The flip of the calendar has brought some wild action, and overall, growth stocks and funds remain stuck in the mud, unable to make much progress (even including the Nasdaq itself). We remain cautious right now and, in fact, are placing two of our stocks on Hold today as they’ve been weighed down by the environment. That said, while we’re holding lots of cash, we remain flexible, as tons of names are in consolidations and are presenting at key conferences (which have become like earnings reports at times) next week—if we see many breakouts, we’ll pounce, but for now, we advise a bit more patience.

Welcome to our 2026 TOP PICKS issue! This is one of my favorite issues each year as our Cabot analysts take a deep look at their portfolios and share their top stock ideas for 2026.

You’ll find a well-diversified selection of stocks—growth, value, dividend payers, metals, technology, healthcare, retail, manufacturing, and much more!

I hope you’ll find one or more to your liking!

Today we’re diving into a fast‑growing oilfield‑services company that sits at the center of one of the most powerful energy build‑outs happening anywhere in the world.

This company is a pure‑play operator in the Middle East and North Africa (MENA) – home to the steadiest upstream spending on the planet – and it just secured a multi‑billion‑dollar contract that makes it the largest unconventional completions provider in the region.

With national oil companies racing to expand gas production to fuel AI, data centers, and industrial growth, this stock is positioned to benefit from multi‑year demand in the MENA region.

All the details are inside the January issue of Cabot Small‑Cap Confidential.

The bull market enters its fourth year, with no signs of slowing. That bodes well for all stocks; growth is likely to continue to outperform, though the gap between growth and value titles appears to be narrowing. To kick off 2026 in style, today we fuse the two by investing in a traditional growth stock (and a household name) that has been so beaten down in recent months that it is now deeply undervalued, at least compared to its historical norm. We also “Retire” a stock from our Growth & Income Portfolio after it eclipsed our price target in just four months.

Details inside.

Despite a holiday-shortened week and light volume, U.S. stocks pulled back from recent highs last week as year-end positioning and lack of fresh catalysts weighed on sentiment. The S&P 500 and Nasdaq slipped after failing to sustain record levels, while tech and small caps bore the brunt of profit-taking amid mixed breadth. For the week, the S&P 500 fell about 1%, the Dow lost roughly 0.7%, the Nasdaq slid nearly 1.5%, and the Russell 2000 dropped by around 2.1%.

The calendar has flipped, and so far the early-January effect has been in effect, with some volatile ups and downs, as well as some sharp rotation into and out of certain areas. Still, we always go with the evidence, and stepping back, not much has changed: For the overall market, the evidence is tilted higher, though growth stocks look worse, still in intermediate-term sideways-to-down phases for most names, but it depends where you look. Overall, we’ll leave our Market Monitor at a level 7 from here, but we’re flexible and will be keying off any breakouts or breakdowns among individual stocks.

Our first list of the New Year is a mix between strong growth titles, aerospace/defense-related names and cyclical stocks. Our Top Pick is a blue-chip growth name that has a history of stair-stepping higher over time—and whose stock just broke out from a three-month range last week.

The bull market marches into a fourth year. On the heels of three straight years of double-digit gains, can the S&P 500 make it four in a row? Wall Street thinks it can come close, with the average predicted return among 21 analysts surveyed by Bloomberg coming it at 9% in 2026. And not one of those analysts thinks stocks will be down this year.

So to kick off the new year in style,let’s stay in growth mode by adding a new pick from Mike Cintolo in his Cabot Growth Investor newsletter.

Details inside.

Despite a holiday-shortened week and light volume, U.S. stocks pulled back from recent highs last week as year-end positioning and lack of fresh catalysts weighed on sentiment. The S&P 500 and Nasdaq slipped after failing to sustain record levels, while tech and small caps bore the brunt of profit-taking amid mixed breadth. For the week, the S&P 500 fell about 1%, the Dow lost roughly 0.7%, the Nasdaq slid near 1.5%, and the Russell 2000 dropped by around 2.1%.

