It’s been a wild ride this past month, hasn’t it? The war in Iran has created tremendous volatility in the markets, with the Dow Jones Industrial Average hitting all-time highs—above 50,000—only to fall back to the 47,000+ level.

Investors have retreated to value stocks, pushing small caps up 5.59% year to date, midcaps, 5.32%, and large caps, 3.98%. Growth stocks are mostly negative right now.

Sector-wise, as expected with a war in a major oil-producing region and worries about the possible closure of the Strait of Hormuz, it’s no surprise that energy company stocks are flying high, up 25.97% so far in 2026.

Artificial intelligence is transforming the world, just not yet.

Ultimately, AI will create new industries that deliver noticeable changes in daily life. And it will happen much faster than with past technologies. But there are companies, outside the actual technology generators themselves, that benefit after the initial launch of a new technology and before new industries develop.

The next phase of AI is likely in companies that enable and service the technology. This new phase is already evident in the stronger performance of previously lackluster utilities as they accommodate the huge electricity demand increase from AI data centers. AI profits are spreading toward companies that service the equipment and massive data management needs of AI.

In this issue, I highlight a REIT that is experiencing massive demand growth servicing the equipment and records generated by the burgeoning technology. It is making an already reliable income-generating security a growth investment as well.

The AI trade isn’t dead. It’s shifting. And this security is in the new sweet spot.

Last week was Wall Street’s worst in months as the military conflict in the Middle East sent oil prices soaring higher, and Friday morning the February jobs report revealed the economy shed 92,000 non-farm payroll jobs, well below estimates that called for gains. By week’s end, the S&P 500 had dropped 2%, the Dow had fallen 3%, the Nasdaq had tumbled 1.2%, and the Russell 2000 had declined by 2.6%.

The market initially took the Iran attacks in stride early last week, but as oil prices elevated, the sellers took the upper hand, pushing the overall intermediate-term trend to negative and, of course, doing a lot of damage to many stocks. Now, given that the reason for the selling is fairly obvious at this point (oil prices, Iran, etc.), could things reverse with some good news? Yes, and we obviously saw some of that today, with hopes the attacks may be near an end helping the market recover nicely by day’s end. Thus, we do remain flexible should the buyers flex their muscle—but we also always go with the evidence, and while today’s bounce was nice, most indexes and stocks are still sitting below key levels. We have our Market Monitor at a level 5, though we could change that (up or down) depending on what comes.

This week’s list is well-rounded, with some growth, precious metals, oil and even some AI infrastructure, which we do find encouraging given what’s going on in the market. Our Top Pick is has rested for two years but recently gapped up on earnings as its AI servers see huge growth. A follow-through on the earnings move would be enticing.

The nascent war (conflict?) in the Middle East is taking a toll on U.S. markets, with the S&P 500 down 2% this week and the Dow off more than 3%. Under the market’s hood, there’s even more selling, prompting us to sell five positions in this week’s issue. However, we also add a potential turnaround story in the healthcare space that has huge upside, according to Cabot Turnaround Letter Chief Analyst Clif Droke.

Details inside on a busy week for the Stock of the Week portfolio.

Last week was Wall Street’s worst in months as the military conflict in the Middle East sent oil prices soaring higher, and Friday morning the February jobs report revealed the economy shed 92,000 non-farm payroll jobs, well below estimates that called for gains. By week’s end, the S&P 500 had dropped 2%, the Dow had fallen 3%, the Nasdaq had tumbled 1.2%, and the Russell 2000 had declined by 2.6%.

Last week was Wall Street’s worst in months as the military conflict in the Middle East sent oil prices soaring higher, and Friday morning the February jobs report revealed the economy shed 92,000 non-farm payroll jobs, well below estimates that called for gains. By week’s end, the S&P 500 had dropped 2%, the Dow had fallen 3%, the Nasdaq had tumbled 1.2%, and the Russell 2000 had declined by 2.6%.

Last week was Wall Street’s worst in months as the military conflict in the Middle East sent oil prices soaring higher, and Friday morning the February jobs report revealed the economy shed 92,000 non-farm payroll jobs, well below estimates that called for gains. By week’s end, the S&P 500 had dropped 2%, the Dow had fallen 3%, the Nasdaq had tumbled 1.2%, and the Russell 2000 had declined by 2.6%.

The market has been full of yellow flags for a while, and with the Iran attacks (and uncertainty) going on, the sellers continue to lean on much of the market, including growth stocks. To be fair, the market has bent but not broken--our Cabot Tides are on the fence and many recent breakouts are pulling back normally so far. Still, given the poor evidence for growth stocks, we’re sticking with a cautious stance (we’re selling one name tonight, giving us more than 60% in cash) and think the market is near a make-or-break period--either support holds and the market can rally briskly (possibly on an Iran resolution), or support cracks and we enter a real correction. We’ll take it as it comes, but right here we continue to stay close to shore.

America’s housing market has been in a deep freeze for years, thanks to high borrowing costs and skyrocketing prices. But signs of hope are starting to emerge, and it’s possible a long-anticipated thaw is coming now that mortgage rates have dipped below 6%.

Could 2026 be the year of the U.S. housing turnaround? Possibly. But even if it isn’t, today we add a housing-adjacent stock that should fare well either way – especially since it’s trading at a deep discount. I see 36% upside, possibly within a matter of months. It’s a name you know well – whose products you’ve almost surely used and likely have in your garage right now.

