Issues
Today’s addition is a profitable small-cap MedTech company specializing in products to treat peripheral nerve injuries.
Management has a number of growth-oriented irons in the fire. And I think the company could be an attractive acquisition target.
While the sock has been relatively stable in this increasingly volatile market, we’ll still start with a half-sized position, just in case.
Management has a number of growth-oriented irons in the fire. And I think the company could be an attractive acquisition target.
While the sock has been relatively stable in this increasingly volatile market, we’ll still start with a half-sized position, just in case.
U.S. markets are in a tailspin, and previously hard-charging growth stocks are leading the slide. But two asset classes that have often been overlooked in recent years are off to very good starts in 2025: value stocks and European stocks. Having just “retired” a European value stock that reached our price target in last week’s update, today we add a Dutch-based mid-cap with an almost identical profile – but at a time when undervalued European stocks are getting treated like U.S. growth stocks.
Details inside.
Details inside.
For the second straight week growth stocks got hit hard, which weighed on the Nasdaq. Though interestingly, as money rotated out of the 2024 leaders, it raced into slow and steady stocks that have been left behind in years past. By week’s end the S&P 500 had lost 1%, the Dow had gained 1%, and the Nasdaq had fallen 3.5%.
Last week saw the softness in leading growth titles spread to most of the market, with most indexes now in intermediate-term downtrends and there’s no question market leadership has taken a hit. That said, the rest of the market isn’t in nearly as bad shape, and what we’re watching closest is how the current bounce phase progresses: Obviously, a strong, big-volume, multi-day bounce in the market and fresher leading names would be encouraging, but right now, we think it’s best to play defense (our Market Monitor now stands at a level 4) but to also remain flexible.
This week’s list has a lot of names that have gone through corrections in recent weeks and months—likely kicking out most weak hands and, in many cases, resetting their uptrends. Our Top Pick is trying to break free from a nine-month rest; given the market, we’d keep it small if you enter and see how the market and breakout attempt go from here.
This week’s list has a lot of names that have gone through corrections in recent weeks and months—likely kicking out most weak hands and, in many cases, resetting their uptrends. Our Top Pick is trying to break free from a nine-month rest; given the market, we’d keep it small if you enter and see how the market and breakout attempt go from here.
The market is in sell-off mode, with the Nasdaq down more than 7% in less than two weeks. But while growth stocks are in the dumps, value stocks are flourishing, up 5% year to date and outperforming growth by one of the wider margins in recent memory. So today, we sell out of a couple growth stocks that aren’t working and beef up our value exposure by adding the newest recommendation from Cabot Turnaround Letter Chief Analyst Clif Droke. It’s a company whose name you likely know, but a stock that was severely out of favor with Wall Street until recently – a perfect turnaround candidate.
Details inside.
Details inside.
For the second straight week growth stocks got hit hard, which weighed on the Nasdaq. Though interestingly as money rotated out of the 2024 leaders, it raced into slow and steady stocks that have been left behind in years past. By week’s end the S&P 500 had lost 1%, the Dow had gained 1%, and the Nasdaq had fallen 3.5%.
For the second straight week growth stocks got hit hard, which weighed on the Nasdaq. Though interestingly as money rotated out of the 2024 leaders, it raced into slow and steady stocks that have been left behind in years past. By week’s end the S&P 500 had lost 1%, the Dow had gained 1%, and the Nasdaq had fallen 3.5%.
I am in Singapore this week as U.S. markets and Explorer recommendations struggle a bit.
I had a chance to visit three Luckin Coffee shops in Singapore. Hard to draw conclusions from this small sample but all three seemed very professional and fully automated with no cash accepted resulting in no lines at all. Spoke with maybe a dozen customers who like the ease of use, variety of flavors, and the price. Several said they also go to Starbucks. One only needs to download the Luckin app to get service which locks in customers to receiving a stream of deals and incentives.
I had a chance to visit three Luckin Coffee shops in Singapore. Hard to draw conclusions from this small sample but all three seemed very professional and fully automated with no cash accepted resulting in no lines at all. Spoke with maybe a dozen customers who like the ease of use, variety of flavors, and the price. Several said they also go to Starbucks. One only needs to download the Luckin app to get service which locks in customers to receiving a stream of deals and incentives.
