Cabot Stock of the Week Issue: March 31, 2025

There’s an expression where I live in Vermont, especially this time of year when it’s technically spring but could easily snow seven inches one day (as it did this past Saturday) or be 60 degrees and sunny the next (as it is while I write this on Monday). I don’t remember the exact wording, but it’s something like, “Don’t like the weather? Wait five minutes.” I’m sure other regions with volatile weather patterns have a similar expression. But that feels like the stock market right now.

Overall, it’s been a cold winter for the market, with the S&P 500 down more than 6% since winter began on December 21. Last week, just as spring had officially gotten underway, it seemed a thaw was coming, with stocks advancing in six out of eight trading sessions after bottoming in mid-March. Then, President Trump started talking tariffs again, teasing what is to come during this Wednesday’s tariff “Liberation Day,” which promises sweeping tariffs on many items and countries – something the market hates, as evidenced by the S&P dropping right back near its March lows.

We’ll see what Wednesday actually brings. But what Wall Street despises most is uncertainty, and right now, we simply don’t know much about what’s going to happen on Wednesday. So, what looked like an early spring has suddenly dumped seven inches of snow on the market, and no one knows whether to put on a parka, raincoat or sunglasses before they open up their portfolios every morning.

This week, we’ll stick to growth on the premise that investor pessimism has become so rampant and tariff angst has grown so acute that anything shy of Wall Street’s worst fears on Wednesday may yield a collective sigh of relief. I see upside ahead for the market after this miserable winter. But we don’t know exactly when the clouds will part. I’m betting on sooner rather than later. With that in mind, we add a mid-cap software stock recommendation from Tyler Laundon today – a stock he recommended to his Cabot Early Opportunities readers earlier this month.

Here it is, with Tyler’s latest thoughts.

Freshworks (FRSH)

Freshworks is a high-growth software company offering cloud-based customer engagement (CRM) and business software to customers of all sizes.

It is well known for offering user-friendly, cost-effective alternatives to enterprise software from companies like Salesforce (CRM), Zendesk (private), and ServiceNow (NOW).

The company’s intuitive and affordable software has integrated artificial intelligence (AI) and automation features through its Freddy AI assistant that helps with customer support and sales processes.

The product lineup includes Freshdesk (customer support and helpdesk solution with AI-powered ticketing and automation), Freshservice (IT service management platform), Freshsales (CRM tool with AI-powered insights), Freshmarketer (marketing automation platform) and Freshchat (live chat and messaging with AI).

Fourth-quarter results beat expectations and highlighted 21.5% revenue growth ($195 million) and EPS of $0.14 (+75%).

While discussing the quarter, management said AI adoption is strong, deals are getting larger, and the recently acquired Device42 solution (an IT asset management solution) added significantly to the Q1 pipeline (Q4 was the first quarter the solution contributed revenue).

Management also said it expected a “stable to improving” small and mid-sized business market, offset by a little pressure with larger customers. Full disclosure: These dynamics will be a major focus on the Q1 call (expected in early May) given a recent uptick in macro concerns.

Revenue expectations for 2025 still fall within management’s guidance range (+12% to +14%), which implies stronger revenue growth in Q1 and Q2 that then slows down a little in the back half of the year. That may simply be due to caution on the part of management.

As for the stock, FRSH came public in September of 2021 at 36 and traded near 50 before the pandemic-fueled bull market began to fade. The stock slipped into the low teens in 2022 before mounting a comeback, but that was cut short at the beginning of 2024. An ugly gap down after last May’s Q1 earnings report sent FRSH into the low teens. The tide changed in November when the Q3 report sent FRSH from 13 to 17 overnight. The stock rallied to 19.8 in the back half of January. FRSH has since retreated to a recent low of 14.3 (March 13), which is where it remains after some ups and downs the last couple weeks. As long as it holds this support (above 14), it’s a buy. BUY

Current Recommendations

Changes Since Last Week:

Sell the remaining Half of Broadcom (AVGO)

