Issues
The economy is steady, but economists are beginning to worry about consumers. For December, retail sales were flat (vs. the anticipated 0.4% rise) after an increase of 0.6% in November. And credit card balances rose 5.5% from last year, to $1.28 trillion, according to the Federal Reserve Bank of New York.
Inflation remained at 2.7%, and unemployment ticked down a bit, to 4.3%. That’s some good news!
Inflation remained at 2.7%, and unemployment ticked down a bit, to 4.3%. That’s some good news!
Investors seem to be rotating out of high-fee, labor-intensive business models viewed as potentially vulnerable to AI-driven disruption. Fortunately, Explorer stocks and ETFs have not been impacted and had a good week and start to 2026.
Luckin Coffee (LKNCY) shares were up 3% this week following last week’s 13% gain. The company just opened its 30,000th store and this underscores Luckin’s extensive network.
Luckin Coffee (LKNCY) shares were up 3% this week following last week’s 13% gain. The company just opened its 30,000th store and this underscores Luckin’s extensive network.
The market has taken a dramatic turn.
Previously beleaguered stocks are soaring while technology flounders. Cyclical stocks in industries including materials, energy, consumer companies, and industrials have posted double-digit returns while the overall market is barely positive.
Is this a lasting trend or a temporary aberration? The cyclical rally indicates investor confidence regarding the state of the economy in the quarters ahead. Will that stronger growth materialize? Is the AI trade finished, or is this just another periodic consolidation?
Anything can happen in the next several months. It’s easier to focus on the longer term instead of trying to figure out the next fashionable trend on Wall Street. Sectors go in and out of favor all the time. Industry leadership changes often. But one strategy has been a winner in just about every kind of market over time – dividend growth.
In this issue I highlight several portfolio stocks that have consistently paid and grown the dividend for many years and have delivered stellar returns with far less volatility than the overall market.
Previously beleaguered stocks are soaring while technology flounders. Cyclical stocks in industries including materials, energy, consumer companies, and industrials have posted double-digit returns while the overall market is barely positive.
Is this a lasting trend or a temporary aberration? The cyclical rally indicates investor confidence regarding the state of the economy in the quarters ahead. Will that stronger growth materialize? Is the AI trade finished, or is this just another periodic consolidation?
Anything can happen in the next several months. It’s easier to focus on the longer term instead of trying to figure out the next fashionable trend on Wall Street. Sectors go in and out of favor all the time. Industry leadership changes often. But one strategy has been a winner in just about every kind of market over time – dividend growth.
In this issue I highlight several portfolio stocks that have consistently paid and grown the dividend for many years and have delivered stellar returns with far less volatility than the overall market.
*Note: Your next issue of Cabot Profit Booster will arrive next Wednesday, February 18, due to the market holiday next Monday, February 16, in observance of Presidents’ Day.
Despite a mid-week tech-led sell-off that dragged the broad markets lower, investors clawed back lost ground on Friday on a rebound in semiconductors, AI-related optimism and stabilization in risk assets like bitcoin. By week’s end, the S&P 500 had lost a mere 0.1%, the Dow actually closed at a new all-time high above 50,000, and the Nasdaq had fallen 1.8%.
Despite a mid-week tech-led sell-off that dragged the broad markets lower, investors clawed back lost ground on Friday on a rebound in semiconductors, AI-related optimism and stabilization in risk assets like bitcoin. By week’s end, the S&P 500 had lost a mere 0.1%, the Dow actually closed at a new all-time high above 50,000, and the Nasdaq had fallen 1.8%.
It’s fair to say the overall evidence took a step back last week, with the Nasdaq coming under pressure, though many cyclical stocks act well (in fact, there are a few in this week’s issue that have shown great recent power) and, ironically, we’re actually seeing some solid strength in many AI-related stocks, a bunch of which have lifted off from three-plus-month consolidations even as other growth areas have flailed. As has been the case for weeks, then, the market outlook really depends on where you’re looking. We’ll move our Market Monitor to a level 6 here, but we’re still game for taking a swing at some of the many strong names (ideally on dips) out there.
This week’s list is chock-full of strong names, mostly from the cyclical side of the aisle, with many lifting out of very long-term consolidations after earnings, showing great power. Our Top Pick is helping to lead the broader transport group, which is also breaking out to new highs.
This week’s list is chock-full of strong names, mostly from the cyclical side of the aisle, with many lifting out of very long-term consolidations after earnings, showing great power. Our Top Pick is helping to lead the broader transport group, which is also breaking out to new highs.
It pays to be an optimist when it comes to investing. So, in a middling market, you’re better off focusing on the positives: The bull market remains intact, volatility is down, earnings growth continues to be robust, and market breadth has spread to the many previously unloved sectors. With that optimistic slant in mind, today we look internationally to add one of the biggest names in South America – an e-commerce giant recently recommended by Carl Delfeld to his Cabot Explorer audience.
Details inside.
Details inside.
*Note: Your next issue of Cabot Options Trader will arrive next Tuesday, February 17 due to the market holiday next Monday, February 16 in observance of Presidents’ Day.
