WHAT TO DO NOW: The market is nosing generally higher of late, however, the action remains very hit or miss among individual stocks, with some emerging and others getting hit. Today’s bulletin regards Shift4 (FOUR), which is cracking today after a mundane Q4 report and a big announced acquisition—we took partial profits a couple of months ago and are going to take the rest of our gain off the table today.
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The major indexes are down just a bit so far today, though the vast majority of growth stocks we follow are in the red today.
This bulletin is about Shift4 (FOUR), which has a great story and long-term growth trends and recently worked its way through some uncertainty regarding the CEO leaving (to head NASA in the new administration). However, last night’s Q4 report was solid but missed expectations, which is obviously not ideal, and the firm also announced a big $2.5 billion acquisition of Global Blue, a specialty technology firm for cross-border payments—which was likely part of the reason the free cash flow outlook for 2025 was a bit mundane.
To be fair, the longer-term fundamentals look good, with the firm targeting north of $1 billion of free cash flow by 2028 ($11-plus per share most likely), and EBITDA is expected to lift 25%-ish this year, too. But after a good-sized run since last summer, the stock’s recent breakout failed badly today, with shares returning toward their December/January lows (not coincidentally when the CEO uncertainty popped up).
We’re not necessarily predicting doom, but the gap down from new highs to below the 50-day line is a red flag. If you want to sell some/hold some, we wouldn’t argue with you, but we’re going to sell the entire position today, thinking there will be better names to own going forward. SELL FOUR
Don’t hesitate to email me directly (mike@cabotwealth.com) if you have any questions.
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