Are promises made really promises kept, for President Donald Trump?
No one really knows, so cannabis equity investors remain depressed.
They can’t get any bullish signals from the administration on rescheduling, which Trump promised.
But there is a way to deal with this uncertainty as a cannabis investor. Shift your focus to getting paid to wait. I’ll explain why, and how, below.
No one really knows, so cannabis equity investors remain depressed.
They can’t get any bullish signals from the administration on rescheduling, which Trump promised.
But there is a way to deal with this uncertainty as a cannabis investor. Shift your focus to getting paid to wait. I’ll explain why, and how, below.
At face value, it’s admittedly a challenge to build a bullish case for the long-term viability of satellite radio. Indeed, as the popularity and reach of digital streaming platforms grow, satellite as a communications medium looks antiquated by comparison.
That said, a case can also be made that reports of satellite radio’s demise are decidedly premature. When researching for this month’s issue of CTL, for instance, I came across an article under the following headline: “Satellite Radio is Dead.” It went on to explain, “Satellite radio will come crashing down to Earth within the next two years. The newly merged Sirius XM Radio is already living on borrowed time—and borrowed money—and simply will not and cannot survive.”
That said, a case can also be made that reports of satellite radio’s demise are decidedly premature. When researching for this month’s issue of CTL, for instance, I came across an article under the following headline: “Satellite Radio is Dead.” It went on to explain, “Satellite radio will come crashing down to Earth within the next two years. The newly merged Sirius XM Radio is already living on borrowed time—and borrowed money—and simply will not and cannot survive.”
The market is sputtering. While the S&P is still up slightly for the year, it’s at the same level it was three months ago.
After two glorious years of being up over 20%, stocks may be expensive and due for consolidation. While that’s certainly possible, it’s normal and healthy in a bull market. And stocks may not be as expensive as they seem.
This bull market has been driven higher by technology and the artificial intelligence catalyst. Without a handful of large technology companies, the bull market returns so far would be quite lame. But things are changing. There are good reasons to believe the relative returns of the rest of the market should vastly improve.
The rally has broadened out. Other stocks are picking up the slack while technology is wobbling. The grossly lopsided performance couldn’t last. And there’s more to the story than just sector rotation. Earnings are catching up.
The energy sector in particular is likely to benefit from the shared bounty going forward.
There are powerful reasons to believe certain energy stocks will benefit from increasing natural gas demand, more oil and gas drilling, and friendlier regulations. Some of these stocks have pulled back from the highs and offer an attractive entry point. In this issue, I highlight two energy stocks that are likely in a multi-year bull market that historically generate high call premiums.
After two glorious years of being up over 20%, stocks may be expensive and due for consolidation. While that’s certainly possible, it’s normal and healthy in a bull market. And stocks may not be as expensive as they seem.
This bull market has been driven higher by technology and the artificial intelligence catalyst. Without a handful of large technology companies, the bull market returns so far would be quite lame. But things are changing. There are good reasons to believe the relative returns of the rest of the market should vastly improve.
The rally has broadened out. Other stocks are picking up the slack while technology is wobbling. The grossly lopsided performance couldn’t last. And there’s more to the story than just sector rotation. Earnings are catching up.
The energy sector in particular is likely to benefit from the shared bounty going forward.
There are powerful reasons to believe certain energy stocks will benefit from increasing natural gas demand, more oil and gas drilling, and friendlier regulations. Some of these stocks have pulled back from the highs and offer an attractive entry point. In this issue, I highlight two energy stocks that are likely in a multi-year bull market that historically generate high call premiums.
Before we dive into this week’s idea, we need to clean up our February positions that expired on Friday. First off, both our NET and HOOD positions closed for their full profits.
However, RBRK and GH stocks closed below their strike prices, which means the calls we sold expired worthless, and we are left with the stock positions, which we are going to sell today.
However, RBRK and GH stocks closed below their strike prices, which means the calls we sold expired worthless, and we are left with the stock positions, which we are going to sell today.
