As we move closer to earnings season for our portfolio holdings (really gets underway the week after next) we see many small-cap growth names (and growth stocks in general) recovering nicely from the drawdowns in late September.
In my view it’s encouraging to see this strength, even while the yield on the 10-year Treasury has moved above 1.6% (at 1.67% today).
Of course, things can change quickly as we move through earnings season. But for now, I’m leaning cautiously bullish and looking for many of our names to issue strong Q3 results and bullish commentary on 2022, albeit with some still-significant challenges out there (it can’t be all good news).
Next week we will get one earnings report. Repligen (RGEN) issues Q3 results on Thursday. A brief overview of what to expect from this long-term holding, as well as other positions, is up next.
No major changes in terms of buy, hold and sell this week.
Recent Changes
None
Updates
Accolade (ACCD) reported a few weeks ago and the stock was weak afterward (continuing the trend that had been in place since the beginning of September). However, over the last week ACCD has perked up a little. Probably the biggest question mark here in the near term is just how much COVID disruptions will impact the company in Q4 and 2022 (management has raised guidance several times but is still being somewhat conservative). I suspect much of the stock’s recent weakness isn’t company-specific and has more to do with general weakness in health care stocks (small-cap health care -8% from September high, large-cap -5% after improving from -8% last week). All factors considered, we’re still at hold. HOLD
Earnings: Done
Arena Pharmaceuticals (ARNA) has had another quiet week. The IBB (biotech ETF) seems to have firmed up 11% off its highs and, if it can gain some lost altitude, I suspect ARNA will go with it. BUY
Announced Earnings Date: November 4
Avalara (AVLR) is up 7% this week and back to within 6% of its all-time high from a few weeks ago. Management just announced the acquisition of CrowdReason, a property tax software company that has a foothold in the market of enterprise commercial property tax assessments, as well as other related areas. Property taxes are another complex area of taxation with rules applying differently in different states, towns, etc., so clearly the actual location of property assets is something businesses needs to deal with. The strategic fit seems straightforward. We don’t have financial terms. No earnings date yet but expected in early November. BUY
Cerence (CRNC) is looking better than it was two weeks ago, having risen 10% over that timeframe. There’s no news to speak of, and we don’t yet have an earnings date. We’re continuing to hold and have a gain of 88%. HOLD
CS DISCO (LAW) will report earnings on November 9. There’s nothing new over the last week and shares haven’t moved much. Big picture, I’m very bullish on CS DISCO’s growth potential and see this as a period (albeit a potentially volatile one) to accumulate shares. BUY
Announced Earnings Date: November 9
Everbridge (EVBG) will report on November 9. Management recently announced a partnership with Deloitte’s cybersecurity center for the EMEA region through which Deloitte clients can gain access to and expert technical support for Everbridge CEM solutions. Management also announced that the New York City Housing Authority has expanded its use of Everbridge’s mass-notification platform to cover over half a million New Yorkers (it was used for NYCHA employees previously). BUY
Announced Earnings Date: November 9
Fiverr (FVRR) will report Q3 results on November 10. No new news. Our ongoing thesis here is that management was a little too conservative on the Q2 call. BUY
Announced Earnings Date: November 10
Inspire Medical Systems (INSP) is up 7% this week and will be reporting on November 2. Recall that in late summer management nailed down improved reimbursement rates for Inspire Therapy and that implanting center growth trends are very strong. HOLD
Announced Earnings Date: November 2
JOANN (JOAN) is a small-cap value stock that currently pays a dividend of 3.5%. The stock hasn’t done much this week but is up 7% over the last two weeks. Supply chain questions continue to be the main concern here. However, as previously mentioned expectations are now quite low (as is valuation) and with management laying the groundwork for sustained industry-leading growth (store refreshes, etc.), I think there is potential for significant gains over the coming years. BUY
