There is tremendous growth ahead for technology. There will be incredible opportunities to invest. While you probably don’t associate technology stocks with a dividend newsletter, things are changing. In this issue I identify a technological behemoth that is now a blue chip dividend payer. Its products are so widely used that owning the stock provides a great way to play the technology revolution in general and gain exposure to the explosive growth.

The market remains in good health, and all Cabot’s market timing indicators are positive, telling us the odds are that the market will be higher in the months ahead.
For today’s recommendation, we shift to a somewhat unusual investment, a high-yielding limited partnership that may avoid the cycles of a notoriously cyclical sector, while offering substantial upside potential.
As for the current portfolio, overall, our holdings are performing well. But we have one sell, a stock that has popped higher in recent days on news and is now closing in on resistance. Details in the issue.

Current Market Outlook


From a top-down perspective, nothing has really changed with the key evidence; there remain a couple of divergences (number of new highs, lagging small-cap indexes), but the intermediate-term trends of the major indexes and most leading stocks (and even non-leading stocks) are pointed up. Under the surface, though, we’re seeing some ping pong action—the major indexes have been alternating up and down days for the past couple of weeks, while many sectors are whipping in and out of favor on a weekly basis. (Growth stocks have been alternating good and bad weeks for a month.) What does it mean? It’s fair to say the broad buying pressures have eased up, though to this point, the sellers haven’t done much damage at all. We’re going along with the back-and-forth action, nudging our Market Monitor down a notch—we remain overall bullish, but the current earnings season will have a lot to say about the intermediate-term outlook for the market and leading stocks.

In the meantime, we’re still seeing a good number of setups from a wide variety of stocks and sectors. We have a couple of favorites this week, but for our Top Pick we’ll go with Qualcomm (QCOM), which has shown extreme power after a game-changing deal with Apple last week. We’re OK buying here or (preferably) on dips.

Stock Name	Price	Buy Range	Loss Limit
Ctrip.com International Ltd. (CTRP)	34.94	42.5-44.5	39-40.5
D. R. Horton (DHI)	66.55	43-45.5	39.5-41.5
Fastenal (FAST)	37.08	67.5-69.5	62.5-64
First Solar (FSLR)	83.74	57-59	52.5-54
Five Below (FIVE)	134.58	136-142	124-127
Kansas City Southern (KSU)	176.54	121-124	112-113.5
ManpowerGroup (MAN)	90.84	93.5-95.5	84.5-86
Microchip Technology (MCHP)	79.12	95-97	88-89
QUALCOMM Incorporated (QCOM)	106.36	78-82	69-71
Redfin (RDFN)	40.40	21-22	19-19.5

Emerging markets have stayed strong into the second quarter, with China leading the way and calming markets by delivering 6% economic growth.

Inside this issue is a new recommendation with a play on a market some estimate as large as $94 trillion over the next two decades. The company delivers a key ingredient that turns steel into “super steel” and plays a key role in electrifying the grid.

The market remains in good health, and all Cabot’s market timing indicators are positive, telling us the odds are that the market will be higher in the months ahead.
For today’s recommendation we move outside the U.S. to a Chinese company targeting a mass market, a mass market that is virtually guaranteed to grow in the years ahead. It’s a stock that not known to most U.S. investors, and I think it’s a good buy here.
As for the current portfolio, some stocks are hitting new highs and many are close to it, while our value-based selections and Heritage stocks still show long-term potential.

Current Market Outlook


Last week was a solid one for the market, not necessarily in the major indexes but in the action of leading stocks, many of which bounced nicely off key intermediate-term support. Looking at the evidence, the vast majority of it is bullish, so we are, too—we’re bumping our Market Monitor up to a level 8 in tonight’s issue. That said, earnings season is just getting underway for most stocks, which will obviously be important. There will surely be the usual ups and downs, but we’ll be looking to see if any new leadership emerges or, conversely, if some of the leading stocks that have had good moves show abnormal weakness.

