. Things seem to be getting a little more tense. But then again, the S&P 500 and Nasdaq just hit fresh all-time highs.

I am a little concerned that it’s going to be harder to ignore all the background noise once earnings season is over. Because there is a lot of noise.

Small caps have underperformed since last Thursday with yesterday’s selloff pushing the index to the lowest level since mid-January.

The main culprits are yesterday’s slightly hotter-than-expected CPI report, concerns about tariffs (carveouts expected) and an uptick in bond yields. Yesterday the 10-year yield jumped back to 4.64%, a three-week high.

Small caps are up a very, very small amount over the last week. In fact, the S&P 600 SmallCap Index has hardly moved over the last five sessions.

I think that’s remarkable given everything that’s gone on lately.

The DeepSeek drama inspired a truly magnificent wipeout for the broad market on Monday. And we had an FOMC meeting yesterday that barely registered on the S&P 600.

The market has been singing a more bullish tune lately and small caps are back in the headlines.

That’s because small caps enjoyed a nice rally after last week’s CPI and PPI data came out and the 10-year yield retreated.

Market observers have seen that the market rally has been broadening beyond just the Magnificent 7 and that small and mid-caps (SMID-caps) have been getting in on the action as well.

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).

Note: Due to the Christmas holiday, there will be no Cabot Small-Cap Confidential update next week. Happy holidays!

In last week’s update I spoke about the potential for a market retreat early in 2025 given that investors are sitting on sizeable paper profits, and selling after December 31 would allow them to postpone capital gains taxes.

My projection may have been off by a week and a half.

The big macro news of the week wasn’t specific to small caps, but it sure helped in stopping a sliding small-cap index at its 25-day moving average line yesterday.

I’m referring to the CPI print for November, which was released at 8:30 AM ET yesterday and gave most of the major market indices a boost, with the exception of the Dow.

While there have been some crazy moves in the market this week, it’s somewhat encouraging that, as of 12:00 PM ET, the broad market isn’t off that much compared to Friday’s close.

We are all trying to digest the substance of “Liberation Day” and better understand what lasting impact it will have. Suffice to say, there are a lot of ways this could go. But one thing is for sure – we’re in uncharted territory.

Delcath (DCTH) reported before the bell this morning that Q4 revenue was $15.1 million (+2,701%) and adjusted EPS was $0.00. Revenue beat by $1.5 million (almost 11%). Gross margin was 86%.

It’s been a pretty ugly stretch lately, with numerous crashes in a number of growthy names. I’m far from confident that the selling is over, however, history has shown that a little buying when things seem bleak can pay off.

FTAI Infrastructure (FIP), AvePoint (AVPT), Docebo (DCBO), Alkami (ALKT)

The market has quickly moved from one in which companies were given the benefit of the doubt when things weren’t perfect to one in which everything that’s not perfect is a disaster.

Shares of Weave (WEAV) are selling off today following yesterday’s Q4 report that beat on both the top and bottom lines.

Enovix (ENVX) reported yesterday after the close, and once again the financial results are way down the list in terms of what matters most, for now. It’s all about executing the ramp-up to full-scale production, securing customer orders, and continuing to develop batteries that major electronics manufacturers will qualify for their devices and then order in mass quantities.

Shares of Perpetua Resources (PPTA) are having a tough day today following the release of a Financial Update. This Financial Update is part of the process for formalizing its loan application with the U.S. Export-Import Bank (EXIM), which indicated potential financing of up to $1.8 billion in the Stibnite gold project via a Letter of Interest in April 2024.

Shares of Peloton (PTON) are up double digits this morning after the company delivered a better-than-expected Q2 fiscal 2025 report before this morning’s opening bell. This is a turnaround story so take the numbers in that context. Management is working to curb costs and lay the groundwork for a return to growth, not trying to grow right now.

Enovix (ENVX) Pops After Achieving Milestones

Perpetua Resources (PPTA) Gets Green Light