First off, some housekeeping: This is our last Top Ten issue of the year, as next Monday is the second of two “off” weeks we have all year. We will, however, send out a full Movers & Shakers update next Monday (December 29) to keep you up to date. Most important, we wish you and your family a very Merry Christmas and Happy Holidays.

As for the market, the five-day dip into last Wednesday was a downer, but it looks like a year-end rally is underway, with the indexes and many stocks lifting nicely of late. Of course, looking ahead, early January is usually very tricky, though as always, we’ll just take it as it comes: Today, we continue to see more good than bad out there, though it does depend on where you look, with cyclical and financial areas doing well while growth areas are picking up steam but lagging. We’ll nudge our Market Monitor up to a level 7, respecting the action, but focusing on what’s working remains paramount.

This week’s list is again well balanced, with some strong names continuing their moves and other titles emerging after long rest periods. Our Top Pick has many industry-wide and company-specific tailwinds, and the stock looks to be changing character as it discounts a much brighter future.

In our final issue of 2025, we close out what has been another extremely profitable year for the market and the Stock of the Week portfolio by adding one more risk-on stock that will hopefully take flight in the new year. It’s a mid-cap nuclear energy play that was recently recommended by Tyler Laundon to his Cabot Early Opportunities audience. We will be back with our next issue in two weeks, on January 5, 2026. In the meantime, enjoy today’s issue – and Happy Holidays!

Please note, here is the schedule for the holiday-shortened week:

• The stock market will be open Monday through Wednesday until 1 eastern.
• Closed Wednesday afternoon and Thursday.
• Open on Friday.

My plan is to very loosely watch the market on Friday.

You will receive the Daily Option Order Flow email Monday through Thursday mornings, and then again starting the following Tuesday.

Have a great holiday!

Despite a mid-week wobble in tech (especially AI stocks), the bulls stepped up Thursday and Friday, and by week’s end the indexes finished mostly mixed. The S&P 500 gained 0.1%, the Dow lost 0.7%, the Nasdaq rose by 0.5% and the Russell fell 0.9%.

Please note, here is the schedule for the holiday-shortened week:

• The stock market will be open Monday through Wednesday until 1 eastern.
• Closed Wednesday afternoon and Thursday.
• Open on Friday.

My plan is to very loosely watch the market on Friday.

You will receive the Daily Option Order Flow email Monday through Thursday mornings, and then again starting the following Tuesday.

Have a great holiday!

Despite a mid-week wobble in tech (especially AI stocks), the bulls stepped up Thursday and Friday, and by week’s end the indexes finished mostly mixed. The S&P 500 gained 0.1%, the Dow lost 0.7%, the Nasdaq rose by 0.5% and the Russell fell 0.9%.

Amid all the noise, you may have missed that Microsoft (MSFT) is investing $5.4 billion over the next two years to expand its existing data center capacity in Canada. The investment is primarily aimed at strengthening Canada’s AI and cloud infrastructure in Toronto and Quebec City.

Microsoft has pledged to keep Canadian data on Canadian soil and is launching a new “Threat Intelligence Hub” in Ottawa. This hub will allow experts to work closely with the Canadian government on cybersecurity threat monitoring.

This is a big win for Canada and is likely tied to one of the country’s secret weapons: cheap, dependable hydro power. This is where we go for this week’s new recommendation.

While momentum in many of 2025’s leading growth and AI names has waned, there are many “new” groups of stocks acting very well. This month’s issue focuses on these companies, which might offer somewhat less top-line growth but still significant upside share price potential.

This month’s issue tilts toward industrial-type names, like companies that make filters and specialized bearings for mission-critical equipment, power converters for data centers and medical imaging devices, and protection equipment for nuclear facilities. We also have a cruise line operator that’s crushing it.

Enjoy!

Despite a late-week sell-off, stocks finished last week with a mixed but telling tape. Federal Reserve policymakers delivered a widely anticipated 25 basis-point rate cut mid-week — reinforcing easier policy expectations — while fresh highs in cyclicals and small caps early in the week signaled strong breadth, only to be met by renewed AI valuation angst into Friday. Rotation out of mega-cap tech and into value names helped buoy the Dow and Russell 2000, which gained 1% and 0.5%, respectively, even as the tech-heavier S&P 500 and Nasdaq fell 0.6% and 1.6%.

