Issues
In 2022 new management took the helm of a small, deli-focused food company that was underperforming its potential. Fast forward a couple of years and management is executing an ambitious growth plan, while consumers are flocking to the deli section like never before.
This month’s Issue tells the story of a micro-cap company that’s hitting its stride a century after the woman it’s named after completed the journey from Italy to Brooklyn, NY.
This month’s Issue tells the story of a micro-cap company that’s hitting its stride a century after the woman it’s named after completed the journey from Italy to Brooklyn, NY.
In 2000 a small company began selling a proprietary surgical adhesive to seal up arteries. Over the next two decades that company would acquire several highly specialized products for patients undergoing heart surgery.
Today, the company is hitting its stride as surgeons and patients (and the FDA) see how much better its solutions are.
This month’s Issue has all the details.
Today, the company is hitting its stride as surgeons and patients (and the FDA) see how much better its solutions are.
This month’s Issue has all the details.
The digital marketing world has been turned upside down as new privacy measures make it more challenging to track consumers across online and in-app activities.
But one company has been building out a unique opt-in data set and the backend technology to do just that. It sells this information to the biggest companies in the world so they can reach consumers with personalized marketing messages. With the new privacy measures, business is strong.
All the details are inside the May Issue of Cabot Small-Cap Confidential.
But one company has been building out a unique opt-in data set and the backend technology to do just that. It sells this information to the biggest companies in the world so they can reach consumers with personalized marketing messages. With the new privacy measures, business is strong.
All the details are inside the May Issue of Cabot Small-Cap Confidential.
There is a growing mental health crisis going on out there.
But it’s starting to be addressed by a tiny, unknown (so far) company with a virtual care platform that’s beginning to make a difference across the U.S. And it’s doing so while growing both the top and bottom lines.
All the details are inside the April Issue of Cabot Small-Cap Confidential.
But it’s starting to be addressed by a tiny, unknown (so far) company with a virtual care platform that’s beginning to make a difference across the U.S. And it’s doing so while growing both the top and bottom lines.
All the details are inside the April Issue of Cabot Small-Cap Confidential.
Half of all people need cataract surgery. But even though messing with your eyes is a massive decision, the Big 3 MedTech players in this market don’t have the best solution out there.
This is where today’s company comes in. It has developed cutting-edge technology that drives better outcomes for patients needing cataract surgery. The key? Its lens can be customized once in the eye!
All the details are inside the March Issue of Cabot Small-Cap Confidential.
This is where today’s company comes in. It has developed cutting-edge technology that drives better outcomes for patients needing cataract surgery. The key? Its lens can be customized once in the eye!
All the details are inside the March Issue of Cabot Small-Cap Confidential.
The auto insurance market has been in a deep freeze since the middle of 2021. But now it’s thawing ... maybe even shifting into growth mode. That means huge potential for companies with direct access to the market.
That’s where today’s idea comes in. It’s a micro-cap internet company that offers unfiltered exposure to the auto, home and renters’ insurance markets.
All the details are inside the February Issue of Cabot Small-Cap Confidential.
That’s where today’s idea comes in. It’s a micro-cap internet company that offers unfiltered exposure to the auto, home and renters’ insurance markets.
All the details are inside the February Issue of Cabot Small-Cap Confidential.
This month we’re jumping into a small software company that provides solutions for a specific small- and mid-sized business (SMB) market.
While the market for SMB software has been tough for the last two years, this company’s revenue growth has accelerated and customers that bailed in 2022 are coming back. In short, best-of-breed software isn’t dead! And this player is about to become profitable too. Enjoy!
While the market for SMB software has been tough for the last two years, this company’s revenue growth has accelerated and customers that bailed in 2022 are coming back. In short, best-of-breed software isn’t dead! And this player is about to become profitable too. Enjoy!
This month we’re adding a small company that specializes in software that helps organizations train their employees and the partners they work with.
The company has a market cap of $1.5 billion, is growing revenue by about 25% and throws off a ton of cash relative to its size. Moreover, I rarely see this stock in the media, despite impressive growth and achievements. I think that’s about to change.
All the details are inside this month’s Issue.
The company has a market cap of $1.5 billion, is growing revenue by about 25% and throws off a ton of cash relative to its size. Moreover, I rarely see this stock in the media, despite impressive growth and achievements. I think that’s about to change.
All the details are inside this month’s Issue.
This month we’re adding a small company that specializes in the opaque and inefficient market for selling surplus and salvaged goods.