Updates
In today’s note, we discuss the reasons why it’s a good time to exit our (mostly) profitable holdings in Alibaba Group Holding (BABA), Nokia (NOK), Tyson Foods (TSN) and Zillow (Z).
We’re adding two new stocks to the portfolio, providing us with exposure to the booming software and utilities sectors.
We’ll also discuss some catalysts for three stocks across three different sectors in what look to be powerful intermediate-term turnarounds.
We’re adding two new stocks to the portfolio, providing us with exposure to the booming software and utilities sectors.
We’ll also discuss some catalysts for three stocks across three different sectors in what look to be powerful intermediate-term turnarounds.
While the S&P 500 Index made record highs (again) this week, the real story has been in small caps.
From last Wednesday’s close through mid-day today, the S&P 600 small-cap index is up 2.9%, more than twice the return of the large-cap index, which is up 1.3%.
The gains have been propelled by consumer discretionary, staples, financials, industrials and tech stocks.
From last Wednesday’s close through mid-day today, the S&P 600 small-cap index is up 2.9%, more than twice the return of the large-cap index, which is up 1.3%.
The gains have been propelled by consumer discretionary, staples, financials, industrials and tech stocks.
Bank stocks such as Morgan Stanley (MS) and Goldman Sachs (GS) had strong earnings while tech is starting to show signs of weakness. ASML (ASML) reported sharply lower quarterly sales and giant Samsung Electronics’ share price (listed on the Korea Exchange) has fallen almost 30% over the past six months as it struggles to catch up with SK Hynix and Micron in supplying the most advanced AI chips.
Still, everyone is waiting for Nvidia’s (NVDA) earnings as capital spending in AI remains robust.
Still, everyone is waiting for Nvidia’s (NVDA) earnings as capital spending in AI remains robust.
We spend the vast majority of our time focused on U.S. stocks, and rightly so.
After all, although America has just 4% of the world’s population and generates 23% of the global GDP, 72% of worldwide investment capital is spent on U.S. stocks. That’s a stat our global investing expert, Carl Delfeld, relayed to me and my colleague Brad Simmerman on our latest Street Check podcast (click here to listen to the entire conversation). I knew the global investment axis tilted toward the U.S. – just maybe not that much.
After all, although America has just 4% of the world’s population and generates 23% of the global GDP, 72% of worldwide investment capital is spent on U.S. stocks. That’s a stat our global investing expert, Carl Delfeld, relayed to me and my colleague Brad Simmerman on our latest Street Check podcast (click here to listen to the entire conversation). I knew the global investment axis tilted toward the U.S. – just maybe not that much.
The two-year-old bull market is about to meet third-quarter earnings. And things look good.
The bull market is alive and well and shows no signs of stopping. Since the bear market low in October of 2022, the S&P 500 has risen over 60%. It has been powered by the artificial intelligence catalyst, a surprisingly resilient economy, and the peaking of interest rates. The current “soft landing” expectation means we are getting rate cuts but no economic pain. That’s good news.
The bull market is alive and well and shows no signs of stopping. Since the bear market low in October of 2022, the S&P 500 has risen over 60%. It has been powered by the artificial intelligence catalyst, a surprisingly resilient economy, and the peaking of interest rates. The current “soft landing” expectation means we are getting rate cuts but no economic pain. That’s good news.
The bull market is now two years old and shows no signs of stopping.
Since the bear market low in October of 2022, the S&P 500 has risen more than 60%. It has been powered by the artificial intelligence catalyst, a surprisingly resilient economy, and the peaking of interest rates. Overall earnings are projected to be strong, and the market could get a further boost from AI-specific earnings this quarter.
Since the bear market low in October of 2022, the S&P 500 has risen more than 60%. It has been powered by the artificial intelligence catalyst, a surprisingly resilient economy, and the peaking of interest rates. Overall earnings are projected to be strong, and the market could get a further boost from AI-specific earnings this quarter.
In today’s note, we discuss the acceleration—and potential for overcrowding—of the China stock momentum trend, specifically how it relates to our position in Alibaba Group Holding (BABA).
The small-cap indices (Russell 2000 and S&P 600) have been totally uninspiring over the last three weeks, which is sort of odd given that the Fed cut interest rates by 50 basis points almost exactly three weeks ago.
