Issues
Let’s start with some remarkable statistics.
Nvidia’s (NVDA) fourth-quarter revenue reported yesterday was $68 billion, up 73% from the same period last year. It now makes more revenue in a single quarter than most chip competitors generate in an entire year. Nvidia’s profit for the last 12 months was $120 billion. Just three years ago, Nvidia’s profit was $4.4 billion.
It is estimated that more than one-third of the value of the stock market is represented by companies based in the San Francisco Bay/Silicon Valley area.
Nvidia’s (NVDA) fourth-quarter revenue reported yesterday was $68 billion, up 73% from the same period last year. It now makes more revenue in a single quarter than most chip competitors generate in an entire year. Nvidia’s profit for the last 12 months was $120 billion. Just three years ago, Nvidia’s profit was $4.4 billion.
It is estimated that more than one-third of the value of the stock market is represented by companies based in the San Francisco Bay/Silicon Valley area.
We continue to get solid signals from the White House that cannabis rescheduling is on track. That’ll be a significant catalyst for cannabis stocks. The only question is the timing. That remains uncertain and probably unknowable. Cannabis stocks remain a buy on weakness ahead of this catalyst.
The background here is that last December, President Donald Trump signed an executive order directing the Justice Department to move cannabis to Schedule III from Schedule I under the Controlled Substances Act.
The background here is that last December, President Donald Trump signed an executive order directing the Justice Department to move cannabis to Schedule III from Schedule I under the Controlled Substances Act.
The bull market has broadened out beyond technology in a big way. While the S&P 500 is about even for the year so far, most market sectors are beating the index, and by a lot. In fact, six of the eleven sectors have a better than 8% YTD return, not even two months into the year.
The new market dynamic is having a profound impact on the portfolio. Several stocks that had been dead weight in the portfolio have soared in recent months to 52-week highs. The new market has turned previously underperforming stocks into strong income generators.
It has been a strong run for several portfolio stocks. But a largely successful earnings season is almost over. That means there will be no obvious catalyst to continue driving stocks higher, at least for now. The situation makes it a better time to capitalize on recent price surges instead of adding more positions and hoping for more.
Under the current circumstances, the biggest market opportunity right now is income. In this issue, I highlight three more high-priced covered calls on stocks that have had strong rallies.
The new market dynamic is having a profound impact on the portfolio. Several stocks that had been dead weight in the portfolio have soared in recent months to 52-week highs. The new market has turned previously underperforming stocks into strong income generators.
It has been a strong run for several portfolio stocks. But a largely successful earnings season is almost over. That means there will be no obvious catalyst to continue driving stocks higher, at least for now. The situation makes it a better time to capitalize on recent price surges instead of adding more positions and hoping for more.
Under the current circumstances, the biggest market opportunity right now is income. In this issue, I highlight three more high-priced covered calls on stocks that have had strong rallies.
In researching potential candidates for this month’s edition of the newsletter, I narrowed down my final list of top choices to the usual 10 stocks. What caught my attention when reviewing the list, however, was how many of them were in the healthcare sector—in particular, the therapeutic arena.
I was gratified by this discovery since I feel that a.) medical stocks are underrepresented in the portfolio, and b.) the sector is at once defensive in nature (always a good thing in my estimation) yet also poised to benefit from ongoing sector rotation.
I was gratified by this discovery since I feel that a.) medical stocks are underrepresented in the portfolio, and b.) the sector is at once defensive in nature (always a good thing in my estimation) yet also poised to benefit from ongoing sector rotation.
Before we dive into this week’s covered call idea, I need to address two items.
First, we are going to sell our RKT stock as the February call that we sold expired worthless, leaving us with our stock position.
First, we are going to sell our RKT stock as the February call that we sold expired worthless, leaving us with our stock position.
It remains about as mixed an environment as we can remember, which does mean the risk of some sort of convulsion (a correction, a re-rotation into laggards, etc.) is elevated. That said, as opposed to the on-again, off-again action from certain areas in January, we have seen the winners persist of late, so that’s where we’re focusing—while also holding some cash and raising stops along the way given what’s going on. For the moment, we’ll stick with a level 6 on the Market Monitor, but again, we’re OK taking swings at strong stocks.
