The world is about to change in a major way. So much so that you may look back ten years or even five years from now and realize how profoundly different things are since 2019.

The rapidly advancing rollout of 5G will be a technological tipping point that crosses a threshold into the digital age where everything is connected to the internet. Today, only a few things are connected. In a few years, the whole world will be computerized.



5G is such a game changer that many companies and governments can’t afford to be left behind. The current Administration has labeled 5G a national security priority. It seems 5G is the news arms race.



Those are the stakes. And it’s coming fast. In this issue, I identify a company that is at the epicenter of the 5G rollout. It holds vital technology that is light years above the competition and is necessary to connect any device to 5G. Earnings and revenues should skyrocket as the rollout proceeds in haste.

Current Market Outlook


The market finally hesitated a bit last week, and going through our weekend research, we did spot more leading names that had pulled back during the past five to 10 trading days. But as has been the case since the early-October lows, that weakness was tame (most dips were calm and controlled), with today’s burst of buying pushing many back up. (Encouragingly, even the lagging small-cap indexes are now trying to break out of multi-month ranges.) There’s still some shorter-term yellow flags, so we wouldn’t throw caution to the wind here (don’t forget to take some partial profits!), especially if you’ve put a bunch of money to work in recent weeks. But the fact that most stocks and indexes haven’t been able to retreat much despite those yellow flags is yet another stone in the bullish wall. We remain bullish.

This week’s list includes a broad mix of names, from old winners coming back to life to new names perking up to recently strong performers that have eased to good entry points. Our Top Pick is Axon Enterprise (AAXN), which has come back to life after a year-long rest. Start small and go from there.

Stock Name	Price	Buy Range	Loss Limit
Alnylam Pharmaceuticals (ALNY)	143.58	107-113	97-99.5
AAXN (AAXN)	87.11	72-75	66-64
Kansas City Southern (KSU)	176.54	149-153	138-141
Leggett & Platt, Incorporated (LEG)	49.79	51.5-53	47-48
Lithia Motors Inc. (LAD)	146.30	160-165	145-148
Luckin Coffee (LK)	0.00	28-30	24.5-25.5
Novocure (NVCR)	0.00	88-91	80-82
Palo Alto Networks (PANW)	236.92	241-246	225-228
Synnex Corp. (SNX)	129.70	119-123	110-112
Target (TGT)	124.77	122-125	112-114

The market and leading stocks have hit a few potholes during the past couple of days, and given the recent run and some short-term measures, more selling wouldn’t be shocking. But bigger picture, the outlook remains sunny: The trends are up for the major indexes and many fresh leading stocks have emerged. We’ve done a bunch of buying during the past month, though we’re still holding 24% on the sideline as we see how these new buys act.

In tonight’s issue, we talk about our market view, give you our latest thoughts on all our recommendations and write about the two themes that we think are leading the market higher, at least for now. Throw in some new ideas and there’s something for everyone in tonight’s Growth Investor.

In this Month’s Issue of Cabot Early Opportunities I reveal a few tips to help you buy into IPOs at reasonable prices and we look at some compelling data that suggests the 150 to 180 day period after IPO just might be one of the ideal times to buy.

We also go inside five companies that look great right now, including a few software stocks, a consumer goods company and a MedTech stock that’s flying under the radar now, but not for long!

So far, November’s markets have been a nice respite from the volatility of October, and the Dow Jones Industrial Average actually gained about 900 points. Investors—for the most part—seem to be ignoring China tariffs, impeachment hearings, and Brexit. And why not? After all, the economy remains strong and sentiment—as you’ll see in our Advisor Sentiment Barometer, as well as in our Market Views—remains very bullish.

The major indexes continue to hit new highs, all Cabot’s market timing indicators remain positive, and our portfolio is solid, with no particular worry spots today. Third-quarter earnings have been good to us.

Of course, that will change, and when it does, we will adjust our stance, but for now, we’re making hay while the sun shines—only downgrading one stock to hold today because it’s gotten too expensive.