DexCom (DXCM) Moves from Buy to Sell

Flutter Entertainment (FLUT) Moves from Hold to Sell

Kyndryl Holdings (KD) Moves from Buy to Sell

Four more sells this week, or technically three and a half, since we had previously sold half of Broadcom (AVGO) at its December apex and are now selling the rest as shares have fallen through support. The other three simply aren’t performing, so it’s time to cut bait in a harsh market. That brings us down to 18 stocks, with the addition of Freshworks (FRSH) – the smallest the portfolio has been since 2022. That’s what happens when stocks fall five out of six weeks and enter a correction. So, we play defense by limiting losses; fortunately, most of the rest of our stocks are holding up well or had sizable cushions prior to the recent pullbacks.

Here’s what’s happening with all of them.

Updates

AbbVie (ABBV), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, ticked down from 209 to 205 but was one of the better-performing large-cap stocks in the first quarter of 2025, up more than 15%. In his latest update, Tom wrote, “ABBV had been a stellar defensive performer. It was making new highs while most stocks were falling. But the ascent has stopped. It has been trending lower since the March 11 high. I’m still very bullish on the stock over the course of this year and beyond as the company has finally moved beyond the Humira patent issue as new drugs have replaced peak revenue. The patent issue had been holding the stock back but now it should move higher. However, ABBV has a tendency to pull back after surging to a new high. It looks like the stock may be in the process of doing that now.” BUY

Agnico Eagle Mines (AEM), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up from 104 to 109 this week as investors continue to pile into gold stocks. Gold prices are now above $3,100 an ounce for the first time ever and are up 21% year to date as investors pile into the traditional safe haven of the yellow metal as Trump’s tariffs have led to a decidedly risk-off market. And Agnico is performing even better – AEM shares are up more than 37% year to date. BUY

Airbus (EADSF), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was mostly unchanged this week. There was no news. This airplane maker remains a strong play on the world’s post-Covid return to air travel, and one that could benefit from ongoing dysfunction at rival Boeing. BUY

AST SpaceMobile (ASTS), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, was down sharply this week on no news, falling from 28 to 23 as investors again came for stocks with “meat on the bone.” Still, shares of this developer of space-based, straight-to-smartphone internet service are up more than 14% year to date and trading well above their late-January lows in the 17 range. They’ve roughly doubled since we added shares to the portfolio last July. There’s plenty of upside ahead once the market can get its act together. BUY

Axsome Therapeutics, Inc. (AXSM), originally recommended by Mike Cintolo in his Cabot Top Ten Trader advisory, finally ran into some resistance, falling 9% this week. Mixed results for Sanosi, its drug candidate for attention deficit hyperactive disorder (ADHD), were partly a drag on the stock; while a 150-milligram dose demonstrated statistically significant improvement over placebo, the 300-milligram dose missed the mark. Because the 300-mg dose is exploratory – the 150-mg dose already exists for narcolepsy – the selloff from the test results is likely overdone. Shares are still up 36% year to date. Buy the dip if you don’t already own shares. BUY

Banco Santander (SAN), originally recommended by Carl Delfeld in his Cabot Explorer advisory, pulled back more than 5% this week despite the Spain-based bank lowering its mortgage affordability stress test, allowing it to lend up to 35,000 pounds more per loan in the U.K. That could help borrowing at a time when the Bank of England held interest rates steady. Santander is already faring well as profits increased 14% last year and the bank now has more banking customers than JPMorgan Chase. Shares are up more than 45% year to date, so this week’s pullback did little to slow the stock’s momentum as one of Europe’s most favored large-cap stocks. BUY

Broadcom Inc. (AVGO), originally recommended by Tom Hutchinson in Cabot Dividend Investor, imploded along with other semiconductors, falling 15% to reach its lowest point since November. After showing signs of life on the heels of a strong earnings report earlier this month, AVGO shares have imploded again, and now trade well below their 200-day moving average. That type of downward spiral can be difficult to reverse. So, having sold half our position after its post-earnings peak in December, it’s time to sell the remaining half of Broadcom and pocket the 90%-plus return. SELL REMAINING HALF

