Welcome to the first Issue of Cabot Early Opportunities. This month’s Issue delves into a number of fast growing software names that look good on modest pullbacks, as well as one that’s brand new to the public market. I also cover some early-stage stocks posting big growth from beyond U.S. borders. We don’t venture too far down the market cap curve, or get into any pre-revenue names this month. But we will, once this modest growth to value rotation is behind us. Enjoy!

Current Market Outlook


Last week began with a reaction to an attack on Saudi Arabia’s oil infrastructure, moved on to a confusing Fed statement concerning future rate moves and ended with fears that U.S.-China trade talks were breaking down. But despite all of that and a solid rally the week before, the major indexes held firm, which is a constructive sign and keeps the intermediate-term trend pointed up. Individual stocks remain mixed, with lots of crosscurrents among different sectors and themes, though we are seeing an increasing number of solid charts and set-ups. Overall, the evidence tells us this is still a bull market, which isn’t to be forgotten—you should be keeping your optimist’s hat on. But with individual stocks still a bit topsy-turvy, you should pick your spots (and stocks) carefully. We’ll leave our Market Monitor at a level 6, though a bit more positive action could push that up.

This week’s list includes many fresher names that money is now flowing into. Our Top Pick is Pinduoduo (PDD), which, after a big earnings-induced breakout and run higher, has pulled back in an orderly fashion.

Stock Name	Price	Buy Range	Loss Limit
Apollo Global Management (APO)	39.69	39-40.5	35.5-36.5
Boot Barn (BOOT)	43.24	35-37	31.5-32.5
GDS Holdings Limited (GDS)	80.15	41-43	37-38.5
Generac Holdings (GNRC)	86.60	78-80	71-72
HUYA (HUYA)	21.51	26-27.5	23-24
J.B. Hunt (JBHT)	115.27	110-114	102-104
KB Home (KBH)	36.05	30-32	27-28
KLA Corp. (KLAC)	158.80	150-154	136-139
Pinduoduo (PDD)	87.53	32-33.5	27.5-28.5
TopBuild (BLD)	111.00	93-96	86-87.5

A Fed rate cut was offset by Mideast uncertainty but our portfolio soldiered on having another positive week. The Emerging Market Signal is just short of turning positive due to the lack of a clear uptrend but we have a new recommendation at the heart of “The Internet of Things”.

Last month’s Cabot Wealth Summit was a great success, with many of our subscribers coming together to share investment ideas and strategies. Overall, the mood was very positive with most attendees falling into the bullish category. That sentiment is supported by my surveys of our contributors, as you’ll see in our Market Views, as well as in our Advisor Sentiment Barometer.

The market looks great today. The correction is over and buyers are back in control, so I recommend heavy investment in stocks that meet your portfolio’s goals.
Last week I made a slew of ratings changes to our portfolio to get back in synch with the market, but today all looks well so there are no changes at all—though of course that will change!
As for this week’s recommendation, it’s a bit unusual, in that it’s a recent IPO that got very little notice (unlike giant Uber for example), but it has a good growth story, and could even thrive in the next recession.

Current Market Outlook


We’re still of the mind that going slow makes sense—following the vicious rotation of the past week or two, there’s still a chance of continued crosscurrents going forward, especially with the weekend news in Saudi Arabia and the usual batch of uncertainties that are out there (Fed this week, U.S.-China trade, etc.). But at the end of the day, most of the evidence out there is tilted to the bull case: The intermediate- and longer-term trends of the major indexes are up, the broad market is very strong (very few stocks hitting new lows every day) and, while leadership has definitely shifted, we’re seeing a good number of stocks and sectors that are under strong accumulation. We still favor starting with smaller-than-normal positions and holding some cash, but we also wouldn’t be in your storm cellar as the buyers are (mostly) in control.
This week’s list features stocks where the buying has been concentrated of late—and these aren’t beaten-down names, as many are at or near new-high ground. Our Top Pick is Floor & Décor (FND), a mid-sized building-related retailer that has tightened up nicely.

Stock Name	Price	Buy Range	Loss Limit
ACADIA Pharmaceuticals (ACAD)	47.84	42-44	34-35
Arconic (ARNC)	17.00	26.5-27.5	24.5-25
Elastic (ESTC)	86.17	90-93	82-84
Floor & Décor (FND)	68.03	48-50	44-45
Lam Research (LRCX)	268.47	227-232	207-210
Medpace (MEDP)	76.28	81-83.5	73-75
Micron Technology, Inc. (MU)	43.31	48-50	44-45
Shake Shack (SHAK)	92.08	95-98	85-87
Teladoc, Inc. (TDOC)	127.95	67-69	60-62
Teradyne (TER)	82.83	56-58	51-52

The market has been wild in recent days, giving investors very mixed messages—on one hand, many leading growth stocks have broken down, but on the other, the broad market is strengthening, with our Cabot Tides actually flashing a new green light. Given the crosscurrents, we’re taking things on a stock-by-stock basis, selling stocks that are cracking support and looking for new buys among fresh leadership.

The gathering at our Cabot Wealth Summit last month was lively, accompanied by markets exhibiting some pretty intense volatility. That was primarily due to the Chinese tariff issue, but with little net change. Our subscribers—as well as individual investors—continue to be bullish. The economy remains strong, but Fed watchers are calling for another 25 basis points rate cut at the September 17-18 meeting, due to the global outlook as a result of the U.S./China trade war.

And yet, the fundamentals look sound, and as you’ll see in our Market Views section, our contributors continue to be positive in their outlook.

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.

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.

The shares of this retailer were recently initiated at Wells Fargo with an ‘Outperform’ rating, and upgraded at Oppenheimer to ‘Outperform’, PiperJaffray to ‘Overweight’, and Goldman Sachs to ‘Buy’.

The shares of this energy company were recently upgraded by Bank of America to ‘Buy’.

The market was mixed today, as the Dow rose 94 points, but the Nasdaq dropped 54 points and many growth stocks were hit hard.

An important stock sector reclassification has begun that can affect your shares prices. And we’re selling one stock from the portfolio.

Sharing the top five holdings of this ETF.

This chip maker beat analysts’ estimates by $0.08 last quarter and 19 analysts have raised estimates for the company in the past 30 days.

Eight analysts have increased their EPS estimates for this real estate company in the past 30 days; the company beat Wall Street’s earnings estimates by $0.37 in its most recent quarter.

This Canadian cannabis company began trading publicly earlier this month, and Aurora Cannabis (ACB.TO), a $4.5 billion company owns a significant portion of its shares.

A performance review of the Buy Low Opportunities Portfolio; and a new stock joins the Buy Low Opportunities Portfolio as a Strong Buy.

An earnings miss has made this wireless supplier a bargain, and analysts are projecting 15% annual growth for the company for the next five years.

I’m recommending the sale of two stocks today because they’ve gone up at a rapid pace that’s unsustainable. There is absolutely no bad news that’s driving this decision, and I am open to repurchasing both stocks in the future, especially if they have big price corrections.

Our second recommendation is a short on an auto parts retailer, as a result of so-so sales.

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.