Despite a mid-week tech-led sell-off that dragged the broad markets lower, investors clawed back lost ground on Friday on a rebound in semiconductors, AI-related optimism and stabilization in risk assets like bitcoin. By week’s end the S&P 500 had lost a mere 0.1%, the Dow actually closed at a new all-time high above 50,000, and the Nasdaq had fallen 1.8%.
Despite a mid-week tech-led sell-off that dragged the broad markets lower, investors clawed back lost ground on Friday on a rebound in semiconductors, AI-related optimism and stabilization in risk assets like bitcoin. By week’s end the S&P 500 had lost a mere 0.1%, the Dow actually closed at a new all-time high above 50,000, and the Nasdaq had fallen 1.8%.
*Note: Your next issue of Cabot Options Trader Pro will arrive next Tuesday, February 17 due to the market holiday next Monday, February 16 in observance of Presidents’ Day.
Despite a mid-week tech-led sell-off that dragged the broad markets lower, investors clawed back lost ground on Friday on a rebound in semiconductors, AI-related optimism and stabilization in risk assets like bitcoin. By week’s end the S&P 500 had lost a mere 0.1%, the Dow actually closed at a new all-time high above 50,000, and the Nasdaq had fallen 1.8%.
Despite a mid-week tech-led sell-off that dragged the broad markets lower, investors clawed back lost ground on Friday on a rebound in semiconductors, AI-related optimism and stabilization in risk assets like bitcoin. By week’s end the S&P 500 had lost a mere 0.1%, the Dow actually closed at a new all-time high above 50,000, and the Nasdaq had fallen 1.8%.
Growth as a whole has been stagnant for three months, and this week, we started to see the selling spread out a bit, with our Two-Second Indicator waiving a yellow flag and with more names coming under pressure (and with many growth stocks really caving in). To be fair, the top-down evidence isn’t much changed, so we’re flexible--if this is the final shakeout to the past three months of rest, there could be many things to sink our teeth into soon.
But as growth investors, we’re focused on the growth evidence, which tells us to remain in a cautious stance until the buyers step up.
But as growth investors, we’re focused on the growth evidence, which tells us to remain in a cautious stance until the buyers step up.
Large-cap stocks are starting to show some cracks. But small caps aren’t.
After years of underperformance, small-cap stocks appear to finally be poised for a breakout 2026 thanks to a combination of lower interest rates and soaring earnings. So in this month’s Cabot Value Investor issue, we present a small-cap company that is already coming off a very strong quarter, whose sales and earnings have more than doubled since Covid, but whose shares were overly punished last fall and are just now starting the long climb back. The combination of double-digit earnings growth and a well-below-average valuation makes this small cap ripe for our Buy Low Opportunities Portfolio.
Details inside.
After years of underperformance, small-cap stocks appear to finally be poised for a breakout 2026 thanks to a combination of lower interest rates and soaring earnings. So in this month’s Cabot Value Investor issue, we present a small-cap company that is already coming off a very strong quarter, whose sales and earnings have more than doubled since Covid, but whose shares were overly punished last fall and are just now starting the long climb back. The combination of double-digit earnings growth and a well-below-average valuation makes this small cap ripe for our Buy Low Opportunities Portfolio.
Details inside.
Industrial stocks are hot. So today we’re jumping into a small-cap precision‑engineering and motion‑technology company that has both a self-help and an improving end-market story.
This company has spent the past several years transforming itself from a niche motor supplier into a vertically integrated engineering platform. After a strong start to 2025, it looks like 2026 will be even better.
All the details are inside the February issue of Cabot Small‑Cap Confidential.
This company has spent the past several years transforming itself from a niche motor supplier into a vertically integrated engineering platform. After a strong start to 2025, it looks like 2026 will be even better.
All the details are inside the February issue of Cabot Small‑Cap Confidential.
Despite a rally midweek to new all-time highs, last week finished on a soft note as profit-taking and macro uncertainty crept back into equities. Investors grappled with cooling tech leadership, mixed earnings reactions, and a fresh focus on monetary policy. By week’s end the S&P 500 was up 0.3%, the Dow Jones Industrial Average had slipped 0.4%, the Nasdaq Composite had fallen 0.9%, and the Russell 2000 had lost 1.5%.
Updates
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%).
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.
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%.
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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.
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’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.
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.
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.
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.
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.
The long-awaited promise of inflation’s “impending” demise remains as distant as ever entering 2026.
Economists have been assuring us since at least 2023 that inflation is abating. But far from this, what we’re actually seeing is a weakening dollar that’s putting ever-more upward pressure on prices across several asset categories.
Economists have been assuring us since at least 2023 that inflation is abating. But far from this, what we’re actually seeing is a weakening dollar that’s putting ever-more upward pressure on prices across several asset categories.
Alerts
Artivion (AORT), our MedTech company that specializes in cardiovascular and aortic repair solutions, reported Q4 FY25 results after the close yesterday. Results came in a hair below expectations. Revenue grew by 11.7% to $129.5 million (missed by $48K) while adjusted EPS improved to $0.17 (missed by a penny) from breakeven in the year-ago quarter.
Portfolios
Strategy
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.