Cabot Top Ten Trader Issue: March 10, 2025

A Vacuum of Buying Pressures in Growth

What we’ve seen since the February 19 top in growth stocks has basically been a rolling crash, with most every leading stock from 2024 breaking its intermediate-term uptrend, and with many flashing longer-term red lights as well. The rest of the market hasn’t been quite as bad, but even there most stocks have been giving up ground. Now, short-term, we do think things are finally getting hairy—recession fears and tariff headlines are making the rounds even as we are seeing a few near-term rays of light (the number of stocks hitting new lows is actually drying up a bit even as the indexes sink). That might be a reason to hold a some smaller positions at a profit, but overall, we remain clearly defensive—at some point, this decline will end, probably take a bit of time to bottom out and then lead to a sustained run with fresh leadership, but the goal until then is to keep most of your capital (and confidence!) intact by holding plenty of cash and, if you do buy, keep positions small (to us, that means half or less of your normal position size). Our Market Monitor is now at a level 3, though we’re most interested in seeing how strong and persistent any bounce is once it begins.

This week’s list has names from all over the map, though medical and foreign stocks certainly dominate the list. Our Top Pick is TG Therapeutics (TGTX), which has a newer MS drug that’s taking major share. It’s a one product company, so that has risk, but both sales and earnings are booming and the stock is strong. Aim for dips if you want to test the waters with a small position.

Stock 1

Axsome Therapeutics (AXSM)

Why the Strength
Axsome Therapeutics is a mid-cap biotech firm that looks to be just starting a big wave of growth thanks to a couple of drugs on the market today and more that are likely to be approved in the quarters ahead. The firm is focused on central nervous disorders, and its big-selling drug today is dubbed Auvelity, which is an oral treatment for major depressive disorder, working by mimicking the effects of ketamine but without some nasty side effects; Q4 sales of the drug lifted 89% and brought in $291 million for all of 2024, though most see peak annual sales here reaching at least $1 billion down the road. Then there’s Sunosi, for wakefulness for those with sleep apnea or narcolepsy; growth here has been slower (up 16% in Q4) though a recent patent settlement that pushes generic competition out to 2040 has many thinking sales here (just $94 million last year) could grow many-fold in the years ahead. Next up is Symbravo (acute migraines), which got the FDA thumbs up in January and should have initial sales mid-year ($500 million peak sales potential), followed by three new drug submissions to the FDA this year: Two of them (one for narcolepsy, one for fibromyalgia) have solid potential (again, likely peak sales potential in the $500 million range in the years ahead), but the bigger driver of investor perception surrounds a third one for Alzhemier’s disease agitation—trial results for that one in December didn’t impress Wall Street, but when management said a few weeks later it thought results were positive enough for approval, Axsome’s stock took off. (The company sees $1.5 billion to $3 billion peak sales potential for that offering if all goes well.) Clearly, with so many new submissions, new launches and upcoming FDA decisions, the stock is going to be news driven, but business already good and analysts see sustained growth ahead, with 60% top-line growth both this year and next while losses should start shrinking quickly from here and leap into the black in 2026. It’s a good, well-rounded (not just one drug) story.

Technical Analysis
AXSM had a couple of promising periods during 2023 and 2024, but net-net the stock could never really get going—shares made no progress for a couple of years after the sharp dip into mid-January. But it’s completely changed character since, quickly running to new highs in early February and then gapping strongly to even higher highs after earnings. Granted, AXSM has been slipping some since, so there’s a chance of a deeper correction, but so far the dip has come on very light trade and been reasonable compared to the prior run. If you want in, we’ll set our buy range up a bit from here, aiming to start small on a resumption of the uptrend.