In the meantime, we’re just following the system, looking for strong stocks that are relatively early in their overall runs. Our Top Pick this week is Okta (OKTA), which looks to be resuming its run after a seven-week rest.

Stock Name	Price	Buy Range	Loss Limit
Armstrong World (AWI)	88.01	80.5-83.5	73.5-75.5
Avalara (AVLR)	102.00	52.5-55.5	48.5-50
The Walt Disney Company (DIS)	144.76	128-132	117-120
Heico (HEI)	134.84	96-99	91-92.5
Marvell Technology Group (MRVL)	36.88	22-23.5	20-21
Nexstar Media Group (NXST)	105.68	111-115	101-103
Okta, Inc. (OKTA)	148.41	92.5-95.5	82.5-84.5
Yeti Holdings (YETI)	42.80	29.5-32	26-27.5
Yext Inc. (YEXT)	21.32	20.5-21.5	19-19.5
Zscaler (ZS)	126.22	63.5-67	57-59

The past few weeks have been choppy and challenging for many growth stocks, but we’re happy to see some of the yellow flags from last week be addressed--our Cabot Tides, which were on the fence, are again positive, and most growth stocks that dipped to support have found buyers. Of course, there remain some worries (earnings season is coming up; relatively few stocks are hitting new highs), but most of the evidence remains bullish
Tonight, in fact, we’re putting some of our sidelined cash back to work by averaging up in one stock and starting with a half-sized position in another, which will leave us with 17% cash.
In tonight’s Cabot Growth Investor, we talk about all our current holdings, highlight one beaten-down sector we’re keeping a distant eye on for a new upturn, as well as look at some little-known names that are on our watch list.

I’ve just spent two glorious days cleaning out my flower beds and planting my annuals. Cleaning up my yard reminds me that it would also be a good time to review your portfolio—get rid of the non-performers and make room for some more profitable investments.

The volatility in the market has abated—for now—with the Dow Jones Industrial Average gaining about 600 points since the last issue. And as you’ll see in Market Views and our Advisor Investment Barometer, the investment pros continue to be bullish. The economy continues to be strong, with decent housing and manufacturing numbers, as well as low unemployment.

For value-focused investors, this year’s prologue has been a welcome change from the turmoil experienced in early 2025.

In just the past few weeks, some of last year’s most ignored or underappreciated laggards have posted outsized gains, with rallies that have made even momentum-driven tech stock traders envious. Even more remarkable is the fact that much of that strength has been concentrated in ultra-defensive areas of the market like consumer staples, utilities and healthcare.

The market rotation continues to be the main story out there this week, though rumblings of a potential strike on Iran, an update from the January FOMC meeting, and a slew of earnings reports and economic data releases have been giving investors plenty to think about.

In terms of the rotation, the equal‑weight S&P 500 ETF (RSP) is up 5.5% so far this year, illustrating that leadership is broadening beyond the narrow group of mega‑cap stocks that drove much of last year’s performance.

Year to date, the S&P 600 SmallCap Index is up 8.3% and the S&P 400 Mid‑Cap Index is up 7.9%. Both are comfortably outperforming the S&P 500, which is up just 0.1%, and the Nasdaq, which is down 2.1%.

Happy Chinese New Year! The year of the horse is upon us.

China is expecting an incredible 9.5 billion trips to be made during the 40-day Lunar New Year travel period. Chinese automakers are also on the move as the country’s numerous brands sold nearly 200,000 vehicles in Britain last year, doubling their market share to almost 10%.

As U.S. investors have shifted from risk-on to risk-off mode in recent months, a clear disparity between the “haves” and the “have-nots” has materialized.

Let’s start with the “have-nots.” Financials have fared the worst so far this year (-4.7%), followed by technology (-3.1%), communication services and consumer discretionary (-2.8% each). The downturn in the two tech-related sectors in particular is a stark departure from recent years, when technology led the charge of the current bull market.