This week’s list is very heavy on the cyclical side of things, with many names perking up and out of long ranges. Our Top Pick has a solid growth profile and has emerged on the upside after a six-month choppy phase.
This week’s list is very heavy on the cyclical side of things, with many names perking up and out of long ranges. Our Top Pick has a solid growth profile and has emerged on the upside after a six-month choppy phase.
Tariffs rejected. Big shortfall in GDP growth. Possible emerging conflict with Iran. There were enough headlines last week – and really, Friday alone! – to make your head spin. And yet … stocks were mostly calm, with no sudden movements in either direction. As always, the stock charts matter more than the headlines, at least when it comes to investing.
So, let’s stay the course, which this week means adding a well-known stock that continues to thrive in the midst of the ongoing travel resurgence. It was Mike Cintolo’s Top Pick in his Cabot Top Ten Trader momentum-trading advisory last week.
Details inside.
So, let’s stay the course, which this week means adding a well-known stock that continues to thrive in the midst of the ongoing travel resurgence. It was Mike Cintolo’s Top Pick in his Cabot Top Ten Trader momentum-trading advisory last week.
Details inside.
Despite early-week angst over continued AI disruption fears, markets steadied into the weekend as tech found fresh legs and headline risk eased after a key Supreme Court ruling altered the U.S. tariff landscape. The rebound in mega-cap names helped sentiment improve off midweek lows, though small caps lagged. For the week, the S&P 500 rallied 1.1%, the Dow advanced 0.3%, and the Nasdaq led with a gain of 1.5%, while the Russell 2000 was essentially flat.
Despite early-week angst over continued AI disruption fears, markets steadied into the weekend as tech found fresh legs and headline risk eased after a key Supreme Court ruling altered the U.S. tariff landscape. The rebound in mega-cap names helped sentiment improve off midweek lows, though small caps lagged. For the week, the S&P 500 rallied 1.1%, the Dow advanced 0.3%, and the Nasdaq led with a gain of 1.5%, while the Russell 2000 was essentially flat.
It’s not 1999 out there, but the Model Portfolio has been doing OK despite the choppy, challenging, crosscurrent-filled market of late, partially thanks to an interesting dynamic—while the top-down evidence really hasn’t changed much in recent weeks (if anything, it’s probably worsened a bit, especially when it comes to growth funds and our Aggression Index), we are definitely seeing more individual stocks perk up, both within AI and in cyclical areas.
We do have two or three moves we’re close to making—while we’re not eager to be heavily invested given the evidence, we have a lot of cash and are likely to put some to work soon. But, tonight, we’ll stand pat and see if opportunities arise in the next few days—while also seeing if the Nasdaq’s test of its recent low holds. Bottom line, stand pat here, but we’ll be in touch with any changes in the days ahead.
We do have two or three moves we’re close to making—while we’re not eager to be heavily invested given the evidence, we have a lot of cash and are likely to put some to work soon. But, tonight, we’ll stand pat and see if opportunities arise in the next few days—while also seeing if the Nasdaq’s test of its recent low holds. Bottom line, stand pat here, but we’ll be in touch with any changes in the days ahead.
With the market’s rotation into energy, industrial and other “unloved” stocks continuing well into 2026, we’re leaning deeper into the trends.
This month’s issue focuses on yet another specialty industrial player, an under-the-radar biofuel story, and an energy name with exposure to strong, international markets.
As always, the goal is to stay aligned with what’s working.
Enjoy!
This month’s issue focuses on yet another specialty industrial player, an under-the-radar biofuel story, and an energy name with exposure to strong, international markets.
As always, the goal is to stay aligned with what’s working.
Enjoy!
Despite a small bounce Friday on softer inflation data that eased some knee-jerk selling, markets finished on their back foot as renewed investor anxiety around artificial-intelligence disruption rippled through tech and cyclical stocks. Growth names lagged, pressure widened beyond software to financials and real estate, and defensive sectors outperformed amid falling Treasury yields that weren’t enough to stem the slide. By week’s end, the S&P 500 had fallen 1.4%, the Dow Jones had lost 1.2%, and the Nasdaq Composite had tumbled 2.1%.