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Stock 2

BJ’s Wholesale (BJ)

Why the Strength
As Americans continue to feel the sting of inflation, stores that offer deep discounts for consumer goods are thriving—and are finding buyers in the market due to their defensive qualities. BJ’s Wholesale operates a membership-only warehouse club with over 250 stores across 21 states, mainly along the East Coast, selling groceries, gasoline and other products to nearly eight million members, with memberships costing $60 a year. Like its main competitor Costco, BJ’s offers many of its items for sale in bulk—at typically a 25% discount—with many of those items in smaller packages (unlike Costco’s goods), making them easier to store. Unsurprisingly, the company has seen a substantial increase in foot traffic and memberships over the last year as food prices at traditional retail stores remain stubbornly high and continue to lift. Inflation aside, another big growth driver has been the firm’s focus on digital sales, with curbside, in-store pickup and home delivery sales up nearly 30% in the fourth quarter—and up by a whopping 53% from two years ago. BJ’s reports that around 60% of its members engage digitally with the company in some form, with Buy Online, Pickup in Club (BOPIC) being the largest contributor to the digital growth. Another piece of BJ’s growth strategy involves expanding its physical presence, and to that end it opened seven new clubs and 12 gas stations in 2024, with plans to open up to 30 new clubs in the next two years, making for a solid cookie-cutter angle. Last week’s Q4 earnings release was the reason for the stock’s latest show of strength—revenue of $5.3 billion was 1% lower year-on-year, but earnings of 93 cents a share beat estimates by six cents while full-year earnings of $4.05 per share increased 2%. More important to Wall Street, comparable club sales, excluding gasoline sales, increased a very solid 5%, led by increased traffic, while membership fee income increased by 8%. Looking ahead, the company sees comparable club sales (excluding gas sales) increasing by around 3% in 2025, with adjusted EPS expected to a mid-point of $4.20 (up 4% if realized). It’s a defensive play with a modest but reliable growth angle.

Technical Analysis
BJ kicked off a new uptrend last February, with shares breaking out above a key resistance at 80 in May. The stock met resistance around 92 in July and then pulled back to the old highs a couple of months later, but BJ has been consistently etching out a series of higher highs and higher lows since then, highlighted by last week’s earnings surge. The uptrend should continue, but entry points will matter, so if you want in, aim to enter on dips.

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Stock 3

Futu Holdings (FUTU)

Why the Strength
Futu Holdings is the “Robinhood of China,” a Tencent-backed company that runs a popular low-commission brokerage and wealth management platform—it allows Chinese investors to easily trade stocks on overseas markets including the U.S. (for less than $0.005 per share) and Hong Kong (for 0.03% of the total transaction), and it’s consistently ranked as one of the top retail brokerages in terms of trading volume in both China and Hong Kong, with its app, Moomoo, having the highest number of downloads in the region. The excitement surrounding the stock is partly the result of China’s just-released GDP growth target for 2025 (an ambitious 5%) and additional fiscal stimulus plans to further boost its economy. But Futu’s recent efforts at diversifying its revenue streams and reducing its dependence on the Chinese market have also attracted growing interest among customers, as evidenced by a 31% year-on-year spike in revenue during Q3, to $442 million, driven in part by a 52% lift in brokerage commissions and handling charges, leading to a 21% earnings increase to $1.23 per share. The sub-metrics were also enticing, with the total number of paying clients rising 33% to 2.2 million, while total users rose 14%, to 24 million; total trading volume increased by 75% to $245 billion, within which trading volume for U.S. stocks was $195 billion. Daily average revenue trades (DARTs) in Q3 increased 68%, while the client retention rate was north of 98%. Elsewhere, Futu’s wealth management arm recorded another quarter of “strong growth” on the back of enticing yields for money market and fixed income funds; total client assets grew 87%, with around 27% of paying clients holding wealth management products, up from 25% in the second quarter. When FUTU releases Q4 earnings on Thursday (pre-market), analysts expect top- and bottom-line growth of 61% and 93%, respectively, with new paying clients expected by the top brass to “comfortably increase” by 550,000 for the full year (up 32% if realized). It’s an interesting Chinese Bull Market stock.

