Today’s candidate provides digital health solutions to people with chronic health issues. Its biggest market is people with heart conditions, but it is branching out to the diabetes market as well. For a short window of time, I believe we can establish a position while shares are “on sale.”

The Cabot Emerging Markets Timer continues to offer a green light, so we’re forging ahead as our stocks enter the heart of earnings season for emerging ADRs. We also welcome back a mega-cap old friend into the portfolio.

This month’s Cabot Value Model contains a diversified list of buy recommendations, with a bias toward high quality companies in the Technology and Financial sectors. These and similar companies have propelled the Cabot Value Model to gain more than the Dow Jones Industrial Average, Standard & Poor’s 500 Index and Warren Buffett’s Berkshire Hathaway.

Today’s featured stocks include a new addition to the Growth Portfolio. You’ll also find comparisons between our featured stocks and their peers in the integrated oil, asset management and semiconductor industries.

Today’s selection is a little-known small-cap stock with a revolutionary process that may change one of the world’s most noxious industrial processes. Plus, I think the stock is at a good entry point here.

Current Market Outlook


The market produced some very constructive action last week, with the Nasdaq bursting to new highs and most other indexes testing their March peaks. And possibly the best action of all came from leading stocks! In a variety of sectors, we’ve seen many resilient names (including a ton of Top Ten stocks) rip higher, often on earnings. With that said, we can’t conclude that the market is completely out of the woods—until most major indexes clearly lift to new highs, there’s still a chance that the post-March 1 consolidation has further to run. Still, all of the major indexes are back above their 50-day lines, most stocks are acting well and the odds favor the market’s March/April consolidation giving way to further upside. We’ll move our Market Monitor to a level 8, and look for new highs on the indexes in the days ahead.

This week’s list has a ton of strong stocks with great growth stories, including a few that recently gapped up on earnings. It’s hard to pick just one, but we’ll go with PayPal (PYPL) as our Top Pick because the stock decisively lifted out of a long IPO base thanks to a big earnings gap.

Stock Name	Price	Buy Range	Loss Limit
Exact Sciences (EXAS)	116.91	29-31	25-26.5
Graco Inc (GGG)	0.00	104-108	97-99
GrubHub (GRUB)	140.03	41-44	38-39.5
Lending Tree (TREE)	411.51	138-144	126-129
MKS Instruments (MKSI)	109.43	75-78	70-71
National Beverage Corp. (FIZZ)	0.00	85-90	78-80
PayPal (PYPL)	147.00	46-48	43.5-44.5
Tencent Holdings Limited (TCEHY)	0.00	29.5-31	27-28
Wabash National (WNC)	0.00	22-23.5	20-21
Yandex (YNDX)	0.00	25.5-27	23-24

The market\'s rally in recent days has turned our Cabot Tides positive, joining our Cabot Trend Lines and Two-Second Indicator. Because of that, we did some buying in a Special Bulletin last evening, but added half-sized positions because both companies are set to report earnings next week.

In today’s issue, we add a large-cap industrial stock to the Dividend Growth Tier, review our sales from the past week, and explain how to write covered calls.

Hello from sunny Florida!

I am on vacation with my family this week, taking a much-needed break from the harsh, snowy Vermont winter (and narrowly making it down here ahead of the latest blizzard to dump another foot or two of snow on the Northeast). But with so much going on in the market – tariffs rejected! GDP growth slowing! AI panic! – I wanted to provide an update on everything that’s going on with our stocks.

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%.

Five Below (FIVE) has been unable to pull out of its tailspin following a good-but-not-great quarterly report last week, so we’re selling the stock today and booking our small profit.

Ulta Beauty (ULTA) has likely formed an intermediate-term top after sinking on earnings during the past three days.

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.