After a brief decline, due mostly to the China and Mexico tariff issues, we’ve seen a decent rebound in the markets this past month.
Earnings for the quarter look like they are going to come in at a negative growth rate when all the reports are calculated. However, 76% of companies in the S&P 500 reported EPS numbers higher than estimated and 59% posted positive revenue surprises. The lack of growth in earnings is somewhat concerning, and that—plus the tariff issues—seem to be weighing on market prognosticators, turning their sentiment a bit more cautious, as you can see in our Advisor Sentiment Barometer, as well as in our Market Views. In the meantime, our contributors have been knee-deep in research and analysis, and have come up with some very interesting ideas for you this month.

If you don’t know by now, I’m a big fan of diversification; I love having a portfolio that has hot stocks of fast-growing young companies, low-risk stocks of established companies, high-yielding stocks of underappreciated companies, and more—because you never know which way the market is going to zig, but when you’re diversified you’re always winning somewhere.

Current Market Outlook


The market’s correction was in full force a week ago, with the S&P and Nasdaq falling to new correction lows and many resilient stocks beginning to give up the ghost. But since then stocks have turned on a dime—whatever the reason (Fed, less-heated trade rhetoric, Mexico deal), the market has soared amidst a vacuum of selling pressure, with the major indexes, the broad market (most number of stocks hitting new highs in months) and many growth stocks all kicking into gear. That said, the intermediate-term trend has not yet turned positive (it’s very close, but not quite there yet) and many stocks are now either extended or running into resistance, so we don’t advise throwing caution to the wind. But there’s no question that the action is encouraging —we’re bumping up our Market Monitor to a level 7 tonight.

This week’s list has a nice batch of stocks, including a few that are hot and others that are just emerging. Our Top Pick is Zillow (Z), which has changed character over the past few weeks and looks like a leader should the market’s rally continue.

Stock Name	Price	Buy Range	Loss Limit
Ciena (CIEN)	44.25	42.5-44.5	38.5-40
Coupa Software (COUP)	262.20	118-124	104-107
The Walt Disney Company (DIS)	144.76	135-138	125-127
Kirkland Lake Gold (KL)	51.30	36-38	32.5-33.5
MongoDB (MDB)	156.56	165-170	149-152
PagSeguro Digital (PAGS)	35.09	34.5-36	30.5-32
UniQure (QURE)	74.08	72.5-75.5	63-65
Vulcan Materials Company (VMC)	137.10	131-135	121-124
Zillow (Z)	76.64	44.5-46.5	40-41.5
Zoom Communications (ZM)	155.83	95-102	81-85

Today’s Cabot Small-Cap Confidential candidate runs an online marketplace for a different type of market where over $120 billion is spent each year. The trend is strong, and it’s still early days. All the details are inside the June Issue of Cabot Small-Cap Confidential.

The market remains in a correction, and with the intermediate-term trend pointed down, we’re still advising a cautious stance. That said, we do think the pieces are in place for a new advance, from positive longer-term evidence, a big dip in sentiment and bullish action from many leading growth stocks.
In tonight’s issue we review all of our stocks, fine tune our watch list and we also look at the medical sector, which we think could be a leadership area going forward for a few reasons.

Tariff threats for China and Mexico continued to roil the markets this month. But yesterday, we saw a 500+ gain, on the heels of Fed Chairman Powell hinting at a rate reduction. Meanwhile, the economy is holding up well, with auto sales and construction spending rising and employment still strong.

Sentiment has turned a bit more cautious, as you will see in our Market Views, but most advisers think the market is oversold right now. And that’s good news for our pickings!

Within the Growth & Income portfolio, you’ll find a discussion of retail woes. The Buy Low Opportunities Portfolio features a comparison between two of the rare retailers that emerged from first-quarter earnings season unscathed. I was simply focused on retail stores throughout May. Lots of investors own these stocks, and I figured some of you might find the assessment interesting.

The month of May brought a much-needed market correction; will June bring the return of the uptrend? Technically, it’s certainly possible, and fundamentally, too, given that global events probably won’t unfold as negatively as investors now fear.

Current Market Outlook


Sometimes the simplest analysis is the best, and that continues to be the case for the current market—the intermediate-term trend is down for the major indexes and most stocks (we even saw the resilient software sector finally come under pressure today), so until that changes, you should remain cautious, holding a good-sized chunk of cash, limiting new buying and honoring stops. To be fair, there are many signs that the market might be close to a bounce—emotions are beginning to run high, many measures of breadth and sentiment are “oversold” and we still see a fair number of stocks building normal launching pads—but until the buyers actually step up to the plate, those don’t really mean much. (Indeed, today was the Nasdaq’s fifth heavy-volume down day of the past seven sessions.) Our Market Monitor falls to 4 this week.

None of that, though, tells you to stick your head in the sand. This week’s list is again full of solid charts and stories from a variety of sectors. Our Top Pick is Guardant Health (GH), which isn’t tearing up the charts but is in the middle of a nice, tight consolidation.

Stock Name	Price	Buy Range	Loss Limit
Advanced Micro Devices (AMD)	82.24	26.5-28	23.5-24.5
Anaplan (PLAN)	47.52	40-42	35-36.5
Beyond Meat (BYND)	132.87	87-94	72-76
Dynamic Materials (BOOM)	60.21	67.5-71	61-63.5
Guardant Health (GH)	88.34	75-79	65-67.5
Heico (HEI)	134.84	115-119	105-108
Novocure (NVCR)	0.00	50.5-53	45.5-47.5
Paycom Software (PAYC)	0.00	193-198	180-183
Smartsheet (SMAR)	44.12	41-43.5	37-38
Snap Inc. (SNAP)	16.68	11-12	9.6-10.2

While some restaurant chains regularly make adjustments and continue to prosper, others correct their mistakes in time. And some recognize their mistakes too late..

However, several casual dining restaurant chains that have lost their way have turnaround appeal. In this issue, we take a look at five.

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.

Wall Street expects this gaming company to grow at more than 15% annually, over the next five years.

Markets ended last week on a sour note as the U.S. and China imposed tit-for-tat tariffs and Facebook continued to drag tech stocks lower. The major indexes all declined more than 5% for the week, their worst weekly performance in over two years. I’m moving two of our most affected stocks to Hold today.

This insurance company beat analysts’ estimates by $0.05 last quarter.

In light of all this week’s “Trump trade war” headlines, let’s review the U.S.-China trade news so that you can quickly grasp the facts of the situation. It’s also important to understand that as much as the media might try to portray announcements about trade problems as sudden, whimsical and dangerous, they are in fact long-studied, methodical, and inclusive of a huge variety of government, industry, academic and citizen input.

The market was crushed yesterday as fears of a trade war with China picked up. At the close, the Dow had lost 724 points while the Nasdaq had fallen 179 points.

This animal health company was just recommended by Zack’s, who cited its earnings growth and positive estimate revisions.

One stock reports second quarter results and three more are rising this week.

This aerospace services company beat analysts’ earnings estimates by $.20 per share last quarter, and nine analysts have increased their forecasts for the company in the past 30 days.

If you own shares of this stock in our portfolio you were very pleased when shares rallied 28% yesterday.

This investment seeks daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the NASDAQ-100 Index®.

Analysts expect this pharma to grow at more than 100% over the next five years.

Nomura just upgraded the shares of this financial behemoth to ‘Buy’ and two analysts have increased their EPS estimates for the company in the past 30 days.

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.