The company has a market cap of just $580 million and is growing revenue and EPS by double digits. It’s an interesting setup, especially as government agencies and corporations increasingly look to save money and achieve sustainability goals.
All the details are inside this month’s Issue.
The company has a market cap of just $580 million and is growing revenue and EPS by double digits. It’s an interesting setup, especially as government agencies and corporations increasingly look to save money and achieve sustainability goals.
All the details are inside this month’s Issue.
We’re switching things up this month, steering clear of high-tech, medical devices and other fancy types of companies.
This company is super easy to understand, sells a product pretty much everybody adores, has a seasonal tailwind and is executing on its profit growth agenda.
All the details are inside this month’s Issue.
This company is super easy to understand, sells a product pretty much everybody adores, has a seasonal tailwind and is executing on its profit growth agenda.
All the details are inside this month’s Issue.
This month we’re jumping into a highly specialized financial services company that helps immigrants send money to friends and families overseas.
You can think of it as the modern version of Western Union (WU). But there’s more to the story than that. Starting with a vision that’s a lot more about helping customers than overcharging them.
The hook is that revenue growth is off the charts. And it’s profitable!
All the details are inside this month’s Issue.
You can think of it as the modern version of Western Union (WU). But there’s more to the story than that. Starting with a vision that’s a lot more about helping customers than overcharging them.
The hook is that revenue growth is off the charts. And it’s profitable!
All the details are inside this month’s Issue.
This month we’re digging into an emerging software star that specializes in helping brands communicate with consumers like you and me.
The details behind the technology are a bit technical. But if you’ve noticed an uptick in personalized emails and text messages letting you know it’s a good night to get takeout, or that those shoes you’ve been pining for are back in stock, you get the picture. Enjoy!
The details behind the technology are a bit technical. But if you’ve noticed an uptick in personalized emails and text messages letting you know it’s a good night to get takeout, or that those shoes you’ve been pining for are back in stock, you get the picture. Enjoy!
Updates
Small caps have been up and down over the last week with the net result being that there was almost no change since last Thursday (through 10:25 AM ET today).
That doesn’t sound too meaningful until you consider that the S&P 500 is down 2.6% over the same period and that small caps have outperformed in all sectors except for consumer staples, energy and utilities.
That doesn’t sound too meaningful until you consider that the S&P 500 is down 2.6% over the same period and that small caps have outperformed in all sectors except for consumer staples, energy and utilities.
All of a sudden small-cap stocks are the talk of the town.
I guess that’s what happens when the asset class posts its best five-day streak since April 2020!
Despite the recent move, Barclays reports that Commodity Trading Advisor (CTA) positioning is still neutral on small caps (overweight S&P 500 and Nasdaq), leaving ample room for more buying.
I guess that’s what happens when the asset class posts its best five-day streak since April 2020!
Despite the recent move, Barclays reports that Commodity Trading Advisor (CTA) positioning is still neutral on small caps (overweight S&P 500 and Nasdaq), leaving ample room for more buying.
At the index level, small-cap performance has been unremarkable (though stable) for a while, but under the hood, there continue to be plenty of performing names, and we’ve been fortunate enough to be in a number of them.
That said, there’s been some shifting of the deck this week with a few growthy stocks (TMDX, RXST) taking a bit of a hit. On the flip side, continued performance from the likes of ENVX and new addition (from June) AORT is very nice to see.
That said, there’s been some shifting of the deck this week with a few growthy stocks (TMDX, RXST) taking a bit of a hit. On the flip side, continued performance from the likes of ENVX and new addition (from June) AORT is very nice to see.
Just a quick housekeeping note. With the 4th of July holiday next Thursday, I’m going to send out the July Issue one day earlier than normal. Look for it next Wednesday, July 3.
As the second quarter comes to a close, a quick look at the performance of small caps relative to large caps shows just how important stock picking has been this year, and especially once you step away from the influence of the Magnificent 7, which now make up almost 32% of the S&P 500.
As the second quarter comes to a close, a quick look at the performance of small caps relative to large caps shows just how important stock picking has been this year, and especially once you step away from the influence of the Magnificent 7, which now make up almost 32% of the S&P 500.
With the Juneteenth Holiday this week and our last update just three business days ago (and right after the FOMC meeting), there is very little to talk about today. So, I’ll keep things short and sweet and we’ll jump right into company-specific updates, of which there are hardly any.
In other words, enjoy a break in the action! They rarely last long.
In other words, enjoy a break in the action! They rarely last long.