Updates
It has been called by many pundits the biggest speculative event since the late ‘90s Internet stock mania. I’m referring, of course, to the widely referenced “AI bubble” that has been in play for the better part of the last three years.
But is it truly a “bubble” in the historical sense of the term? The answer to this question is salient for us not only as investors, generally speaking, but also as it concerns at least a couple of the stocks in our portfolio—namely Intel (INTC) and Centuri Holdings (CTRI).
But is it truly a “bubble” in the historical sense of the term? The answer to this question is salient for us not only as investors, generally speaking, but also as it concerns at least a couple of the stocks in our portfolio—namely Intel (INTC) and Centuri Holdings (CTRI).
WHAT TO DO NOW: It’s not 2008 out there, but the market environment remains very challenging, especially for growth, where most indexes, funds and stocks are struggling. That said, we have started to see some growth names emerge on the upside, and our watch list is growing—if we can see more than a day or two of strength, we’d like to put some money to work. But until then, we’re content to stay close to shore and patiently wait for growth stocks to get moving. In the Model Portfolio, we’re placing Axsome Therapeutics (AXSM) on Hold tonight; our cash position is still just above 50%.
It’s been an interesting week here in Rhode Island, where most people are finally dug out from the roughly three feet of snow that fell across the state Sunday night and into Monday.
Growing up in Vermont, major snowstorms were certainly disruptive. But more often than not, it was all about how we would get to the ski resort without going off the road.
Growing up in Vermont, major snowstorms were certainly disruptive. But more often than not, it was all about how we would get to the ski resort without going off the road.
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.
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.
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%.
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%.
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.
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.
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.
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.
Alerts
This carton maker handily beat earnings estimates for the previous quarter, and projections for next quarter are rising.
Graphic Packaging (GPK)
from Upside
The largest maker of folding cartons in North America, Graphic Packaging’s (GPK) growing client list includes Kraft Foods, Anheuser-Busch, and Coca-Cola. Increased productivity at the
company’s low-cost paper mills should boost...
Graphic Packaging (GPK)
from Upside
The largest maker of folding cartons in North America, Graphic Packaging’s (GPK) growing client list includes Kraft Foods, Anheuser-Busch, and Coca-Cola. Increased productivity at the
company’s low-cost paper mills should boost...
This energy company just announced a big acquisition, expected to be accretive in 2015.
Whiting Petroleum (WLL)
from BI Research
Whiting Petroleum (WLL) recently offered 0.177 shares of its stock for each share of Kodiak (KOG) in an all-stock, tax-free transaction valued at $6 billion including the assumption of Kodiak’s $2.2 billion of...
Whiting Petroleum (WLL)
from BI Research
Whiting Petroleum (WLL) recently offered 0.177 shares of its stock for each share of Kodiak (KOG) in an all-stock, tax-free transaction valued at $6 billion including the assumption of Kodiak’s $2.2 billion of...
This appliance maker is due to report earnings tomorrow. The forecast is for earnings of $0.75 per share on revenues of $407.98 million.
Middleby Corp. (MIDD)
from Cabot Stock of the Month
Middleby Corp. (MIDD) makes a multitude of ovens and cookers fueled by gas, electricity and wood, including pizza ovens, microwaves, conveyor...
Middleby Corp. (MIDD)
from Cabot Stock of the Month
Middleby Corp. (MIDD) makes a multitude of ovens and cookers fueled by gas, electricity and wood, including pizza ovens, microwaves, conveyor...
Although the shares of this Internet TV company have had a wild ride, our contributor thinks there’s plenty more room for growth.
Netflix (NFLX)
from US Investment Report
With meaningless price ratios but steamroller revenue growth, Los Gatos, CA-based Netflix (NFLX) is an Internet television network company with 50 million worldwide subscribers to...
Netflix (NFLX)
from US Investment Report
With meaningless price ratios but steamroller revenue growth, Los Gatos, CA-based Netflix (NFLX) is an Internet television network company with 50 million worldwide subscribers to...
This stock no longer looks like a double, so our contributor is exiting the shares.