As for today’s new recommendation, it’s an undervalued stock in a traditional industry, and paying a solid dividend to boot.

Details in the issue.

Current Market Outlook


When we did our research over the weekend, we really liked what we saw: Not only are the intermediate- and longer-term trends up for all the major indexes, the big-cap measures are in new high ground and, perhaps more importantly, we see a ton of recent breakouts acting well across a variety of industries. Combined with prior positive studies, we think the bull move has farther to run. That said, there are some minor worries to keep in mind—short-term sentiment measures are very complacent, and many leaders are also extended for the time being, meaning a rest/shakeout is a growing possibility. We think any pullback will offer up a bunch of solid entries, but in the meantime, it’s best to be a bit choosy on the buy side.

This week’s list has a nice collection of names that have either recently shown rare strength or have run for a few weeks and could make for solid pullback buys. Our Top Pick is Jabil (JBL), which is beginning to retreat after a major long-term breakout and advance.

Stock Name	Price	Buy Range	Loss Limit
Advanced Micro Devices (AMD)	82.24	37-39	33.5-35
Arconic (ARNC)	17.00	29.5-30.5	27-28
Boot Barn (BOOT)	43.24	41-43	37-38
Fortinet Inc. (FTNT)	137.53	98-102	89-91
Jabil Inc. (JBL)	41.50	37-38.5	34.5-35
KBR Inc. (KBR)	30.53	29-30	26.5-27
Neurocrine Biosciences (NBIX)	123.40	110-113	100-102
Oshkosh (OSK)	95.04	88-90.5	80.5-81.5
Peloton (PTON)	53.03	27.5-30	23.5-25
Sea Limited (SE)	132.86	35-37	31.5-32.5

The nature of this newsletter is that 90% of our focus is centered on finding early-stage opportunities and vetting them. But to have investing success – in any type of stocks – over the long haul we must follow some basic portfolio management strategies.

This month I’m laying out five simple tips that you should follow when investing in the stock I feature in these pages. There is nothing that’s super innovative or worth discussing at a cocktail party here. No hedging or options trading techniques. Just solid, basic, common sense tips that will help you reduce risk, increase your probability of success, and sleep better at night.

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.

==

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.

I’m excited to share a couple of enhancements to Cabot Early Opportunities —improvements designed to sharpen our focus and better help you stay on top of the stocks we own.

This bank is involved in several M&A transactions, and its stock appears to be heavily discounted.

Declining markets tend to bring on attacks by short-selling specialists, and today that’s what has happened to GDS Holdings (GDS)

Two of our stocks reported earnings last night.

Three analysts have raised their EPS forecast for this global telecom in the past 30 days.

Growth stocks imploded again today as buyers were nowhere to be found. Our Cabot Tides are now on the fence, as the recent selling has driven small caps, mid caps and the Nasdaq to, or slightly below, their 50-day lines. Following up our sale from this morning, we are also selling one other position and moving a few to Hold.

One of our positions fell nearly 7% after reporting earnings Friday, and the stock started today with further losses. With the lack of support, it means more downside is the most likely near-term scenario here and it’s time to sell.

The market fell sharply on Friday on no particular news, with growth stocks again taking the hardest hits. Our trend-following market timing indicators are still positive, and that is a good reason not to get overly pessimistic. We are selling one of our positions though, which dropped after earnings on Friday.

A name change and a stock upgrade to ‘Overweight’ at Barclays, and a $0.28 earnings beat are all giving this turnaround stock a boost.

This poultry producer just posted its second quarter results. Its net income was $1.58 per share and revenue came in at $815.9 million.

Shares of our little hearing aid and continuous glucose monitor stock are rocketing higher today after the company turned in a far better quarter than expected.

Eight of our stocks reported earnings recently.

This healthcare tech company’s shares were recently initiated at Berenberg to ‘Buy’ and upgraded at Craig-Hallum to ‘Buy’.

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.