Small caps are off ever so slightly over the last five sessions, though yesterday’s CPI data and Jerome Powell’s press conference/FOMC meeting helped the asset class bounce back from what was a fairly ugly looking four-day slide. The big-picture takeaway here is that the asset class is suffering from the same type of bad breadth malaise that’s keeping a lid on much of the broader market.
It’s been another week of small caps getting pulled around by moves in the 10-year yield, which is largely a function of Fed speaker commentary.
First it was Neel Kashkari (non-voter) sounding off with hawkish comments (yields up, small caps down), though it’s the inverse today after Raphael Bostic (voter) said he still thinks the Fed will be in position to cut rates in Q4.
Next up are NY Fed President John Williams (12:05 ET) while Dallas Fed President Lorie Logan speaks after the close today.
First it was Neel Kashkari (non-voter) sounding off with hawkish comments (yields up, small caps down), though it’s the inverse today after Raphael Bostic (voter) said he still thinks the Fed will be in position to cut rates in Q4.
Next up are NY Fed President John Williams (12:05 ET) while Dallas Fed President Lorie Logan speaks after the close today.
The S&P 600 Small Cap Index has drifted a little lower this week but made a nice move over the last month as interest rates declined. The S&P 600 iShares ETF (IJR) is up 7% over the last five weeks.
The chart inside shows how clear the inverse relationship between the IJR (green line) and the 10-year yield (blue line) is.
The chart inside shows how clear the inverse relationship between the IJR (green line) and the 10-year yield (blue line) is.
We’ve been able to enjoy a break in the earnings action this week (finally), and without a lot of company-specific updates, we’ll keep things short and sweet today.
The main message is that the broad market continues to rise on the back of rate cut expectations and a falling 10-year yield (down to 4.35% from over 4.7% a couple weeks ago).
The main message is that the broad market continues to rise on the back of rate cut expectations and a falling 10-year yield (down to 4.35% from over 4.7% a couple weeks ago).
Earnings reports have been on the menu this week. Some have gone our way, with Zeta (ZETA) and EverQuote (EVER) having fantastic reactions. We’ve taken a few punches too, and Talkspace (TALK) was cut on weakness while Alphatec (ATEC) is down but not yet out of the portfolio.
I’ve upgraded Intapp (INTA) this week as that stock looks like it could move significantly higher. We also add to our Weave (WEAV) position today in anticipation of a rebound in the share price.
I’ve upgraded Intapp (INTA) this week as that stock looks like it could move significantly higher. We also add to our Weave (WEAV) position today in anticipation of a rebound in the share price.
The week was ticking along pretty well until this morning’s first read of GDP (1.6% vs. expectations of 2.2%) came out and shot a small hole in the “at least the economy is doing well” argument that’s helped the market hold up despite persistent inflation data.
Embedded in the GDP report were Q1 core and headline PCE inflation, both of which were a little hotter than expected and up from Q4 of 2023. March PCE data will be out tomorrow and is expected to be the biggest macro news event of the week.
Embedded in the GDP report were Q1 core and headline PCE inflation, both of which were a little hotter than expected and up from Q4 of 2023. March PCE data will be out tomorrow and is expected to be the biggest macro news event of the week.
The market continues to struggle with the rapid jump in interest rates (10-year at 4.63% after hitting 4.7% on Tuesday).
I think we’re still fluctuating somewhere between a code yellow and a code orange situation (was code green a few weeks ago!) so long as that yield doesn’t go over 4.7% and all hell doesn’t break loose in the Middle East.
I think we’re still fluctuating somewhere between a code yellow and a code orange situation (was code green a few weeks ago!) so long as that yield doesn’t go over 4.7% and all hell doesn’t break loose in the Middle East.
Alerts
Shares of Docebo (DCBO) opened lower this morning after the company delivered a Q1 beat after the close yesterday but lowered full-year guidance.
Shares of Intapp (INTA) should open higher today after the company beat Q3 fiscal 2024 expectations after the close yesterday. Revenue grew 20.2% to $110.6 million, beating by $2.4 million (2.3%), while EPS of $0.14 was up from a penny in the year-ago quarter and beat by $0.07.
New kid on the block Zeta (ZETA) is starting the week off with a bang after the Q1 report yesterday sailed past expectations.
Enovix (ENVX) Up On Q1 Results and Development Agreement, Weave Communications (WEAV) Dips After Q1 Report
Shares of TransMedics (TMDX) are indicated to open nicely higher this morning (+10% to 15%) after the company smashed Q1 expectations.
As the market continues to push out expectations for a rate cut (Powell’s comments yesterday make this much more likely), we’re going to lighten up a little more, starting with Liquidity Services (LQDT), which moves to sell today.