Issues
Surging data center demand. Electric vehicles. Heat pump HVAC systems. Severe weather events. Hurricanes. Rising sea levels. North Carolina flooding.
This is just a short list of the drivers behind rising electricity demand, the harsh realities of being behind the curve when it comes to global warming, and the resulting push toward energy efficiency and greenhouse gas emission reductions.
Today’s portfolio addition is a small and still-unknown company that helps solve these challenges, moving the country toward a more sustainable, clean-energy future.
I think you’ll find it interesting.
This is just a short list of the drivers behind rising electricity demand, the harsh realities of being behind the curve when it comes to global warming, and the resulting push toward energy efficiency and greenhouse gas emission reductions.
Today’s portfolio addition is a small and still-unknown company that helps solve these challenges, moving the country toward a more sustainable, clean-energy future.
I think you’ll find it interesting.
Everybody is talking about the potential of generative AI. But a lot of organizations haven’t yet organized their digital data in such a way that they can leverage it for AI, let alone protect it once AI applications gain access.
Today, we’re jumping into a steady-growth software company that helps solve this problem.
Today, we’re jumping into a steady-growth software company that helps solve this problem.
Infrastructure has been a hot topic for the last couple of years given passage of a bipartisan bill to finally spruce up the U.S. and try and address climate change.
This month we’re jumping into a pure-play infrastructure company that owns railroads and deep-water ports supporting crude oil and clean fuel shipments, as well as a modern power plant that’s getting tons of calls from AI data centers.
One thing – the company reports quarterly results after the bell today!
This month we’re jumping into a pure-play infrastructure company that owns railroads and deep-water ports supporting crude oil and clean fuel shipments, as well as a modern power plant that’s getting tons of calls from AI data centers.
One thing – the company reports quarterly results after the bell today!
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.
Updates
Small caps have bounced around this week, taking a break from the rally that began on September 11 and continued through the 19th.
Behind the scenes, analysts have been increasing their earnings expectations for the asset class. This is largely because rates are falling, but also because the economy is holding up.
Behind the scenes, analysts have been increasing their earnings expectations for the asset class. This is largely because rates are falling, but also because the economy is holding up.
Finally! The Fed met yesterday and, as expected, began a rate cutting cycle. The market, and small caps, love it.
The magnitude of the September cut, 50 bps, is a bit of a surprise. Despite what Fed Chair Jerome Powell said during the press conference yesterday, this is partially a make-up cut. Since there was no meeting in August, and the Fed didn’t cut in July, it was time to make a statement.
The magnitude of the September cut, 50 bps, is a bit of a surprise. Despite what Fed Chair Jerome Powell said during the press conference yesterday, this is partially a make-up cut. Since there was no meeting in August, and the Fed didn’t cut in July, it was time to make a statement.
After a couple of tough weeks, maybe due to a lingering yen carry-trade impact and a little too much concern over a weakening economy, the market has acted much better the last couple of days.
It seems we’re in one of those periods where there isn’t a major market catalyst, even though we’re getting inflation reports, presidential debates and a Fed meeting. So the market is just bouncing around.
It seems we’re in one of those periods where there isn’t a major market catalyst, even though we’re getting inflation reports, presidential debates and a Fed meeting. So the market is just bouncing around.
The S&P 600 Small Cap ETF (IJR) closed out last week on a high note as the index rallied 3.4% on Friday following comments from Fed Chair Jerome Powell in Jackson Hole that confirmed what investors were expecting, that an interest rate cut in September is likely.
Small caps have chopped around this week, inching a little lower but not making any dramatic moves.
The market is now pricing in a roughly 35% probability of a 50-bp rate cut next month, and just over 100 bp of easing by the end of this year.
Small caps have chopped around this week, inching a little lower but not making any dramatic moves.
The market is now pricing in a roughly 35% probability of a 50-bp rate cut next month, and just over 100 bp of easing by the end of this year.
While the S&P 600 Small Cap ETF (IJR) hasn’t yet challenged its high for the year of 120.7, hit just prior to the market rout a few weeks ago, the index’s performance lately has still been impressive.
For most of this year the IJR bumped up against overhead resistance near 111. It finally blasted through in the second week of July. But that market turbulence from a few weeks ago seemed like it could put a lid on the index for a while.
That hasn’t been the case.
Small caps have come back swiftly, jumping back above that 111 level a week ago and acting very well this past week.
For most of this year the IJR bumped up against overhead resistance near 111. It finally blasted through in the second week of July. But that market turbulence from a few weeks ago seemed like it could put a lid on the index for a while.
That hasn’t been the case.
Small caps have come back swiftly, jumping back above that 111 level a week ago and acting very well this past week.
With this week’s PPI inflation number (Tuesday morning) coming in lower than expected and the CPI reading (Wednesday morning) coming in as expected, the trend of lower inflation remains intact.
That’s a good thing, unless you have a hankering to buy more Treasuries and have held off.
The 2-year Treasury yield is now below 4%.
That’s a good thing, unless you have a hankering to buy more Treasuries and have held off.
The 2-year Treasury yield is now below 4%.
What a wild couple of weeks.
For two weeks after the June 11 CPI print, small-cap stocks were advancing at such a record pace that they were finally being talked about again in the financial media.
Everything seemed great through the Fed meeting last Wednesday.
Then the wheels came off.
For two weeks after the June 11 CPI print, small-cap stocks were advancing at such a record pace that they were finally being talked about again in the financial media.
Everything seemed great through the Fed meeting last Wednesday.
Then the wheels came off.
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.
Alerts
Shares of Zeta (ZETA) are up about 5% this morning after the company announced it will acquire LiveIntent, a people-based marketing technology company founded in 2009.
Mama’s Creation (MAMA), our micro-cap grocery company that’s a play on the growth in deli prepared food, reported a solid Q2 after the closing bell yesterday that slightly surpassed expectations.
Artivion (AORT) Delivers Q2 Beat; Sell Remaining Half of EverQuote (EVER)
EverQuote (EVER) and RxSight (RXST) Deliver; FTAI Infrastructure (FIP) Still a Buy
Shares of new addition FTAI Infrastructure (FIP) are trading down modestly today but outperforming the market after delivering Q2 results at the crack of dawn this morning (not after the bell yesterday, as they were supposed to).
Enovix (ENVX), Weave (WEAV), TransMedics (TMDX) and Zeta (ZETA) Deliver