Our contributors are stock-picking experts, utilizing their various investment styles to offer investors a wide range of strategies through up and down markets. And their track records are impressive. While the market’s double-digit gains of 2017 were fantastic, our contributors did even better.
Now, we move ahead to 2018, and this issue is packed full of exciting opportunities among very diversified sectors and investing styles.

Today’s recommendation is a familiar name, not because I’ve recommended the stock before (I haven’t) but because the company’s creations are enjoyed by millions of Americans and a major new acquisition will only increase the company’s reach.

Current Market Outlook


It’s been a great start to the year, with most areas and indexes shooting ahead on solid volume in recent days. We’re still seeing some wild moves (up and down), which is par for the course for early January and you can expect volatility among individual names to remain elevated in the near-term. Our focus is always on the intermediate- to longer-term, so while there remain some near-term yellow flags (with many stocks extended to the upside and with sentiment bubbly, you should pick your spots on the buy side), the positive price and volume action keeps us bullish.

This week’s list is about evenly split between growth stocks and industrial/commodity stocks, which tells you how broad the advance has been. Our Top Pick is Commercial Metals (CMC), a mid-sized steel-related outfit that just catapulted out of a huge base on earnings. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Alcoa (AA)	0.00	51-53	47-49
Autohome (ATHM)	98.65	70-73	65-67
Commercial Metals (CMC)	0.00	23.5-25	21-22
Dycom Industries (DY)	0.00	109-113	99-101
Lear Corp. (LEA)	0.00	184-188	173-176
Lennar (LEN)	61.85	64-66.5	60-62
Netflix, Inc. (NFLX)	423.92	204-210	191-194
Splunk (SPLK)	207.67	85-88	79-80.5
Steel Dynamics (STLD)	0.00	44-46	40.5-41.5
Twitter (TWTR)	40.37	23-24.5	21-22

This month’s candidate is another software stock—but not a high flyer. Rather, this company is still scooting just below the radar, and trades at a big discount to most of its peers. When you value it based on growth, it’s downright cheap—but valuation isn’t why we’re buying it.

The Model Portfolio is more than 90% invested and off to a good start this year. In tonight’s issue, we write about our newest addition and the excellent relative strength it’s shown in recent months; we think it’s a liquid leader of the new energy rally. We also write about some recent IPOs, other stocks we’re watching and, of course, dive into all of our recommended names.

Current Market Outlook


The calendar has flipped, but the market environment remains bullish, with the major trends of most indexes and leading stocks continuing to point up. Today saw some rotation back into a few of last year’s leading growth stocks, but we wouldn’t jump to conclusions quite yet—January is known for lots of volatility as big investors reposition their portfolios and, in a couple of weeks, as earnings season gets underway. You should keep your feet on the ground and honor your stops, but you shouldn’t get carried away with daily moves over the next few days; ideally, try to buy strong stocks on normal dips. For overall stance, you should remain bullish.

This week’s list has a nice mix of great stories and charts, ranging from a speculative biotech to a couple of strong energy stocks. Our Top Pick, though, is one of the largest copper miners in the world—Freeport McMoRan (FCX) appears to have blasted off and entered a sustained uptrend after forming a very long launching pad. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Adamas Pharmaceutical (ADMS)	0.00	32.5-35.5	29-30
American Woodmark (AMWD)	0.00	126-131	113-116
Burlington Stores (BURL)	193.95	115-120	105-108
Diamondback Energy (FANG)	0.00	122-126	110-113
Freeport-McMoRan Inc. (FCX)	13.78	18.5-19.5	16.5-17.2
Floor & Décor (FND)	68.03	44.5-47	41-43
Ollie’s Bargain Outlet (OLLI)	103.94	50.5-52.5	47-48.5
Penn National Gaming (PENN)	45.38	29.5-31	26.5-28
ProPetro (PUMP)	23.30	18.9-19.7	17.2-17.7
Warrior Met Coal (HCC)	0.00	24-26	21-22

The bull market remains alive and well, with most stocks and sectors in good shape, so we\'re generally letting our winners run and staying heavily invested. That said, January is often a tricky month, so with the potential for potholes and volatility, tonight\'s Cabot Stock of the Week is a mega-cap growth stock that, by some measures, is undervalued.

There are many changes in today’s issue: we’re adding four new stocks and selling seven stocks.

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.

This Fidelity Select Fund is a diversified way to participate in the recovery of the natural gas industry through strong companies.

This spin-off from Alcoa is expected to grow at a 35.5% rate next year.

One new stock joins the Growth & Income Portfolio, plus updates on three other stocks.

On March 20, this financial firm will become part of the S&P 500 index. The added visibility should help propel the company to the double-digit growth that Wall Street is expecting.

This semiconductor company beat analysts’ estimates by $0.02 last quarter, and is forecast to grow at a triple-digit rate this year and next.

This company is a play on the Internet of Things, as well as rising auto sales.

Sell one of our stocks. There is nothing wrong at the company, and earnings are growing at an attractive rate. However, the share price is quite fairly valued, with the 2018 EPS and dividend growth rates equal to the 2018 P/E.

We’re going to book our profits in one of our stocks today. Today’s sale will likely net us a profit of about 48%, for a total return, including dividends, of about 49%.

This technology company beat earnings estimates by $0.03 last quarter, and is forecast to post double-digit growth.

Today we have important news on two of our stocks. I also comment on homebuilder stocks, and name several stocks that are looking good today.

This Xerox spin-off has an enviable list of clients and operates in a rapidly-growing sector.

This ETF is comprised of mostly consumer cyclical and basic materials companies linked to the home building industry.

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.