BYD Co. Ltd. (BYDDY), originally recommended by Carl Delfeld in his Cabot Explorer advisory, pulled back more than 6% and seems to have settled into a trading range between 100 and 108 after weeks of advancing. That kind of basing pattern is bullish, especially in a down market like this one. Last Monday’s earnings results only added to BYD’s growing popularity. In the fourth quarter, net profits improved 73% while sales expanded 52.7%. For full-year 2024, profit growth was 34% on 29% sales growth (to $107 billion, more than Tesla’s $97 billion last year), and BYD overtook Volkswagen as China’s top automobile seller at 4.25 million vehicles sold. That news came on the heels of the announcement earlier this month that the company is launching the fastest EV battery charger ever, capable of charging to 400 kilometers in five minutes – the equivalent of filling a gas-powered vehicle at a fuel pump. Prior to that, BYD had unveiled its new God’s Eye self-driving technology and signed an AI deal with up-and-comer DeepSeek. BYD is red-hot and making all kinds of eye-popping news, so it was due for a modest pullback. BUY

DexCom, Inc. (DXCM), originally recommended by Clif Droke in his Cabot Turnaround Letter, fell more than 10% this week after the Food and Drug Administration (FDA) issued a warning letter accusing the company of making unauthorized changes to its glucose sensors. The company quickly denied the claims, but the damage has been done to the stock price, which is now well below the 200-day moving average, and we are now at a mild loss. Let’s sell, as this turnaround story is taking too long to develop. MOVE FROM BUY TO SELL

DoorDash Inc. (DASH), originally recommended by Mike Cintolo in Cabot Top Ten Trader, was off 11% this week, giving back all its gains from the previous two weeks. There was no news. We downgraded to Hold on weakness earlier this month and will keep it right there. HOLD

Dutch Bros (BROS), originally recommended by Carl Delfeld in his Cabot Explorer advisory, gave back its 15% gain from the previous week, despite both Wells Fargo and Morgan Stanley initiating coverage on the stock with an “Overweight” rating. There was no reason for the pullback, other than investors coming for stocks with meat on the bone during the selling in the last week. We upgraded to Buy last week and I’m keeping it right there for this fast-expanding drive-through coffee store chain. BUY

Eli Lilly and Company (LLY), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, pulled back 6% this week but remains north of its March lows. In his latest update, Tom wrote, “The superstar drug company stock got an unexpected drubbing earlier this month, falling 11%. LLY had been soaring while the market got clobbered until a news event earlier this month. A pipeline weight-loss drug for Novo Nordisk (NVO) reported disappointing results in a trial. Lilly is a big player in the red-hot weight-loss drug sector with its highly popular Zepbound. The weight-loss drug players sold off in sympathy with the Novo news as worry spread that these drugs might not be as good as previously thought. But Novo is a competitor. And Zepbound is killing it. When a type of drug gets this hot, markets tend to overreact, especially in such an unforgiving market. I don’t think this news changes anything. And now, LLY is cheaper.” HOLD

Flutter Entertainment (FLUT), originally recommended by Mike Cintolo in Cabot Top Ten Trader, imploded, falling 12% and sinking through support at the 200-day line on no news. For a sports betting stock to be down 22% in what is supposed to be one of its biggest revenue-generating months with March Madness is not a good sign. Having swung to a small loss for us, it’s time to sell and open up another spot. MOVE FROM HOLD TO SELL

Kyndryl Holdings, Inc. (KD), originally recommended by Mike Cintolo in his Cabot Top Ten Trader advisory, fell about 9%, breaking below its recent range of 34-35, after being victimized by a short-seller report. Gotham City Research said the company “manipulates” reported adjusted EBITDA plus adjusted free cash flow to artificially give the appearance that it generates profits and cash flow. “In reality,” the short seller wrote, “KD generates losses and burns cash.” If the short-seller report involved a stock that had been generating strong returns for us, I’d say we should wait it out and see how shares respond in the coming days. But the stock is now at a 10% loss for us in the three months since we recommended it, so it’s time to sell, like Gotham City. MOVE FROM BUY TO SELL

