What started as another very bullish week for stocks turned into a bit of a mess on Friday as a confluence of negative items hit the market. First it was Broadcom (AVGO), Ciena (CIEN) and CrowdStrike (CRWD), all of which saw their stocks fall following earnings Wednesday afternoon, then a stronger-than-expected May jobs report sent Treasury yields surging, and finally, leading AI play Anthropic put out a thought piece that recommended the speed of AI development should slow down a bit. The result was the Nasdaq’s worst single session since April 2025.

Friday saw the sellers finally make a stand, with a huge, broad decline, focused mostly on the highest-fliers but hitting most everything. Nothing has changed with the intermediate-term evidence, which remains bullish, but near term, we do think the onus is on the bulls to step up, given Friday’s huge wave of selling and some iffy action among a small-but-growing number of leaders. All told, we’re bullish, but the odds are increasing that the market and some names may need to digest for a while. We’ll pull our Market Monitor down a notch to a level 7.

This week’s list has a bunch of attractive names despite the market’s selloff. Our Top Pick is a solid consumer-oriented story that’s producing quick and reliable growth, and the stock has tightened up nicely of late.

Stocks finally encountered their first real turbulence since March, with several of the major indexes having their worst day all year on Friday, thanks to soaring interest rate-hike odds in the wake of a better-than-expected jobs report (down is up sometimes on Wall Street!). Today’s bounce-back is encouraging, but there may be some more choppiness ahead given the strength of the rally in April and May. So today we add a measure of safety to the portfolio in the form of a well-known commodity play – but one that has enough momentum that it caught the eye of Mike Cintolo in his Cabot Top Ten Trader momentum-investing advisory last week.

Details inside.

Artificial intelligence has moved past the experimentation phase and is being rapidly deployed at scale, forcing companies to rethink how their IT infrastructure actually handles data flow.

Today’s company sits at the intersection of network performance and protection, helping the world’s largest organizations manage this new wave of traffic, while also maintaining reliability. Its networking platform is becoming increasingly critical as AI workloads scale.

All the details are inside the June Issue of Cabot Small-Cap Confidential.

Healthcare is a universal need. It’s also a growing one.

The aging of the U.S. population is such that healthcare spending is expected to make up 20% of total economic spending by 2033. And yet, healthcare stocks are having a rough year, retreating more than 10% since the Iran war began. The evergreen nature of the sector (everyone needs healthcare!) means that it rarely stays down for long, and it appears a bottom has already been put in. That spells opportunity!

So today, we add a big-name healthcare stock to our portfolio that does 90% of its business in the U.S. Trading nearly 30% off its February highs, it’s a bargain right now – and one that has grown sales and earnings by double digits the last three years.

Details inside.

AI stocks are a little unsettled as Broadcom (AVGO), the sixth-most valuable stock in the S&P 500, fell short of revenue expectations, and the stock looks like it is going to open weakly and have a tough day. Bitcoin is in a slump, down about 25% this year and having lost about half of its value since reaching a peak above $126,000 in early October.

The market is also getting impatient with the on-and-off Hormuz story as energy stockpiles dwindle and oil prices react to the daily news cycle.

The bulls made it nine straight winning weeks, though the holiday-shortened four-day stretch (markets were closed Monday for Memorial Day) required a burst of earnings firepower to keep the streak alive. Dell Technologies (DELL) and Snowflake (SNOW) both posted blowout results, sparking sympathy rallies across AI-adjacent tech names and giving software stocks in particular a much-needed shot in the arm.

Overall, nothing has changed when looking at the big picture of the market and leadership—that said, we are seeing a bunch of extended, hot names begin to take on a little water, and we’ve even seen a few names that have had long runs flash some intermediate-term iffy action. That’s not a death knell, but it’s a reminder to continue trailing stops, and for new buying, focus on either powerful, fresh breakouts or leaders that pull in to higher-odds points. We’ll leave our Market Monitor at a level 8 this week.

This week’s list has something for everyone, though after highlighting a few zingers of late, this week’s Top Pick is on the cyclical side of things, with shares emerging from a multi-month rest period.

Stocks are at record highs, but after two straight months of relentless gains, a pullback of some sort – at least in the short term – seems likely. Still, not every sector is stretched to the moon, and that includes biotech. Cabot Early Opportunities Chief Analyst Tyler Laundon recently uncovered a fast-growing biotech that looks primed for a big run, so today we add this intriguing name to our portfolio.