Technical Analysis
After crashing in 2021 (down nearly 90% from top to bottom), FUTU bottomed out in early 2022 and embarked on a long, slow bottoming process, with some limited upside over time but not a lot of net progress through last fall. The initial Chinese stimulus announcement caused shares to go wild in September, but FUTU pulled back to the 40-week line in January after that. But now the buyers are back, driving the stock back to its highs last month before its latest sharp pullback. Volatility here is extremely high, but we’re OK with a small buy on strength, with a stop near the century mark.

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Stock 4

GeneDX Holdings (WGS)

Why the Strength
The era of personalized medicine has been talked about for many years as genome (complete set of DNA) and exome (part of the DNA that codes for proteins) testing and mapping has become more common—but it always seems to be mostly talk. But now GeneDX might be changing that: According to the company, a child with a rare disease will have three misdiagnoses and undergo 16 ineffective tests before finding a solution, with around 10% of families overall facing issues at one time or another. But GeneDx’s tests can be a big help, with studies showing the firm’s best-in-class genome and exome testing offers far better diagnostic rates than other tests (even other genetic-type tests). And GeneDX looks like the clear leader here: Its 750,000-plus genomes and exomes in its database has enabled the firm to identify a few hundred disease-gene relationships (and that figure grows over time as more tests are performed), which is why over 80% of clinicians that order exome testing order from GeneDX. (Results take days or weeks and are often covered by insurance.) Today the targets are epilepsy, autism and developmental delay among children, and it’s looking to scale up in NICU (neonatal intensive care units), where a quarter of patients likely have a genetic disorder but less than 5% order genome testing. Last year’s ramp in business was helped in large part from outpatient testing (neurology), but the top brass feels like it’s only scratching the surface there, with near-term moves into things like cerebral palsy and hearing loss. GeneDX has a legacy business that’s doing fine, but the growth is from the genome/exome side of things—in Q4, genome/exome tests lifted 32% and made up 38% of all tests performed, and the top brass sees revenues from that business rising at least 30% in 2025, which could prove very conservative. Importantly, profits have begun to take off, too, with sponsorship still small (280 funds) but also rising quckly (106 two quarters ago). It’s a small firm but a big idea.

Technical Analysis
First things first: WGS had a massive, massive run last year and is as wild as can be (it moves around 9% per day from high to low, ballpark), so should the market remain weak, there’s obviously a chance the stock could give up the ghost. But given the meltdown in growth titles, we can’t ignore the stock’s strength—after soaring into the 90 area around Halloween, shares chopped sideways and tried to break out in early January, before pulling back very sharply (40%!) in the next few weeks. But Q4 earnings caused an even larger gap to new highs, and while wobbling a bit, WGS has held very firm of late, a sign few want to sell this potential gigantic story. We’ll set our buy range above the highs of the past couple of days; if you enter, use a loose stop.

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Stock 5

Okta (OKTA)

Why the Strength
Okta is a leader in identity access management (IAM), a form of workplace security that is well-suited to handle growth in remote and hybrid work situations, where network security can’t be as tightly controlled as in the office. Okta’s cloud-based platform verifies the user and the device, allowing access to a business’ systems in a less cumbersome manner than alternatives, a service for which it charges a subscription fee. Okta is a leader in the service – it just tallied its first quarter with more than $1 billion in new contracts, with strength coming in Auth0, a company it bought two years ago and for a time had some trouble integrating but is now a key part of the overall offering. Also notable is that 20% of deals were for recently introduced products like Okta Identity Governance, which simplifies access across different technology products from unrelated vendors, solving a source of frustration among clients. It led to a solid quarter for Okta, reported last week: Q4 revenue hit $682 million and earnings of 78 per share, both lifting over consensus. In the current first quarter of its fiscal 2026, Okta expects sales to rise 10%-- while not rapid, that figure was much higher than they had previously been guiding Wall Street to look for. Part of that comes from a jump in the number of very large customers, those generating $1 million or more subscription revenue—that cohort grew 22% in the just-completed quarter. Management credits a move into specialization, of both technology products and in the salesforce, that is helping Okta separate itself in a field crowded with better-known tech names like Oracle and Microsoft. A partnership with Amazon Web Services promoting free trials for AWS clients has also been very strong for Okta gaining smaller, quick-growing customers, generating $1 billion in sales in the first four years of partnership. Low double digit growth is expected from here, though many are thinking that will prove too low.