Cyclical stocks are soaring and technology is floundering in the transformed market.

The bull market is turned upside down. For most of the first three years, technology, and particularly AI stocks, soared while most other stocks did very little. Now, previously meandering stocks are killing it while technology sinks.

Strong fourth-quarter earnings are confirming what the market was already doing.

Current estimates based on earnings reported so far are for 13.2% overall S&P earnings growth for the quarter. It’s a solid quarter and the fifth straight quarter of double-digit earnings growth. In terms of sector performance, cyclical companies are killing it, and technology is floundering, just like before earnings.

Like many coffee aficionados, I have something of a love/hate relationship with Starbucks (SBUX). My main gripe is that the company’s food and beverage offerings have always been pricey compared to the fare served in most fast-food restaurants and run-of-the-mill coffee houses.

The outperformance of small caps continues.

Through Tuesday’s close, the S&P 600 is up 10% year to date versus just 1.6% for the S&P 500.

All but three small-cap sectors are outperforming their large-cap counterpart. The strongest small-cap sectors are materials (+20%), energy (+23%), industrials (+17%), and tech (+11.4%).

Let’s talk about the power of staying invested.

Sure, when the market turns south – and I’m not even sure last week’s mini-dip qualifies – it makes sense to pare back on your weakest stocks and put a larger portion of your portfolio in cash. But taking your ball and going home – selling out of all of your stocks when times are tough – is not a winning strategy. Here’s why.

NOTE: We’re sending this a day early as I’m soon to embark on a trip with the kiddos over the next week. I will be working a good amount from the road, though, and will have updates if need be. Also, next week’s issue will be published as scheduled.

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WHAT TO DO NOW: The market remains very mixed, with growth measures still generally pointed sideways to down, while the broad market remains in solid shape. What’s interesting, though, is that we’re seeing more growth stocks kick into gear, along with some huge buying action in a few “cyclical growth” names. Tonight we’re making one move—adding a half-sized stake in Macom Tech (MTSI)—but are keeping our eyes open for a broader character change among growth stocks. Our cash position will be around 53%.

Today could be a big day for cannabis stocks.

The reason: We may get an important update on the rescheduling timeline.

Cannabis investors will be watching closely today to see whether Attorney General Pam Bondi offers a rescheduling update when she appears before the House Judiciary Committee. Upbeat comments could spark a sharp cannabis sector rally. The hearing starts at 10 a.m. EST.

I’m excited to share a couple of enhancements to Cabot Early Opportunities —improvements designed to sharpen our focus and better help you stay on top of the stocks we own.

The shares of this real estate company were recently upgraded by Raymond James to ‘Outperform’ and seven analysts have raised their EPS estimates for the company in the past 30 days.

This oil producer just announced a merger deal with SandRidge Energy, Inc., which should result in one of the largest oil players in the Mississippian Lime shale formation.

A small-cap jumps on earnings and a second has announced a voluntary cash offer to acquire all shares of another company.

There are several rating changes today due to earnings.

Five analysts have increased their EPS estimates for our first pick, a midwestern bank, and our second recommendation is the sale of a previous idea.

Our second recommendation is the sale of a previous idea.

This trucking company handily beat analysts’ earnings estimates, and forecasts are for double-digit growth this year.

This airline manufacturer has seen fantastic results, beating analysts’ earnings estimates by $0.17 last quarter.

Right now, my advice is to continue to deploy cash into your favorite stocks.

After a half-hearted mid-week bounce, the stock market had another rough day yesterday. The S&P 500 fell almost 4%, and is now 10% off its all-time high. That means we’re now officially in a correction, although we didn’t really need yesterday to tell us that.

This contributor has concerns about volatility and is recommending a short-term move into this 5-star short-term bond fund.

The major indexes are testing their Tuesday lows, but the intermediate-term trend is clearly down and the sellers are punishing many stocks.

Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.