Despite a holiday-shortened week and light volume, U.S. stocks pulled back from recent highs last week as year-end positioning and lack of fresh catalysts weighed on sentiment. The S&P 500 and Nasdaq slipped after failing to sustain record levels, while tech and small caps bore the brunt of profit-taking amid mixed breadth. For the week, the S&P 500 fell about 1%, the Dow lost roughly 0.7%, the Nasdaq slid near 1.5%, and the Russell 2000 dropped by around 2.1%.

Cannabis stocks are down sharply ever since the group got its best news in decades – President Donald Trump’s December 18 executive order to reschedule the plant.

Using the AdvisorShares Pure US Cannabis exchange-traded fund (MSOS) as a proxy, the group is off 32%.

As markets closed the year largely treading water, one might ask why prices of stocks, gold, and just about everything are leaving 2025 higher than they started 2025.

One simple answer is that there is a lot of money sloshing around the world looking for opportunities. Governments and central banks injected trillions of dollars in stimulus during and after the pandemic. Much of that continues to drive momentum trades. Americans alone hold over $7 trillion in money market mutual funds.

If there was a dominant investment theme for the Cabot Turnaround Letter in 2025, it was the focus on defensiveness, in which we showed a penchant for companies in the consumer staples arena. This, I believe, was—and still is, from a long-term perspective—justified in view of the many headwinds faced by the U.S. economy over the last 12 months.

Now that we’re about to enter a new year, however, the economic winds have started to shift in a more favorable direction. With the Fed’s embrace of a looser monetary policy, sectors that were out of favor or not very strong in 2025 are poised to become better performers in 2026. I’m referring particularly to some of the more economically sensitive industries within the broader consumer discretionary sector.

The market has finally started to show some cracks the last couple days, but the bull market remains very much intact. Last week’s 25-basis-point Fed rate cut was expected, but should nonetheless act as a tailwind – or at least a floor raiser – in the coming months, especially as Jerome Powell and company signaled that they plan to cut twice more before year’s end. And yet, there’s no getting around the fact that stocks, as a whole, are overvalued, with the S&P 500 trading at 23.8x forward earnings – its highest point since late February.

The market just keeps on going. Both the S&P and the Nasdaq made yet another new high on Monday. And that makes me nervous. I guess I’m just not built to receive continuing good news without getting suspicious.

So much for the cranky post-summer investor and the historically rough September. The S&P is up 3.4% for the month so far. It’s also up 13.8% YTD and 38% from the April low. Why not? We’re in a Fed rate-cutting cycle. The AI catalyst is going strong. And the economy is nowhere near recession.

Thursday’s massive rally in Intel (INTC), a Cabot Turnaround Letter portfolio holding, did more than just underline the just-announced $5 billion stake that Nvidia (NVDA) initiated in the company. It also highlighted the degree to which growing federal involvement in tech- and defense-related companies—particularly those used to enable AI and other “mission critical” applications—has been driving the seemingly endless rallies of many leading tech sector stocks.

Investors got the 25bps cut we expected yesterday, and as a little bonus, the Fed’s dot plot indicates potential for two more rate cuts this year. That’s what the CME’s Fed Watch tool is projecting as of mid-morning today as well.

That said, the bond market might not fully believe it. The 10-year Treasury bond yield is trading higher today.

Alibaba (BABA) shares surged 15.5% this week as the company announced that it had completed a roughly $3.2 billion capital raise. Better yet, Baidu (BIDU) shares jumped a stunning 29% in the stock’s first week as an Explorer recommendation.

But could quantum computing be a bigger investment opportunity than artificial intelligence (AI) as the U.S.-China rivalry escalates?

Value stocks have outperformed the market of late, with the Vanguard Value Index Fund (VTV) up 2.9% in the last month vs. a 2.3% return in the S&P 500. Granted, that’s minuscule outperformance, but it’s a sign that investors are starting to look for value with the major indexes at or near all-time highs for the last couple months.