Technical Analysis
OKTA looked like it was finally getting going from a big bottoming process a year ago, but that breakout attempt failed and led to another huge base-building effort. Shares had been gradually recovering since October, and after a quick three-week dip, OKTA exploded higher last week, pushing higher for two straigth days after earnings before a little wobble to end the week. If you want in, you can consider buying on a bit of weakness from here, with a stop in the mid-90s.

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Stock 6

Royal Gold (RGLD)

Why the Strength
As its name implies, Royal Gold is a precious metals royalty and streaming company and doesn’t directly engage in the mining process. Instead, it provides up-front payments to miners in exchange for the right to buy gold, silver, copper and other resources at a set price (or else receive a percentage of the output), which allows the company to purchase valuable precious metals at below-market costs in exchange for miners getting needed upfront capital to work new mines or develop existing ones. Royal’s portfolio consists of interests in approximately 175 properties across various continents, including both currently-producing mines and development stage projects that should pay off down the road. Royal benefited from strong gold prices in 2024, as evidenced by impressive growth in operating cash flow (up 27%) and earnings (up 39%)—both of which exceeded its growth in revenue. The strong financial performance allowed the firm to repay $250 million of debt during the year and pay out $105 million in dividends (annual dividends have increased in each of the last 22 years). Revenue in last year’s final quarter was a record $203 million, which increased by an eye-opening 33% and was driven by output of 76,100 gold equivalent ounces (GEOs), with per-share earnings of $1.63 beating estimates by 15 cents. Royalty revenue was up by 43%, to $78 million, and this segment contributed around 38% of total revenue—above the average level over the last several quarters—with the streaming segment seeing a 27% jump in revenue. Royal also expanded its portfolio in December with the addition of a royalty over the Cactus copper/gold project in Arizona, which is expected to deliver up to 6,000 GEOs per year in its first 15 years of operation at current prices, with mineral resource estimates of over seven billion pounds of copper (and with copper cathodes to be produced from the mine). The company was debt-free at quarter’s end, with total liquidity of around $1.2 billion. For 2025, analysts expect Royals’ top and bottom lines to increase 20% and 25%, respectively.

Technical Analysis
RGLD tried to break free from a 30-month holding pattern last October, but it couldn’t really get going, with shares briefly exceeding resistance and posting a token all-time high at 155 before pulling back. A repeated attempt at rallying above that level failed again in early December and was followed by a much deeper pullback into Christmas, with the stock finding support around the 200-day line. RGLD tightened up from there, though, and the bulls took control soon after, with shares marching persistently higher … though are still battling that old resistance area. We’ll set our buy range up a bit from here, thinking a breakout will pave the way for a more sustained run.

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Stock 7

Sea Ltd (SE)

Why the Strength
Singapore-based Sea Ltd. is one of many strong international stocks, and this one has always had a great story, with recent growth picking up steam. Sea is one of Southeast Asia’s and South America’s leading online sales, entertainment and financial service providers. The company’s offerings range from the e-commerce focused Shopee platform to the digital gaming Garena segment, with the digital payments arm, SeaMoney, offering e-wallet services and payment processing, while its digital bank, MariBank, offers banking services online to Singaporeans and permanent residents. Sea was one a top performer during the pandemic era, thanks largely to Shopee, as online commerce was all the rage. However, the stock fell out of favor as e-commerce declined in 2022, along with a significant decline in online gaming, which hurt Garena. (The Garena segment was also hurt after its pandemic-era revenue leader, Free Fire, was banned in India over national security concerns.) Sea has since launched a successful turnaround based on cost-cutting measures at Shopee and a focus on the core gaming business at Garena, and it just finished up its second straight profitable year in 2024, along with margins showing significant improvement. Last week’s Q4 report featured revenue of nearly $5 billion that increased a big 37% from a year ago, plus EBITDA of $591 million that shot up by triple digits from the year-ago $127 million. The quarter’s highlights included Shopee become a “clear e-commerce market leader” in all seven of its Asian markets, with a “sizable and growing presence” in Brazil, surpassing $100 billion for the first time with over 10 billion orders in 2024. SeaMoney increased revenue by an eye-opening 55%, with over 26 million active borrowers and becoming one of the largest consumer lending businesses in Southeast Asia. Meanwhile, Garena saw quarterly active users and gross booking increase by around 20% each, led by a global resurgence of popularity in Free Fire. For 2025, management expects Shopee’s gross merchandise sales to expand 20%, with Garena expected to grow double-digit in both users and bookings. Wall Street sees 20% to 25% annual top-line growth this year and next while earnings boom. It’s a good story.