Details inside.

The bulls made it nine straight winning weeks, though the holiday-shortened four-day stretch (markets were closed Monday for Memorial Day) required a burst of earnings firepower to keep the streak alive. Dell Technologies (DELL) and Snowflake (SNOW) both posted blowout results, sparking sympathy rallies across AI-adjacent tech names and giving software stocks in particular a much-needed shot in the arm — the IGV, which we own, broke decisively above its 200-day moving average for the first time this year on Friday.

The bulls made it nine straight winning weeks, though the holiday-shortened four-day stretch (markets were closed Monday for Memorial Day) required a burst of earnings firepower to keep the streak alive. Dell Technologies (DELL) and Snowflake (SNOW) both posted blowout results, sparking sympathy rallies across AI-adjacent tech names and giving software stocks in particular a much-needed shot in the arm — the IGV, which we own, broke decisively above its 200-day moving average for the first time this year on Friday.

The bulls made it nine straight winning weeks, though the holiday-shortened four-day stretch (markets were closed Monday for Memorial Day) required a burst of earnings firepower to keep the streak alive. Dell Technologies (DELL) and Snowflake (SNOW) both posted blowout results, sparking sympathy rallies across AI-adjacent tech names and giving software stocks in particular a much-needed shot in the arm — the IGV, which we own, broke decisively above its 200-day moving average for the first time this year on Friday.

We’ve all seen it before: the owner of a home in dire need of structural repair decides to “flip” the house for a quick profit by contracting a restoration service. Instead of making sorely needed foundational repairs, the cleanup crew focuses on superficial fixes like painting, tiling, flooring, etc., in hopes that a shiny new veneer will hide the problems that exist beneath the home’s exterior.

Crude though the analogy may be, I think it’s an apt description of what we sometimes encounter as turnaround investors.

WHAT TO DO NOW: The market and especially most leaders have finally shaken out a bit in recent days, and there are some worries we’re watching, including the rise in Treasury rates and the health of the broad market (our Two-Second Indicator is now negative). Even so, the primary evidence remains in good shape, and while this rest phase could easily take longer if the worries persist, the odds favor higher prices down the road. Tonight we’re making one small move: Averaging up on Axsome Therapeutics (AXSM), buying another 3% position. Our cash position will be around 34%, which we’ll be looking to put to work should the market continue to act properly.

The war in Iran has not sunk the stock market the way it appeared it might in March, nor has it put a dent in the U.S. economy (yet), with first-quarter earnings growth among U.S. large caps coming in at 27.7%, a five-year high. But the bond market has been profoundly impacted, with yields on the 10-year Treasury up 17% since late February to top 4.6% for the first time in a year. Even more troubling? Yields on the 30-year note are now north of 5% for the first time since 2007.

Small-cap stocks have taken a very small step back this week, with the S&P 600 down less than 1% from last Wednesday’s close. The index remains up roughly 12.5% year to date. The S&P 500 is also down less than 1% over the past week and is up roughly 8.5% so far this year.

The rally could be in jeopardy. The ongoing situation in Iran is causing a spike in oil prices and interest rates that is worrying investors.

There was war bluster over the weekend as peace efforts stalled and President Trump threatened renewed strikes on the country. Since then, a host of Arab nations have claimed Iran is submitting a new and more serious peace proposal. We’ll see what happens. But there still isn’t any relief in oil prices or interest rates.

The rally could be in jeopardy. Despite the S&P hitting a new high last Thursday, stocks are off to a rocky start this week as the Iran war threatens to heat up again.

Peace negotiations don’t seem to be going anywhere, and President Trump threatened renewed strikes on the country over the weekend. The price per barrel of Brent Crude Oil again moved above $110, prompting fears of inflation and a spike in the 10-year Treasury rate to 4.6%, the highest level in a year.

It’s a minor development and certainly not yet significant enough to warrant serious concern, but the first small cracks in the financial market’s liquidity profile have begun to show.

The market’s hyper-abundant liquidity we’ve discussed in recent weeks and months is still, in my estimation, strong enough to keep the major averages buoyant. But the “all-clear” nature of the heretofore strong market environment has given way to a few signs of potential trouble on the distant horizon, which bears watching.

The situation in the Middle East seems to be in a relatively stable period, though a steady stream of headlines about limited transit through the Strait of Hormuz serves as a constant reminder that things can change at any moment.