The overall evidence is more good than bad, but it really depends where you look—AI stocks specifically (and growth stocks in general) have been lagging, while many cyclical and value-type areas have been doing well, with more stocks breaking out on the upside and with many holding firm during some sloppiness the past two days. At this point, we’re just going with what’s in front of us: Extending our line in fresher titles that are showing strength, but raising stops on laggards and being selective given the crosscurrents that are out there.

This week’s list has something for everyone, with a decent amount of non-AI growth, along with some cyclicals and a turnaround or two. Our Top Pick is a name we missed a month ago but whose recent pullback is starting to set up a nice risk/reward situation.

The market didn’t get the bump from another Fed rate cut that some may have anticipated, though it’s possible the run-up was already baked in after the cut was deemed all but a foregone conclusion starting late last month. Still, stocks are hovering near record highs, and broader measures like small caps and the equal-weight index are catching up to the major indexes. Improving breadth means it’s a good time to add a dividend-paying energy stock, courtesy of Cabot Dividend Investor Chief Analyst Tom Hutchinson. It’s a stock that’s picked up a full head of steam since bottoming in mid-August.

Details inside.

Despite a late-week sell-off, stocks finished the week with a mixed but telling tape. Federal Reserve policymakers delivered a widely anticipated 25 basis-point rate cut mid-week — reinforcing easier policy expectations — while fresh highs in cyclicals and small caps early in the week signaled strong breadth, only to be met by renewed AI valuation angst into Friday. Rotation out of mega-cap tech and into value names helped buoy the Dow and Russell 2000 which gained 1% and 0.5%, respectively, even as the tech-heavier S&P 500 and Nasdaq fell 0.6% and 1.6%.

Despite a late-week sell-off, stocks finished the week with a mixed but telling tape. Federal Reserve policymakers delivered a widely anticipated 25 basis-point rate cut mid-week — reinforcing easier policy expectations — while fresh highs in cyclicals and small caps early in the week signaled strong breadth, only to be met by renewed AI valuation angst into Friday. Rotation out of mega-cap tech and into value names helped buoy the Dow and Russell 2000 which gained 1% and 0.5%, respectively, even as the tech-heavier S&P 500 and Nasdaq fell 0.6% and 1.6%.

The market’s evidence continues to improve, with our core market timing indicators returning to the bullish side of the fence. That’s obviously a good thing and has us optimistic -- though upside follow through from here will be key, as many growth measures are still lagging behind, though we are seeing more setups, especially from areas that sat around for much of the past year (see the issue for much more on that). All told, we are doign some new buying tonight, and will have more to come if the market continues to act well.

Due to a short Thanksgiving week, rather than the usual stock-by-stock update, I will briefly highlight some significant moves by Explorer stocks. I’d also like to wish you and your family a great long Thanksgiving weekend.

Regrettably, Universal Technical Institute (UTI) has not worked out for us despite filling a crucial need and posting impressive earnings, as the stock was down sharply this week. I’m moving this to a sell. Coeur Mining (CDE) and International Business Machines (IBM) were both up about 6% this week, while Sea Limited (SE) was down 7%.

A couple of weeks ago we discussed the likelihood that the “all things AI” momentum trade would sooner or later lose luster. I called into question the tenacity of some of 2025’s top-performing tech stocks while also speculating that some of this year’s wayside laggards would launch a return to prominence in the coming months.

WHAT TO DO NOW: The market tried to rebound today after Nvidia’s earnings last night—but big investors stepped up to sell, driving the market and many growth stocks into the red. Our Cabot Tides have now joined the Two-Second Indicator in negative territory, which has us remaining cautious and holding plenty of cash. In the Model Portfolio, we’re going to book partial profits in the ProShares S&P 500 Fund (SSO), selling one-third of our stake and holding the rest. That will leave us with a cash position of 62%. Details below.

A quick housekeeping note: with our offices closed next Thursday and Friday for Thanksgiving, we won’t be publishing the regular Weekly Update next week. I will, of course, send out Special Bulletins if/as needed. I hope you have a happy and healthy Thanksgiving!

On to the market.

Nvidia’s (NVDA) upbeat revenue forecast due to ongoing AI demand should help to tamp down bubble concerns today and possibly stanch the selling that pushed the S&P 500 and Nasdaq below their 50-day moving average lines earlier this week and inflicted the same damage on the S&P 600 SmallCap Index last Thursday.