Main Street Capital Corp. (MAIN), originally recommended by Tom Hutchinson in the High Yield Tier of his Cabot Dividend Investor advisory, pulled back from 58 to 56 but remains one of the steadiest, most reliable performers in our portfolio. Its status as a high-yielding, monthly dividend payer makes it ideal for the current risk-off environment. Keeping at Buy. BUY

Netflix, Inc. (NFLX), originally recommended by Tyler Laundon in Cabot Early Opportunities, was off about 5.5% this week as its recovery hit a snag in the face of rampant selling in the market. There was no major company-specific news. Netflix reports earnings on April 17, which has served as a springboard for the share price in recent quarters. Shares remain well north of their March lows, and for those who have not yet bought this stock, this dip looks like a strong buying opportunity for one of the market’s best growth stocks. BUY

Rubrik (RBRK), originally recommended by Mike Cintolo in Cabot Top Ten Trader, tumbled 16% in its first week in our portfolio. Yikes. There was no news, so the selling likely had everything to do with the market and investors selling out of growth stocks with momentum ahead of this week’s tariff day. Considering none of that has anything to do with this up-and-coming cybersecurity company, I expect shares to bounce back. The good news is, if you missed the boat last week, you can get the stock at a much better price now. BUY

Sea Limited (SE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, held firm at 128, an accomplishment in a down week for the market. As Carl noted in his latest update, “Sea generated $238 million of net income in the fourth quarter of 2024, compared to a $112 million loss a year ago. The company’s balance sheet is also much improved with $10.4 billion in cash and equivalents on hand. Gaming segment Garena has over 600 million users playing its games quarterly.” There’s a lot to like, and investors have flocked to SE, with the stock up more than 19% year to date and 139% in the last year. And yet, shares trade at roughly a third of their 2021 highs, so there’s plenty of potential upside still to go. BUY

Sirius XM Holdings (SIRI), originally recommended by Clif Droke in his Cabot Turnaround Letter, pulled back from 24 to 22 on no news. As the dominant force in satellite with shares trading at less than 8x earnings, Clif highlighted the stock’s turnaround potential. Nothing since we added it to our portfolio earlier this month has changed that. BUY

Tesla (TSLA), originally recommended by Mike Cintolo in Cabot Top Ten Trader, gave back some of its recent recovery gains, falling 8%. The stock is still well north of its early-March lows in the low 220s but lost more than a third of its value in the first three months of the year. Even CEO Elon Musk acknowledged that his role within Trump’s administration as the head of DOGE is hurting Tesla stock. Tesla’s recent earnings report, its worst in more than a decade, may have done even more damage. Musk called the major dip in his company’s stock a “buying opportunity.” But we’ll keep the shares at Hold until there’s a rebound that lasts more than a week or two. HOLD

Waste Management (WM), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, had a nice week considering the down market, rising 1.5%. The company will host its 11^th annual Waste & Sustainability Symposium this Friday, April 3, and will feature presentations by the leadership team on industry dynamics, new waste technologies and the company’s fundamentals. Perhaps that will help move the needle. But as Tom wrote in his initial write-up, trash collection is always going to be a need, and with the population expanding, so too is the amount of trash. WM is thus the kind of low-risk dividend payer you need in your portfolio in volatile markets like this one. BUY

If you have any questions, don’t hesitate to email me at chris@cabotwealth.com.

Here, too, is the latest episode of Cabot Street Check, the weekly podcast I host with my colleague Brad Simmerman. This week we welcomed on Chinese stock expert Larry Cheung to talk about the building momentum in the Chinese market, how real the momentum is, and what Chinese stocks to buy now.

The next Cabot Stock of the Week issue will be published on April 7, 2025.

Copyright © 2025. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.