Sell: PDF Solutions (PDFS)
from 100% Letter
Updated from Investment Digest 752, December 18, 2013
Today I want to exit a position that is a perfectly good investment, but which I no longer believe will double over the next...
Sell: PDF Solutions (PDFS)
from 100% Letter
Updated from Investment Digest 752, December 18, 2013
Today I want to exit a position that is a perfectly good investment, but which I no longer believe will double over the next...
Healthy quarterly results are boosting the visibility of this cloud computing company.
Buy: Barracuda Networks (CUDA)
from New Technology Superstars
Barracuda Networks (CUDA) is an already-profitable cloud-based provider of network performance, security and storage solutions to corporate IT departments. The company has a special focus on the smaller end of the business market...
Buy: Barracuda Networks (CUDA)
from New Technology Superstars
Barracuda Networks (CUDA) is an already-profitable cloud-based provider of network performance, security and storage solutions to corporate IT departments. The company has a special focus on the smaller end of the business market...
Shares have become technically unattractive for this apparel maker, and it’s time to sell.
Sell: Michael Kors (KORS)
from Cabot Market Letter
Updated from Investment Digest 752, December 18, 2013
Tonight’s special hotline is in regards to Michael Kors, which we’ve owned for a couple of years but broke long-term support today in the...
Sell: Michael Kors (KORS)
from Cabot Market Letter
Updated from Investment Digest 752, December 18, 2013
Tonight’s special hotline is in regards to Michael Kors, which we’ve owned for a couple of years but broke long-term support today in the...
Sales were up 19% and earnings 10% for the most reason quarter, for this Mexican pawn shop operator.
First Cash Financial Services (FCFS)
from Periscope Report
First Cash Financial Services (FCFS) is the largest operator of pawn shops in Mexico, a country that has been in an economic recession for decades, which has...
First Cash Financial Services (FCFS)
from Periscope Report
First Cash Financial Services (FCFS) is the largest operator of pawn shops in Mexico, a country that has been in an economic recession for decades, which has...
This cloud-computing company just reported a 35% increase in quarterly revenues and beat earnings estimates by five cents.
LogMeIn (LOGM)
from The Oberweis Report
LogMeIn (LOGM) provides a portfolio of secure, easy-to-use cloud-based offerings aimed at addressing the evolving needs of businesses, their employees and their customers in today’s universally connected world.
LogMeIn offers...
LogMeIn (LOGM)
from The Oberweis Report
LogMeIn (LOGM) provides a portfolio of secure, easy-to-use cloud-based offerings aimed at addressing the evolving needs of businesses, their employees and their customers in today’s universally connected world.
LogMeIn offers...
For the recently reported third quarter, this company’s fortunes improved with revenue rising 13%, to $4.4 billion and income of $676 million, up from $640 million a year earlier. EPS was 69 cents a share, a bit more than analysts’ forecasts of 68 cents.
eBay Inc. (EBAY)
from Wall Street Stock Forecaster
eBay...
eBay Inc. (EBAY)
from Wall Street Stock Forecaster
eBay...
Increased volume and rates pushed this railroad company’s second quarter earnings 17% higher.
Union Pacific (UNP)
from Richard C. Young’s Intelligence Report
Shipping via highway has become more difficult thanks to increased congestion, higher costs for fuel, shortages of drivers, and increased regulation of motor carriers. According to Intermodal Association of North America...
Union Pacific (UNP)
from Richard C. Young’s Intelligence Report
Shipping via highway has become more difficult thanks to increased congestion, higher costs for fuel, shortages of drivers, and increased regulation of motor carriers. According to Intermodal Association of North America...
This hotel’s transition to a more upscale environment is paying off in rising sales and earnings. And we have an update on Ecolab, Inc., recommended in our October 2013 issue.
Marriott International Inc. (MAR)
from Blue Chip Growth
Marriott International Inc. (MAR) is a familiar name to travelers. The company’s properties cover the...
Marriott International Inc. (MAR)
from Blue Chip Growth
Marriott International Inc. (MAR) is a familiar name to travelers. The company’s properties cover the...
Portfolios
Strategy
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.