Issues
We’re digging into another compelling MedTech story this month.
The company in focus is a spine specialist. It’s been grabbing market share from larger players by growing a portfolio that covers the full spectrum of spine care, from imaging and surgery planning to surgical tools and implants.
It’s a great example of how intense focus on a specific market can set one player apart from the big boys. Enjoy!
The company in focus is a spine specialist. It’s been grabbing market share from larger players by growing a portfolio that covers the full spectrum of spine care, from imaging and surgery planning to surgical tools and implants.
It’s a great example of how intense focus on a specific market can set one player apart from the big boys. Enjoy!
This month we are going with a small industrial company that is showing how consistent focus on operational improvement can pay dividends.
Once thought of as a highly cyclical company with management that tended to drop the ball, execution has improved dramatically. In 2022 revenue was up 14% and EPS was up 41%.
With exposure to megatrends like infrastructure and global electrification, I see more upside ahead.
Enjoy!
Once thought of as a highly cyclical company with management that tended to drop the ball, execution has improved dramatically. In 2022 revenue was up 14% and EPS was up 41%.
With exposure to megatrends like infrastructure and global electrification, I see more upside ahead.
Enjoy!
This month we are dialing up the risk a little with a small software company that has a potentially disruptive platform that streamlines back-office processes for small and mid-sized businesses.
There are risks. The economy isn’t super strong, and this is a competitive market. But this company has a truly innovative set of solutions, is in one of the market’s most beat-up sectors and has new products and a low-cost customer acquisition strategy.
It’s also profitable and generates positive free cash flow, two attributes that make it an attractive acquisition target.
Enjoy!
There are risks. The economy isn’t super strong, and this is a competitive market. But this company has a truly innovative set of solutions, is in one of the market’s most beat-up sectors and has new products and a low-cost customer acquisition strategy.
It’s also profitable and generates positive free cash flow, two attributes that make it an attractive acquisition target.
Enjoy!
This month we’re going with a small software company serving a resilient industry that has been slow to adopt to cloud technology, but which is coming on strong now.
Despite the tough macro environment this company has been beating expectations for many quarters. Management has been raising revenue guidance too, and a tweak to the business model is starting to pay dividends.
Enjoy!
Despite the tough macro environment this company has been beating expectations for many quarters. Management has been raising revenue guidance too, and a tweak to the business model is starting to pay dividends.
Enjoy!
This month we’re going with a little-known consulting company that’s growing revenue and EPS in the double digits as it helps organizations adapt to the changing times.
It is growing especially quickly in areas like digital transformation, which is challenging for lumbering organizations in the healthcare and education segments where the firm generates the bulk of its revenue.
With a fresh revenue and profit growth strategy and a plan to return more money to shareholders, this little company’s stock looks great.
Enjoy!
It is growing especially quickly in areas like digital transformation, which is challenging for lumbering organizations in the healthcare and education segments where the firm generates the bulk of its revenue.
With a fresh revenue and profit growth strategy and a plan to return more money to shareholders, this little company’s stock looks great.
Enjoy!
With market jitters returning following the Fed’s meeting yesterday, we’re going back to a segment that’s served us well so far this year – MedTech.
Today’s portfolio addition is another highly specialized company that’s doing things far better than the competition and growing by over 30%.
Enjoy!
Today’s portfolio addition is another highly specialized company that’s doing things far better than the competition and growing by over 30%.
Enjoy!
The market has been trying to climb off its knees this week as we’re finally getting some solid evidence that both inflation and the job market are cooling.
In a seemingly odd twist, in the short term what’s bad for the economy is probably good for the stock market. While that doesn’t mean we’re out of the woods just yet, I’m going to up our risk profile slightly with a potential big winner in the battery industry.
This company is currently qualifying batteries for wearable technologies and expects to move into more consumer markets, as well as the EV market, in the coming years. All the details are inside the October Issue.
Enjoy!
In a seemingly odd twist, in the short term what’s bad for the economy is probably good for the stock market. While that doesn’t mean we’re out of the woods just yet, I’m going to up our risk profile slightly with a potential big winner in the battery industry.
This company is currently qualifying batteries for wearable technologies and expects to move into more consumer markets, as well as the EV market, in the coming years. All the details are inside the October Issue.
Enjoy!
The market has been iffy since Fed Chair Jerome Powell’s “prepare for pain” speech at Jackson Hole last Friday.
With interest rates up and (most) stocks down since I’m going with a high-quality name this month.
This healthcare specialist just posted 44% growth in Q2 and has grown its covered lives by 80% over the last 12 months. It’s profitable, and with a bucket of new contracts in the first half of 2022 the business looks set up for a terrific 2023.
Enjoy!
With interest rates up and (most) stocks down since I’m going with a high-quality name this month.
This healthcare specialist just posted 44% growth in Q2 and has grown its covered lives by 80% over the last 12 months. It’s profitable, and with a bucket of new contracts in the first half of 2022 the business looks set up for a terrific 2023.
Enjoy!
The market is getting stronger and higher-growth names are leading the charge.
This month we dig into an overlooked company with a global payments platform that’s helping solve digital payment challenges in complex industries.
Growth is expected to be over 30% for a number of years, and the stock is acting well.
Enjoy!
This month we dig into an overlooked company with a global payments platform that’s helping solve digital payment challenges in complex industries.
Growth is expected to be over 30% for a number of years, and the stock is acting well.
Enjoy!