The market is at another new high and looking good. Anticipated Fed rate cuts and a revitalized artificial intelligence trade are driving stocks higher.

It’s Fed Day! And a rate cut is expected. That’s even better than Prince Spaghetti night to Wall Streeters. More than 90% of traders are expecting the first fed funds rate cut in 2025 to be 0.25%. Hopes for a 0.50% cut likely went out the window with the higher-than-expected August CPI number.

Stocks made another new high this week as investors expect a resumption of Fed rate cuts on Wednesday.

The Fed Chairman indicated that the fed funds rate will be cut at the September meeting during his Jackson Hole comments last month. Wall Street traders are pricing in a 90%-plus probability of a 0.25% cut on Wednesday. And consensus expectations are for two more such cuts before the end of this year.

The ultimate “fear gauge” isn’t the CBOE Volatility Index (VIX), as financial market pundits often insist. My contention is that it’s actually gold, which arguably is the most historically reliable barometer of how worried the average investor is over various economic, geopolitical and market-related developments.

WHAT TO DO NOW: The top-down, market-wide evidence remains in good shape, and encouragingly, growth stocks have revved up decently over the past week, though the action remains heavily concentrated in AI infrastructure-type names. There are still lots of crosscurrents and many names are hitting the occasional pothole, though, so picking your stocks and spots remains vital. In the Model Portfolio we’re making one new buy—a half-sized stake in Alnylam Pharmaceuticals (ALNY)—while placing MP Materials (MP) on Hold. We could have some other moves in the next few days (including averaging up on names in the portfolio), but tonight we’ll buy ALNY and go from there. Our cash position will be around 43%.

With jobs numbers (and revisions) looking pretty iffy and inflation numbers looking as expected (CPI, today), if not slightly better (PPI, yesterday), the chances of the Fed cutting rates next Wednesday are essentially a lock.

In fact, the only reason the probability of a 25bps cut is only 89% is because the chance of a 50bps cut is 11%!

The market likes this news very much. And so do small caps.

This is, almost certainly, our last update before the Fed starts slashing interest rates for the first time this year. According to the CME Group’s FedWatch Tool, there is now a 100% chance Jerome Powell and company will cut rates by some amount on September 17; 90% think it will be by 25 basis points, another 10% think it will be by 50 basis points, much like last September.

While there have been some crazy moves in the market this week, it’s somewhat encouraging that, as of 12:00 PM ET, the broad market isn’t off that much compared to Friday’s close.

It’s been encouraging to see the market stabilize over the last two days (though yesterday was a crazy session).

We are all trying to digest the substance of “Liberation Day” and better understand what lasting impact it will have on global trade, the market, stocks that we own and those we are considering buying.

We are all trying to digest the substance of “Liberation Day” and better understand what lasting impact it will have. Suffice to say, there are a lot of ways this could go. But one thing is for sure – we’re in uncharted territory.

Soleno Pharma (SLNO) Pops 40% on FDA Approval

Just a quick reminder that, as per last week’s Special Bulletin, the March Issue of Cabot Early Opportunities will be published next Wednesday, March 26. Among the reasons for pushing the Issue back a week is that it will allow time for new portfolio additions to reflect today’s Fed decision to hold rates steady and the updated Summary of Economic projections (SEP), which implies a total of two 25-basis-point cuts this year.

Insiders at two of our Cabot Cannabis Plus Insider Portfolio names just made large purchases of their company’s stocks. Besides cannabis, I have followed insider activity overall for a few decades. These are significant buy signals, in my experience.

This Market. March Issue Moved to the 26^th

WHAT TO DO NOW: The growth stock meltdown continues, with the major indexes and individual names under heavy pressure again today. Already with nearly 80% in cash, we’re not eager to sell wholesale in the Model Portfolio, but we also won’t just hold and hope. Today, we’re going to sell half our position in Flutter (FLUT), which has fallen sharply this week. We’ll hold the rest of our names as well as our 84% cash hoard.

Sell Reddit (RDDT) and Second Half of FTAI Aviation (FTAI)

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

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.