Details inside.

Today, we are moving into the aerospace and defense sector to profile a company that has successfully navigated a complex multi-year recovery and is now entering a higher-growth phase.

After ending 2025 with a record-breaking fourth quarter and its highest backlog in history, the business is now pivoting from “recovery mode” into a period of significant operating leverage.

All the details are inside the March Issue of Cabot Small‑Cap Confidential.

The close of the month of February, which was extremely volatile day-to-day, was another week in the red as a mix of AI-driven growth fears and geopolitical tension put pressure on broader markets. Traders sold heavily into tech and financials, keeping sentiment cautious. By week’s end, the S&P 500 had slid 0.4%, the Dow had lost 1.3%, the Nasdaq had declined by 1% and the Russell 2000 had fallen by 1.2%.

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.

It’s been a positive earnings season so far. But the market keeps rolling along just as it had before earnings.

It’s the same story as it was a month ago, technology is struggling while cyclical sectors are soaring. The S&P 500 has managed an anemic YTD return of 1.27% while energy, consumer, material, and industrial stocks are lighting it up with YTD returns of 19.32%, 14%, 12.45%, and 11.61%, respectively, for the sectors. The bull market continues to broaden out and leave technology behind.

It had to happen sooner or later, but the broad market is showing increased signs of stress as a result of what some have described as a case of “too much participation” from retail investors.

However, the good news is that this week’s increase in selling pressure across the formerly high-flying segments of the market serves to relieve some of that excess heat, particularly in the high-tech stocks. More importantly for our purposes, it also throws into sharp relief the usefulness of embracing the contrarian approach to investing that turnaround investors typically rely on.

“You must dare to be independent. Contrarian impulses are usually better. They are always better in major bubbles and busts.” -Jeremy Grantham

To begin, please note that since it is down about 20% over the last month, I’m moving Grayscale Bitcoin Trust (GBTC) to Sell. This could bounce back but the selling pressure is steady.

Earnings season has arrived in full force. So far, cyclical companies are rallying and technology is faltering, just like before earnings.

Big tech earnings have been mixed so far, with more to come this week. Investors so far haven’t seen enough to change their view that AI investment is too high while revenues have not soared enough yet. That attitude could change soon or endure for a while longer. But AI will be back in favor at some point.

Earnings season is getting hot and heavy. Results have been good so far, and continued positive earnings reports could ignite a bullish trend.

Several big tech companies report on earnings this week. The results could determine if the technology sector, and consequently the market indexes, move higher. It’s been a huge year so far for cyclical sectors, including energy, materials, industrials, and consumer stocks. The rally has broadened while technology has sputtered.

We’re going to continue with our strategy of locking in modest, but relatively quick, profits on some positions while they’re available.

Cannabis stocks were soaring Friday morning on a Washington Post report stating that President Donald Trump plans to go forward with rescheduling. The report cites six sources.

WHAT TO DO NOW: The market continues to act fairly well, though most of our timing indicators haven’t really kicked into gear. We’re OK extending our line, but we’re also going slow and honoring stops on what we own as there are still lots of crosscurrents out there. Today’s bulletin is about Alnylam Pharmaceuticals (ALNY), which we’re selling today after it’s come under pressure this week following no addition to the S&P 500. We’ll hold the cash for now (near 60%) but could redeploy later this week.

Shares of Argan (AGX) are trading down as of midday after the company missed revenue expectations in Q3 FY26 but beat on EPS. The pullback likely signals that AGX stock will be rangebound for a while – possibly in the 300 - 400 range – not that the run in shares is completely over.

CEO Special Bulletin: Position Updates

Sell a Quarter of Centuri Holdings (CTRI)

We’re going to continue to hold our position in Credo Tech (CRDO), which is now up over 145% (since June), following the company’s strong Q2 FY26 report.

We’re going to take a swing at Natural Grocers (NGVC) today by filling the second half of our position. It’s foolish to think you can time a “bottom” perfectly, but there’s enough evidence here to suggest we can buy the stock at a solid discount now and, hopefully, catch a significant updraft in the weeks and months ahead.

Sell Life360 (LIF)

Natural Grocers (NGVC) delivered a Q4 FY25 report and guidance for next year that “should” be good enough to stabilize the stock and get it moving higher again. That said, we have a half-sized position, and if shares don’t stabilize here (KR and SFM have recently done so), then we’re more likely to exit the position than fill the other half. Next week will be important for NGVC.

Here’s a refresher on what qualities help a stock pass our Individualized Retirement Income System tests for inclusion in the Cabot Dividend Investor portfolio.

We take a look at some of the major rotations of the past year, and how, when—or if—they were resolved.

What does risk tolerance really mean, and how can you figure out what yours is?

If you’re a typical Cabot growth investor, you like to own stocks of fast-growing companies ... the kind that go up fast and come down fast. The ride up with these stocks is wonderful. But the ride down can be shocking. Stocks like these can easily fall 40%, 50% or more in a prolonged market decline, destroying the value of your portfolio.

Using Options to Hedge a Portfolio


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.

I want to clarify a few things about our Hold and Buy ratings.

This guide will help you execute the three types of options strategies recommended in Cabot Options Trader: Buying puts and calls, covered call writing and spreads.

This guide will help you execute the options strategies recommended in Cabot Options Trader.

Guide to Options Trading — Pro Version