This month’s issue includes a new addition to the High Yield Tier, updates on all our holdings, and some advice on handling big winners.

Today’s recommendation is a steel stock! It’s a sector that nobody is excited about, but the value proposition is great, and the stock has just blasted off following an excellent earnings report.

Current Market Outlook


Today saw another rotation day, with strong selling showing up among leading growth stocks while the broad market was relatively flat and some areas (financials, energy) perking up. As usual, we’ll see if today is the start of something more pronounced; the Nasdaq bumped up against its early June highs this morning, so if the selling continues, we could be looking at an intermediate-term top. However, it’s too early to conclude that—most major indexes remain in clear uptrends, as do the vast majority of leading stocks despite a few bouts of selling in recent weeks. Thus, we remain mostly bullish, holding our winners and looking to hop on new leadership that’s emerging.

This week’s list has another batch of strong growth-oriented stocks, and encouragingly, many are new names from sectors that have recently come to life. Our Top Pick is Celgene (CELG), which looks like a big-cap leader of the new uptrend in biotech stocks.

Stock Name	Price	Buy Range	Loss Limit
Autohome (ATHM)	98.65	43.5-45.5	40-41
Celgene (CELG)	0.00	130-134	122-124
Clovis Oncology (CLVS)	0.00	88-93	82-83
Paycom Software (PAYC)	0.00	69-72	63-66
Planet Fitness (PLNT)	0.00	22.7-23.7	21.2-21.8
Red Hat (RHT)	0.00	96-100	89-91
Tesla, Inc. (TSLA)	818.87	355-375	326-330
Trivago (TRVG)	0.00	19.5-21	17-18
U.S. Concrete (USCR)	0.00	74-78	67-69
XPO Logistics (XPO)	0.00	59-62	53.5-55.5

In tonight’s issue, we give you our latest thoughts on each of our stocks and take a deep dive into the issue of handling big winners—a skill that few practice, but done right, it will make a huge difference in your portfolio.

While the Dow Jones Industrial Average has gained some 700 points since our last issue, our contributors and advisors, in general, remain bullish, as you can see from our Advisor Sentiment Barometer.

The market’s main trend remains up, though there is certainly some rotation going on, with technology stocks pulling back and financials and medical stocks surging. My advice is to react slowly to these shifts, taking things on a stock by stock basis according to what the stocks are actually doing—and not assuming anything.

Current Market Outlook


The issue following the huge selloff on June 9 was titled, “What Happens From Here is What Counts,” and so far, we’ve been encouraged by what we’ve seen—the Nasdaq found intraday support three times in the 6,100 to 6,150 area last week, and few growth stocks decisively broke key support levels. And today, we saw the Nasdaq and many leading stocks pop nicely. In the short-term, we can’t say the market is completely out of the woods, so picking your spots makes sense. But our main focus is on the intermediate-term, and the trends there remain up for most major indexes and the vast majority of leading stocks. All in all, we remain mostly bullish, though don’t be surprised to see some more “tests” for the market in the near-term.

This week’s list is also encouraging, as our screens aren’t finding it difficult to find great charts and enticing stories. Our Top Pick is LendingTree (TREE), which just broke out in late-April and has held up well during the recent market wobbles.

Stock Name	Price	Buy Range	Loss Limit
Bluebird Bio (BLUE)	0.00	106-112	96-100
Cooper Companies (COO)	0.00	234-242	220-223
HealthEquity, Inc. (HQY)	70.70	50-52	45-46
IAC/InterActiveCorp (IAC)	0.00	99-103	91-94
Impinj (PI)	0.00	52-56	46-48
Lending Tree (TREE)	411.51	166-174	152-156
PayPal (PYPL)	147.00	51-53	47-48
Summit Materials (SUM)	0.00	27-28.5	25-26
Supernus Pharmaceuticals (SUPN)	52.50	37-39	33-34.5
Zillow (Z)	76.64	44.5-47	40.5-42.5

In today’s issue, I initiate coverage of a new stock in an industry where demand far exceeds supply: the recreation vehicle sector. The company is adding two new manufacturing facilities to meet record new orders which have nearly doubled from a year ago.

It’s the same basic market story as it has been for the last four months. Technology is floundering while other sectors are killing it. But a couple of events occurring this week could potentially change the dynamic.

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.

Here are highlights of this week’s earnings as reported by companies within the Cabot Undervalued Stocks Advisor portfolios. In addition, Boise Cascade (BCC) moves from Buy to Hold, and Federated Investors (FII) declared a special dividend.

Shares of Mindbody (MB) are racing higher today after the company delivered revenue growth of 35.4%, and Shares of LeMaitre (LMAT) are also rallying over 10% after the company reported Q3 revenue growth of 22%

Abiomed (ABMD) and GrubHub (GRUB) snapped their uptrends and are now rated Sell.

Several of our portfolios stocks are rising this week, so I want to reiterate some trading suggestions in case the stocks reach price targets before the next weekly update of Cabot Undervalued Stocks Advisor.

E*Trade Financial (ETFC) reported blowout earnings yesterday afternoon.

Sell Reynolds American (RAI). The company received a $56.50 per share takeover offer from British American Tobacco this morning, a 20% premium to RAI’s closing price yesterday.

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.