As we begin the second half of the year, the odds continue to favor higher prices for the market down the road, so we remain in a generally bullish stance. Of course, the short-term will likely be news driven (trade talk, war fears and earnings season), but the big picture is looking sunny.
Individual growth stocks are a bit more divergent, with some looking tired but other, newer leaders looking peppy.

It was a great month for the markets, with the Dow Jones Industrial Average gaining more than 1,400 points. The economy remains sound; housing prices have mitigated somewhat; unemployment is healthy; and consumers are still confident.

That’s a nice setting for our Top Picks issue. Our contributors—so far in 2019—have had a banner year.

I have to brag a bit here about our Cabot contributors, as they took the top three spots!

But, seriously, the thriving market—and some good stock picking—served us well.

The broad market remains in fine health, with all major indexes trending higher and sentiment measures telling us this market has not yet reached the stage where amateurs are sucked in to buy at the top. Thus I continue to recommend that you be heavily invested in a diversified portfolio of stocks that fit your investment needs.
Today’s recommendation is a very large company in an industry that has major ebbs and flows due to circumstances that are beyond this company’s control. But right now, conditions are excellent, and the 4.3% yield is an indication that the stock is cheap as well.
As for the other stocks in the portfolio, they look great, with six at or near their all-time highs. Details inside.

A large number of our portfolio stocks are experiencing bullish price action right now. Unless something ugly hits news headlines in the next few days, we’re probably going to enjoy a strong stock market in the first half of July. I hope you’re not sitting on the sidelines!

Today’s recommendation is another company tapping into the explosive growth in genomic testing. It makes diagnostic tests, which pits it against larger rivals like Illumina (ILMN) and Gardant Health (GH). But this small company plays in three very specific markets where its next-gen products are emerging as market leaders. And new collaborations with the likes of Johnson and Johnson (JNJ) and Loxo Oncology, now part of Eli Lilly (LLY), are further evidence that it’s on the right path. All the details are inside. Enjoy, and Happy 4th of July!

Current Market Outlook


It’s not perfect, but from a top-down perspective, the market remains in good shape—today’s stretch toward new highs for many indexes (the S&P 500 made it, though most others didn’t) keeps the intermediate- and longer-term trends pointed up. That said, under the surface, things are a bit disjointed, with selling on strength seen in some extended growth leaders and buying picking up in names that are either cyclical (oils, financials) or fresher (those that haven’t had huge runs). That doesn’t mean you should chase every stock and sector that’s moving and ditch those that are wobbling, but it is important to avoid complacency with your winners (honor stops and take partial profits when offered) and, on the buy side, focus on stocks showing outstanding accumulation in recent weeks.
Those are just the type of charts we’re honing in on these days, and this week’s list has another batch of (mostly) newer names showing excellent action. Our Top Pick is Anaplan (PLAN), which looks like a new leader in the software space.

Stock Name	Price	Buy Range	Loss Limit
AGCO Corporation (AGCO)	76.24	75.5-78	69-70.5
Anaplan (PLAN)	47.52	47.5-50.5	42-43.5
eHealth (EHTH)	122.74	80-84	71-73
Inphi (IPHI)	120.16	51.5-53.5	46-47.5
Kratos Defense (KTOS)	24.08	21-23	18.8-19.8
Novocure (NVCR)	0.00	58-61	51.5-53.5
Roku, Inc. (ROKU)	150.46	88-92.5	77-80
Shake Shack (SHAK)	92.08	66-68	61-62
Smartsheet (SMAR)	44.12	47-49.5	42-43.5
Snap Inc. (SNAP)	16.68	13.7-14.7	12.2-12.6

Part of what makes turnaround mutual funds an inefficient and therefore profitable investing niche is that most investors avoid these securities. Managers of this small group of funds are comfortable with the contrarian approach of owning stocks that are avoided by more conventional mutual fund managers.

In this issue, we highlight seven of these turnaround-oriented mutual funds we’ve watched over the years.

The latest issue of Cabot Marijuana Investor is now available, with my current advice on the fourteen stocks in the portfolio.

The cannabis sector is currently in a correction, with both marijuana and CBD stocks trending lower, giving up some of their early-year gains—and perhaps building a bottom here.

In fact some of the biggest stocks, those supported best by institutional investors, are already looking stronger, though it will take time to know if they are in real uptrends. In the meantime, I continue to build cash, which will come in handy when it’s time to buy again.

Last week we sold a portion of three stocks and this week we’re selling portions of two more, raising the portfolio’s cash level to about 33%.

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.

One stock reports a slight first quarter earnings beat; and another moves from Strong Buy to Hold.

This small-cap stock has a number of catalysts that should boost revenues and profits in the near-term.

One Stock reports great first quarter results; and two more will report first quarter results on April 17 and 18.

Despite this social media giant’s recent data privacy scandal, there are lots of reasons why the company is here for the long-term. Buy it now at discounted prices.

The shares of this restaurant company were recently upgraded by Deutsche Bank to ‘Buy’.

Two stocks move from Strong Buy to Hold and there is bullish price action another.

Both Citigroup and UBS recently initiated coverage of the shares of this financial behemoth with a ‘Buy’ rating.

The top five holdings in this fund are: Medy-Tox Inc (086900.KS, 2.83%); Cavium Inc (CAVM, 2.58%); Copart Inc (CPRT, 2.35%); Trex Co Inc (TREX, 2.27%); and Knight-Swift Transportation Holdings Inc A (KNX, 2.17%).

This tech services company beat analysts’ estimates by $0.06 per share last quarter.

Our first idea is a company’s whose earnings estimates have been boosted by six analysts in the past 30 days, with estimates increasing $1.28 a share 30 days ago, to $1.66 today.

Our second recommendation is a partial sale of a previous idea.

The shares of this restaurant company were also just initiated as ‘Outperform’ by Baird.

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.