Spillover effects from the Strait closure continue to put upward pressure on the price of oil and bond yields and are exacerbating affordability concerns as we get closer to the busy summer season. This has driven a wave of underperformance in many consumer and retail stocks (for example, Shopify (SHOP) looks just awful).

Just the other day it seems, software ruled the world and the stock market. Now semiconductor chips are the top dog of the stock market, AI, and geopolitics. Chips are essential to the AI build-out, and this has created supply shortages, pushing up prices and igniting an investment frenzy.

Are stocks way overvalued? Not by recent standards.

On a trailing price-to-earnings basis, yes, the S&P 500 is fairly overcooked at the moment, trading at just under 29x earnings – close to a five-year high. But the index has a forward P/E ratio of “only” 21 – below the 22-23 ratio it traded at for much of 2024 and 2025.

Cannabis company earnings season is back. In the past two weeks, virtually all of our model portfolio companies have reported first-quarter results.

To save you the time of listening to lengthy earnings calls and plowing through press releases and filings, I recently did this for you to distill out the major trends that could benefit us as cannabis investors. Below are the top 10 sector trends in the space and what they mean for you, the cannabis investor.

The market’s record run is starting to show signs of fatigue. After powering higher since the March 30 lows, momentum has stalled and breadth has narrowed as a combination of rising yields, higher energy prices and renewed geopolitical uncertainty begins to weigh on sentiment.

The 10‑year Treasury yield has climbed from roughly 4.23% in mid‑April to 4.48% as of mid-morning today (matching the March high, and highest level since last July), meaning that financing costs are going up just as inflation concerns resurface. April’s CPI and PPI inflation reports both came in hotter than expected.

Astronics (ATRO) Delivers

WHAT TO DO NOW: Cava (CAVA) was in a very solid uptrend and hitting new 52-week highs a few weeks ago, but it’s been a steady decline since, and last week’s horrid earnings reactions from some peers look like they’ve changed perception—we’ll cut our loss on our half-sized stake here. On the buy side, we’ll start a half-sized stake (5% of the portfolio) in Axsome Therapeutics (AXSM), getting back into a biotech name that has years of big growth ahead of it. Our cash position will still be around 45%.

National Energy Services (NESR) and Perpetua Mining (PPTA) Deliver

CoreWeave (CRWV) and BridgeBio (BBIO) Report

FTAI Infrastructure (FIP) reported a strong Q1 that underscored both earnings momentum and a clear capital allocation roadmap following the previously announced sale of Long Ridge.

Earnings Updates: ELA, ALNT, XMTR

Earnings updates for TFPM & PRMB. Rating Change for FTI

New Ratings for DigitalOcean (DOCN), Advanced Energy Industries (AEIS) and FTAI Aviation (FTAI)

IDEAYA (IDYA) Earnings Keep Daro on Track

Applying principles from Benjamin Graham, Warren Buffett and other top value investors to bring you the bast value candidates.

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Cabot Top Ten Trader is meant to be something where we do the first four or five steps of the process for you and then let you take it from there.

I explore how to build a reasonably diversified portfolio based on a value investment approach.

Here’s a step-by-step guide to investing with the Cabot Benjamin Graham Value Investor.

I want to point out a problem that I foresee, potentially on the scale of the technology bubble in 2001 and the housing bubble in 2007. I think we’re going to have an “inverse ETF bubble.”

The fundamentals of value investment have been time tested. Followers of the value philosophy such as Warren Buffett, Seth Klarman and Howard Marks have amassed billions of dollars in their lifetimes. In a nutshell, here are the basic tenets of value investing.

One of the things many investors like best about dividend income is that it can qualify for the lower Federal capital gains tax rate. But not all dividends and distributions qualify.

We recently added a new real estate investment trust (REIT) to the High Yield Tier. REITs can be a great source of high income, but they have some unique features that investors should be aware of.

For growth stocks, buying low usually doesn’t mean you’re getting a bargain. It usually means you’re buying a laggard! That’s right—believe it or not, in the market, strength tends to lead to strength, while weakness tends to lead to weakness.

So how can you pick stocks that have a good chance to become winners? Interestingly, the best way is by looking backwards!

Here’s how Cabot Trend Lines, Cabot Tides and the 7.5% Rule can keep you on the right side of every market.