It was a rough week for investors of all stripes, as the S&P 500 is down 3.5% since we last wrote, while the Nasdaq tumbled more than 4%. Even the usually steadier Dow Jones Industrial pulled back nearly 5%, while value stocks pulled back nearly 2%. All month, growth stocks have been getting battered, with many high flyers getting sold off even after convincing earnings beats. Now, the selling has spread to other corners of the market.

But not all sectors are suffering.

The market rally is sputtering. The near-term direction of stocks is highly uncertain. But we might have a much better idea of where things are going by the end of this week.

This will be an important week for a market that’s been floundering.

The S&P 500 is still in an uptrend that began in April. The index is up 14.5% year to date and within 3% of the high. But stocks are down 2% so far in November as investors fret about technology.

A growing chorus of concern regarding artificial intelligence valuations is dragging on the market. Several analysts believe AI stocks have gotten ahead of themselves. Technology has pulled this market higher all year and for most of the bull market. A pullback in those stocks will likely drag the index lower.

In her latest State of the Union address, European Commission President Ursula von der Leyen provided the parliament and citizens of Europe with a stark reminder of a problem that continues to plague governments, corporations and individuals around the world.

In her speech, she specifically referenced “the higher cost of living” for millions of Europeans as “THE global crisis” (emphasis mine). Not climate or geopolitical instability or cybersecurity threats, but inflation.

Small caps continue to underperform large caps in 2025.

The S&P 600 is up a mere 3.6% year to date, trailing the S&P 500’s 16.7% gain by roughly 13 percentage points.

The gap closes meaningfully if we strip out megacaps’ strong performance and compare the S&P 600 with the S&P 500 Equal Weight ETF (RSP), which is up “just” 10.3%.

The end of the government shutdown is buoying markets while indications that some of the AI-related stocks are retrenching is a headwind for the overall market.

The AI story is clearly impacting the cutting of management jobs with the worst numbers in one month in more than two decades, according to outplacement firm Challenger, Gray & Christmas. The last time companies made more layoffs during that month was in 2003, when cell phones started to take off. American investors funded $104 billion of AI startups in the first half of 2025 alone.

Growth stocks, led by the Magnificent Seven, have again carried the market this year.

The Mag. 7 – the clever name for big-tech behemoths Amazon (AMZN), Apple (AAPL), Google (GOOG), Meta (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) – are up an average of 22% this year. Because those seven companies account for more than a third of the entire S&P 500, they’ve carried the index to a solid 16.5% gain year to date. The Equal Weight S&P 500 index, which equally weighs each of the 500 stocks that comprise the benchmark index, is up a mere 8.5% and has barely budged since the Fourth of July. For most stocks, the entirety of this year’s rally occurred during the post-Liberation Day run-up from the second half of April through early July.

It’s cannabis earnings season once again. Like most retailers, cannabis companies report late in the earnings season. I’ll get into company details below. But first, here are the key sector takeaways from third-quarter results.

Warrior Met Coal (HCC), Primo Brands (PRMB) and Millicom (TIGO) Report

It’s required patience to live with the ups and downs of owning Enovix (ENVX) for as long as we have. And the timeline here serves as another reminder that building a company to bring a new product to market is no small feat. In this case, the launch of high-volume sales keeps getting pushed out, which also pushes out performance of the stock. But we’re sticking with ENVX because those better days should still arrive. And when they do, I think the stock can capture investors’ imagination and push it to levels that will seem, at times, totally ridiculous. We have seen that time and time again with these types of stocks.

WHAT TO DO NOW: While the market is in decent shape, our indicators are worsening, the broad market is weak and growth stocks remain very tricky—many look fine, but volatility is insane and, this week, we’ve seen more than a few air pockets after earnings. We’re still taking things on a stock-by-stock basis, which today means cutting bait on Arista Networks (ANET), which looks toppy after a poor earnings reaction. We’ll sell and hold the cash, which will be around 45% of the portfolio.

Hello from Senegal! While there is no regular Cabot Explorer issue this week as I am halfway around the world, I do have two new Sell alerts today.

Sportradar (SRAD), Unity (U) and Triple Flag (TFPM) Report

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