Technical Analysis
After falling 90% during the post-pandemic bust, SE got off its duff in January 2023 and began a huge turnaround as the bottom line lifted into the black. The uptrend had one big shakeout (last August with the overall market) but rebounded quickly from that and headed nicely higher, with a modest December dip giving way to higher prices. To be fair, SE isn’t early stage, and there has been some post-earnings selling. We’ll set our buy range up from here if you want to buy on a rebound off support.

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Stock 8

Tencent Holdings (TCEHY)

Why the Strength
China’s recent efforts at stimulating its economy is paying off in many ways, and a general rotation by investors into international areas is helping Chinese stocks as well in early 2025—particularly those with an internet focus. Among them is Chinese multinational tech giant Tencent, a top provider of internet products and services in China: Along with being a major social media player and owner of the popular WeChat (one of the world’s most used messaging apps), it’s also the world’s largest video game vendor and provides various fintech, commercial payment and cloud services. The company has further cemented its position as one of the world’s most important tech firms through its immense holdings of generative AI patents (nearly 2,100 by some estimates) providing it with a leading position in the GenAI space. Last month, Tencent said it plans to integrate the DeepSeek model—the outfit that caused the initial selling wave in AI infrastructure stocks—into its own WeChat app as a beta test, prompting a surge in its stock price; it’s joining a growing number of Chinese tech players integrating DeepSeek’s AI software into their services. By adding DeepSeek to WeChat, the company believes it will keep the app’s users more engaged thanks to the added AI-powered chat, search and automation capabilities it provides—it will further lower operating costs and provide WeChat with AI-driven ad personalization, potentially boosting revenue for Tencent. On the financial front, revenue growth has accelerated a bit in recent quarters (up 12% in dollar terms in Q3, up from 8% and 1% the prior two quarters) while earnings growth has been much peppier. Analysts expect sales and earnings growth of 8% and 27% (respectively) when Q4 results are released on March 19; clues as to any further AI-related color will be key, as well as management’s view of the core Chinese economy. Any signs of further acceleration should keep buyers interested.

Technical Analysis
TCEHY isn’t a typical Top Ten stock due to its OTC listing, but it’s plenty liquid (trades north of $300 million per day at today’s levels) and is acting very well. Shares spent the last two years forming a massive base while etching out higher lows along the way; the big September ramp was a positive clue, though fell flat along with most of its Chinese peers. But after a shakeout in early January, TCEHY has been super-strong, soaring to new multi-year highs last month and hitting higher highs last week before pulling in. We’ll look to start small on a bit more of a retrenchment with a stop near the 50-day line.