Kornit Digital (KRNT) continues to look great. The company announced its MAX technology is now available on the Presto line of machines (for apparel), expanding the options for designers and manufactures (including printing white on color fabrics) as well as offering efficiency improvements. Earnings are due November 10. BUY
Announced Earnings Date: November 10
Rani Therapeutics (RANI) has designed a medical device, a pill, that can deliver a tiny needle into the digestive tract where it exits the pill capsule and injects the contained drug into the patient’s bloodstream. The hope is that this technology can be used to deliver a wide variety of treatments that are currently only available via injection. Rani’s current programs are early-stage and are focused on acromegaly (excessive growth hormone), neuroendocrine tumors (NETs), osteoporosis, arthritis and diabetes. It’s early-stage and speculative, but there’s more than just a hope and a dream here. The RaniPill appears to work in early-stage studies. BUY
Revolve (RVLV) is trading near all-time highs today (up 13% this week) as we march toward earnings day (November 3). There is a lot of good news priced into the stock and investors likely recall the stock’s reaction last quarter (-15% after reporting) so I don’t foresee a big breakout ahead of earnings. We’re keeping at hold into the event. HOLD
Announced Earnings Date: November 3
Repligen (RGEN) is up 6% this week and has been moving in (very) roughly the same direction as larger bioprocessing peers (DHR, TMO, AVTR). Earnings will be out next Thursday, October 28. Back to the larger peers, DHR reported this morning with results ahead of expectations and COVID-19 tailwinds pushing revenue from related solutions to come in ahead of guidance. Full-year guidance was raised. It’s tough to get a read across to RGEN from those numbers. However, I have little reason to believe that RGEN won’t also beat expectations (analysts see revenue up 74% to $164 million and adjusted EPS up 60% to $0.64). On the one hand, RGEN seems attractive now after a roughly 20% correction. On the other hand, the stock did get ahead of itself (hence our hold rating). All things considered I’m comfortable sticking with hold rating for now. HOLD
Announced Earnings Date: October 28
Sprout Social (SPT) is modestly up over the last week and will report on November 2. No new news. BUY
Announced Earnings Date: November 2
Thunderbird Entertainment (THBRF, TBRD.CA) reported Q4 and full-year fiscal 2021 results yesterday that came in about as expected. For Q4 revenue was up 24% to $26.1 million, adjusted EBITDA was down 21% to $2.3 million and free cash flow was up 85% to $4.8 million. For the full year revenue was up 37% to $111.5 million, adjusted EBITDA was up 26% to $19.6 million and free cash flow was up 68% to $12.3 million. The production and program updates we received a few weeks ago told the story on that front (18 programs in various stages of production, eight of which are company IP or partner-managed). In Q4 the video game, The Last Kids on Earth and the Staff of Doom, launched. As the next fiscal year gets underway, we’ll be looking for more updates on the company’s consumer products division, which should see significant growth with industry veteran Richard Goldsmith’s leadership. BUY
Please email me at tyler@cabotwealth.com with any questions or comments about any of our stocks, or anything else on your mind.
| Stock Name | Date Bought | Price Bought | Price on 10/21/21 | Profit | Rating |
| Accolade (ACCD) | 8/6/20 | 40 | 40 | 0% | Hold |
| Arena Pharmaceuticals (ARNA) | 2/2/18 | 39 | 62 | 59% | Buy |
| Avalara (AVLR) | 2/1/19 | 40 | 179 | 346% | Buy |
| Cerence (CRNC) | 10/1/20 | 50 | 94 | 90% | Hold |
| CS Disco (LAW) | 9/2/21 | 57 | 49 | -14% | Buy |
| Everbridge (EVBG) | 12/2/16 | 16 | 156 | 905% | Buy |
| Fiverr Intl (FVRR) | 3/5/20 | 32 | 186 | 474% | Buy |
| Inspire Medical (INSP) | 10/4/19 | 59 | 255 | 336% | Hold |
| JOANN (JOAN) | 8/6/21 | 15 | 11 | -27% | Buy |
| Kornit Digital (KRNT) | 3/4/21 | 102 | 156 | 53% | Buy |
| Rani Therapeutics (RANI) | 10/7/21 | 17 | 20 | 20% | Buy |
| Repligen (RGEN) | 11/2/18 and 12/31/18 | 59 | 270 | 357% | Hold |
| Revolve Group, Inc. (RVLV) | 4/1/21 | 46 | 75 | 64% | Hold |
| Sprout Social (SPT) | 9/3/20 | 36 | 126 | 244% | Buy |
| Thunderbird Entertainment (THBRF, TBRD.V) | 5/6/21 | 3.8 | 4.0 | 5% | Buy |