January 23, 2025

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.

Might it be that the tide is turning and small caps can lead in 2025?

We’ll just have to see. By my math, the S&P 600 is up 3.2% YTD through yesterday’s close, nipping at the heels of the S&P 500, which is up 3.5%.

In terms of EPS growth, small caps are expected to over-deliver this year. S&P 600 small-cap earnings are expected to grow 16.3% in 2025 versus “just” 14.6% for the S&P 500.

Commenting on the performance of small caps on Monday (when they had outperformed YTD), economist Ed Yardeni wrote, “We may have to reconsider our lukewarm opinion on the SMidCaps. They are outperforming the Large Caps so far this year. Animal spirits have a tendency to spread.”

I agree, Ed!

Recent Changes
None

Updates

Alkami Technology (ALKT) is our newest position. No big news since we jumped in. The company provides white-label digital banking software solutions to credit unions and small and mid-sized regional banks in the U.S., helping these smaller financial institutions to compete more effectively with bigger, more technologically advanced and well-capitalized banks. Alkami just put out a list of the top five business banking trends for the year ahead. They are: (1) Modernizing Processes through Digital Innovation, (2) Leveraging Data Analytics, (3) Reducing Risk & Preventing Fraud, (4) Building Profitable Relationships and (5) Centralizing Cash and Liquidity Management. Who’s excited about these digital banking trends?! BUY

Expected Earnings Date: February 20

Artivion (AORT) continues to quietly push up against all-time highs. Still nothing new to report since we learned (in mid-December) that the company’s AMDS Hybrid Prosthesis (not yet approved in the U.S.) was granted a Humanitarian Device Exemption (HDE) from the FDA. If and when fully approved, AMDS represents about a $150 million annual U.S. market opportunity (significant). Artivion is currently working with facilities and physicians to obtain hospital IRB approvals so patients will have access to the medical device. A broader Premarket Approval is still expected by the end of 2025. BUY

Expected Earnings Date: February 13

AvePoint (AVPT) looks like it wants to go higher as the stock has just crossed back above its 20 and 50-day moving average lines, which converged around 17.5. No news since AvePoint disclosed it will acquire Ydentic, a software company that automates IT management tasks for Microsoft (MSFT) Managed Service Providers (MSPs). Citigroup recently boosted its price target by a buck, to 18. HOLD

Confirmed Earnings Date: February 27

Docebo (DCBO) recently pulled back to its 200-day line and didn’t enjoy the same upside move lately that many other software stocks did. The company has announced five new product releases this year, with the first one coming in late February, shortly before the expected earnings date. The current price still looks like an attractive entry point for a stock that enjoyed a lot of momentum last fall. BUY

Expected Earnings Date: March 6

Enovix (ENVX) hasn’t released any news this week. The short version of what’s happened lately is that (1) the company announced the successful completion of Site Acceptance Testing (SAT) for its high-volume manufacturing line at fab2 in Malaysia, (2) it announced a prepaid purchase order for silicone batteries from a Silicon Valley AI technology company, rumored to be Meta (META), for head-worn mixed reality wearables, (3) rumors suggest Enovix is talking to the other big boys, like Google (GOOG), and (4) there is growing interest in its conventional graphite battery business, Routejade. Still not remotely a smooth trend with the stock, but hanging on and expecting a nice payday, eventually. BUY

Expected Earnings Date: February 19

FTAI Infrastructure (FIP) hasn’t put out any news since last week when it announced it will move ahead with the financing of loans related to its investment in Long Ridge and is also working with GCM Grosvenor (49.9% equity holder in Long Ridge) to buy all of its interest for around $200 million. The stock has been volatile this week, likely as a result of (1) speculation about the future of clean energy investments (of which FIP has several) given the knee-jerk reaction to some of Trump’s seemingly anti-clean-energy executive orders and (2) possible confusion between FIP and FTAI Aviation (FTAI), which is a separate company that’s come under attack from short sellers. FTAI and FIP split a while ago and there is no connection any longer. BUY

Confirmed Earnings Date: February 27

Mama’s Creations (MAMA) has popped back up to near the 8.0 level in the week since management spoke at the ICR conference. Construction costs are behind the company and the focus is on growth. BUY

Expected Earnings Date: April 23

Peloton (PTON) has a new CEO, Peter Stern, who joined on January 1. We’ll get our first major update from the company under his leadership in a couple of weeks, on February 6. He will only have been on the job for a little over a month. At a high level, I expect to hear a lot about cost cutting, pricing and product innovation initiatives. BUY HALF

Confirmed Earnings Date: February 6

Perpetua Resources (PPTA) pulled back to its 50-day line last week and has traded higher in five of the last six sessions as it makes its way back toward recent highs near 13.2 (stock closed at 12.3 yesterday). Management presented at the virtual Maxim Group Mining Conference last Thursday. They spoke about the recent export bans on antimony from China that further restrict the already dwindling supply coming from the country. There was also some discussion about how antimony is used in its various formulations. The two main formulations are antimony oxides, which are most commonly used in flame retardants, and antimony sulfide or trisulfide, which are most commonly used in bullets, munitions, solar panels, wind turbines, etc. This is what Perpetua has on its site, and it can be processed into antimony oxides. The next topic was the timeline after the U.S. Forest Service issued the Final Record of Decision (ROD) authorizing Perpetua’s mine plan for the Stibnite Gold Project. Management said they expect to have the required state permits and wetlands permit from the U.S. Army Corps of Engineers wrapped up early this year. They also said they expect to secure project financing and be in a position to start construction this summer. On the financing front, Perpetua is in the process of finishing its final application to go after the up to $1.8 billion in attractive debt financing that U.S. Export-Import Bank (EXIM) signaled could be available after a preliminary application was filed. This could cover around 85% of project costs. Perpetua also has about $20 million of the $60 million in funds it has been allocated from the DoD. Bottom line here is nothing concrete since the final ROD, but the wheels are turning. BUY HALF

Expected Earnings Date: March 14

Weave (WEAV) continues to act steady, trading in the 15 to 16.5 zone. No news lately. BUY

Expected Earnings Date: February 19

That’s it for this week. Please email me at tyler@cabotwealth.com with any questions or comments about any of our stocks, or anything else on your mind.

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