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Stock 9

TG Therapeutics (TGTX) ★ Top Pick ★

Why the Strength
Earlier in this issue we had Axsome, which has three drugs approved and three more that are likely to be submitted for approval this year. TG Therapeutics is a different animal, with one approved treatment that’s taking share in a huge market. Dubbed Briumvi, it’s a treatment for relapsing multiple sclerosis, one of three treatments (the others made and sold by Roche and Novartis) on the market that work by blocking the CD 20 protein (it targets and depletes B cells that cause disease progression and activity), which has been a big leap forward in the treatment of the disease. Briumvi looks like it could prove to the best among them—trials showed an 80%-ish reduction in relapsing MS, and a recent five-year follow-up saw that 92% of patients showed no disease progression, which has obviously helped uptake, as has the fact that it’s easier to administer (just an hour of IV delivery every 24 weeks, half the time or less of one competitor). Moreover, TG is starting trials to see if Briumvi can be taken by patients at home via a shot every couple of months, which would obviously be big as patients wouldn’t have to visit a center. Briumvi was only launched near the end of 2023 and has quickly taken share, with $104 million in revenue in Q4, up 160% from a year ago, and in the year-end report, management’s 2025 forecast was for the drug to grow another 65% in 2025, and most believe that to be conservative as the initial outlook a year ago proved far too low. Moreover, the bottom line here began to soar in Q4 and should continue to do so, to $1 per share or so this year and possibly $2 per share next. A one-drug situation is always full of risk, but it certainly looks like TG has something special with Briumvi and the numbers should attract more big investors over time.

Technical Analysis
TGTX began to change character in May of last year, as Q1 earnings kicked off what turned into a good (but very choppy and hectic) run higher, culminating with a move back to the early-2023 highs in November. Shares did fall back from there, but instead of cascading as it had done in the past, it etched a controlled consolidation for 14 weeks, with the retreat (26% from the highs) reasonable given the prior advance. And now, after Q4 results, TGTX has flashed a big clue, with a huge-volume move last week to new highs. We’re not big on buying breakouts in this environment, but a nibble on pullbacks and a loose stop is fine by us; TGTX certainly seems like it wants to go higher if the market allows it.

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Stock 10

Uber (UBER)

Why the Strength
Uber took some hits in the market for a disappointing fourth quarter, but investors probably were too negative given the effect of one-time events like the California wildfires, big snowstorms and foreign exchange. Looking at the business itself, not external factors, Uber is still doing extremely well. The ride sharing provider remains the world’s biggest car service and it’s seeing excellent penetration with its Delivery segment (Eats, its food delivery service), and a new service emphasizing rides for teenagers. Plus, membership in Uber One, its $10 a month subscription that offers discounts and priority booking to members, is up 50% in the past 12 months off an already large base. Partnerships with large employers has helped boost Uber One member numbers, who spend on average three times as much as casual Uber users. The company is now working with automakers to plan out autonomous vehicle (AV) fleets to its preferred specifications. AV is an early-stage business but has been a focus for the company and investors, with competition from Tesla (Robotaxi) potentially undercutting Uber’s business in the distant future, though much of that panic has died down thanks to the firm’s own moves; self-driving vehicles aren’t allowed in most markets yet, but Uber has new launches in partnership Waymo coming in Atlanta and Austin. Management believes as more markets open to AVs, it can scale it up to multi-billion-dollar sales in a few years, as it has done with premium services like Uber Reserve (scheduling rides in advance). Over the next three years Uber expects to grow bookings by the mid-teens annually, a nice growth rate considering it already gathers large bookings now – Uber says this quarter should bring gross bookings around $43 billion. For 2025, Wall Street sees revenue rising nearly 15% to $50.4 billion with net income per share of $2.50, which would be down sharply from 2024, but that was a blow-out year for profit due to huge boost from revaluation of Uber’s equity investments. It compares very well to 2023, which had $0.83 EPS on normal, core business. The fact that hedge fund manager Bill Ackman revealed a position in Uber last month has also helped perception.

Technical Analysis
UBER was a leader in the market’s November 2023 to February 2024 rally, but after stalling out for a few weeks, shares cascaded 33% into August and, after rebounding back above its prior high, slipped sharply again (by 32% this time). But this time, UBER has rounded out a very nice-looking launching pad, with a big-volume buying clue after the Ackman news in early February, and with a reasonable pullback of late while the market has cascaded. If you’re aggressive, you could nibble here with a stop in the upper 60s, but like many stocks today, we’ll set our buy range up from here, aiming to enter if the stock (and presumably the market) turn higher.

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Previously Recommended Stocks

The next Cabot Top Ten Trader issue will be published on March 17, 2025.

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