Theoretically, lower rates should benefit small caps given higher exposure to variable rate debt, which requires lower interest payments as rates decline.
Theoretically, lower rates should benefit small caps given higher exposure to variable rate debt, which requires lower interest payments as rates decline.
WHAT TO DO NOW: Continue to lean bullish. The market’s overall position remains in a similar position—far more good than bad, though still a few flies in the ointment—so we continue to look to add exposure, but to do so carefully, as many stocks and indexes are battling with resistance. Tonight, we’re going to fill out our position in Flutter Entertainment (FLUT), adding another half-sized stake (5% of the portfolio). We’re also placing Argenx (ARGX) on Hold given its recent action. Our cash position will now stand near 25%.
Stocks have barely budged for three months.
The S&P 500 is a mere 1.5% above its mid-July highs, while the Nasdaq is actually down 2.5% since its July 10 peak. The Dow has made the most headway, up 2.1% since its July 17 apex. This type of multi-month lethargy is nothing new for an election year.
The S&P 500 is a mere 1.5% above its mid-July highs, while the Nasdaq is actually down 2.5% since its July 10 peak. The Dow has made the most headway, up 2.1% since its July 17 apex. This type of multi-month lethargy is nothing new for an election year.
Cannabis now has its highest election-year profile ever.
Both presidential candidates have highlighted their favorable positions on cannabis reform, obviously because voters in all the key swing states favor reform. Cannabis reform appears on the ballot in referenda in several states – most notably Florida.
Both presidential candidates have highlighted their favorable positions on cannabis reform, obviously because voters in all the key swing states favor reform. Cannabis reform appears on the ballot in referenda in several states – most notably Florida.
After another up week and a record close last Friday, the market is grappling with mixed signals.
Last week’s highly anticipated jobs report came in much better than expected. The previous two weak jobs reports had roiled the market as they stoked recession fears. But not this one. The market was initially thrilled but is now thinking twice about the situation.
Last week’s highly anticipated jobs report came in much better than expected. The previous two weak jobs reports had roiled the market as they stoked recession fears. But not this one. The market was initially thrilled but is now thinking twice about the situation.
Alerts
WHAT TO DO NOW: Do a little more selling. We’re seeing another round of selling in growth stocks, with some more abnormal action among a few names. To be fair, most of the action is mixed at this point, whether looking at the overall market (Tides on the fence, etc.) or individual stocks, but the increasing number of air pockets out there has us paring back a bit more today—we’re going to sell one-third of AppLovin (APP), which is our largest position, as well as cut bait on Toast (TOST), which is our biggest loser. Our cash position will now be around 36%.
WHAT TO DO NOW: The market’s rally has run into trouble, and while there are more than a few growth stocks that look fine (if not great), air pockets are reappearing in many issues. Today, Nutanix (NTNX), which looked picture-perfect heading into its earnings report, is getting mauled along with most other software stocks. We’re going to sell the rest of our stake today, thinking today’s meltdown after a prolonged run isn’t likely to lead to good things in the intermediate term. We’ll have more details (and likely other changes) in tonight’s issue of Cabot Growth Investor.
WHAT TO DO NOW: Remain bullish, but continue to prune weak names and hold/buy stronger ones. In the Model Portfolio, we’re letting go of the rest of our small position in DraftKings (DKNG), which is breaking down further today after bad news on the tax front. We’ll hold the cash for the moment, leaving us with around 28% on the sideline.
Cannabis sector negativity and weakness persists, so the group continues to be a buy.
Now it is time to continue to average in at current prices, ahead of the next catalyst-induced move up.
Now it is time to continue to average in at current prices, ahead of the next catalyst-induced move up.
Back on May 8, I suggested getting long cannabis as a contrarian trade because sentiment had turned dark, and there was a potential catalyst on the horizon.
Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.
The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.
The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.
Portfolios
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
An updated portfolio for Cabot Options Institute – Earnings Trader.
An updated portfolio for Cabot Options Institute – Fundamentals Portfolio.
An updated portfolio for Cabot Options Institute – Quant Trader.
An updated portfolio for Cabot Options Institute – Income Trader.
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.