This month we go back to the MedTech well and pull out a small company with a potentially transformative technology that could shake up the organ transplant market.
With recent FDA approvals and a platform that appears to be head and shoulders above the standard of care, this company is enjoying rapid revenue growth now.
Enjoy!
With recent FDA approvals and a platform that appears to be head and shoulders above the standard of care, this company is enjoying rapid revenue growth now.
Enjoy!
The market continues to be messy, but we’re going to take a partial swing at a profitable software company playing in a big, growth market – cloud services.
This company is like a smaller version of Amazon Web Services and Microsoft Azure. But without all the other parts of those much, much larger companies.
We may be a bit early. But we’ll manage that risk by taking a half position in a company that’s likely to grow above 30% for years and is very profitable.
Enjoy!
This company is like a smaller version of Amazon Web Services and Microsoft Azure. But without all the other parts of those much, much larger companies.
We may be a bit early. But we’ll manage that risk by taking a half position in a company that’s likely to grow above 30% for years and is very profitable.
Enjoy!
The market remains very challenging for high-growth stocks. While I have a list of innovative companies I’m excited to recommend (at some point), for now we’ll continue to diversify our portfolio with more value-oriented names.
This month’s new addition is a little-known supermarket chain I’ve been following for some time. The pitch is very straightforward – rising prices and an insulated business model should help the company post impressive growth in 2022 and 2023. Not to mention we have upside if/as the name spreads among investors that are increasingly looking for just this kind of stock.
Last but not least, the chart looks fantastic.
This month’s new addition is a little-known supermarket chain I’ve been following for some time. The pitch is very straightforward – rising prices and an insulated business model should help the company post impressive growth in 2022 and 2023. Not to mention we have upside if/as the name spreads among investors that are increasingly looking for just this kind of stock.
Last but not least, the chart looks fantastic.
Updates
First off, just a little housekeeping. I’ll be taking time next week to spend with my family, parents, siblings and new niece in Vermont. Much of our production staff will also be taking some time off, so there won’t be a Weekly Update next Thursday. If there is any pressing news I’ll address it via Special Bulletin.
I hope you have a Happy Holiday season!
I hope you have a Happy Holiday season!
Small caps are having a very nice week as a lot of rate-sensitive areas of the market zoom higher following the Fed’s meeting and Jerome Powell’s press conference yesterday.
I’ve been saying I think small caps are very attractive lately, so the directional move here isn’t a surprise, though the pace of this week’s gains is rather eye opening. The S&P 600 Small Cap index is up about 7% over the last two days through midday Thursday!
I’ve been saying I think small caps are very attractive lately, so the directional move here isn’t a surprise, though the pace of this week’s gains is rather eye opening. The S&P 600 Small Cap index is up about 7% over the last two days through midday Thursday!
With the market on track to post a very nice gain in November, it’s been a good time to just sit back and let most stocks do their thing. Much of this move has been driven by lower yields and peak Fed chatter, with inflation and economic data largely supporting the disinflation and soft-landing scenario.
Whether or not the Fed will ultimately begin to cut rates next spring/early summer remains to be seen, but that’s what the market is currently expecting. We’ll now look to the December 12/13 FOMC meeting (last of the year) for Jerome Powell to repeat his “not thinking about thinking about cuts” shtick.
Whether or not the Fed will ultimately begin to cut rates next spring/early summer remains to be seen, but that’s what the market is currently expecting. We’ll now look to the December 12/13 FOMC meeting (last of the year) for Jerome Powell to repeat his “not thinking about thinking about cuts” shtick.
A quick reminder that Cabot will be closed tomorrow and Friday for Thanksgiving. I hope you have a great holiday and enjoy a break from the market.
There have been a lot of interesting developments in the market over the past week, with the lower-than-expected inflation reading and resulting speculation over the Fed’s next move right near the top of the list.
As it stands now, the market is saying no more Fed rate hikes, and even that we’ll see two cuts by next July.
Frankly, that seems a bit aggressive.
As it stands now, the market is saying no more Fed rate hikes, and even that we’ll see two cuts by next July.
Frankly, that seems a bit aggressive.
The broad market has traded higher for eight straight sessions, the longest run since 2021. The Nasdaq is up for nine sessions.
The S&P Small Cap Index is up in five of the last nine sessions, but the last four have been down. What the ...?!!
Big picture, this isn’t great for the broad market as we want a more broad-based rally. And in theory it’s not great for us.
But the reality is our portfolio isn’t diversified along the same lines as the small-cap index. We’re not overweight financials, energy and health care (we have little to no exposure to all three) and instead are focused on pure-play opportunities that aren’t expected to trade in lockstep with the small-cap index.
The S&P Small Cap Index is up in five of the last nine sessions, but the last four have been down. What the ...?!!
Big picture, this isn’t great for the broad market as we want a more broad-based rally. And in theory it’s not great for us.
But the reality is our portfolio isn’t diversified along the same lines as the small-cap index. We’re not overweight financials, energy and health care (we have little to no exposure to all three) and instead are focused on pure-play opportunities that aren’t expected to trade in lockstep with the small-cap index.
It’s said that the market climbs a wall of worry. It’s been a slippery wall lately, and this was the week when the bear case for the stock market really seemed to gather momentum.
The short list of bear case arguments includes the following:
The war between Israel and Hamas could easily expand into a broader conflict and draw the U.S. (and Iran, among others) deeper into a situation with no clear exit ...
The short list of bear case arguments includes the following:
The war between Israel and Hamas could easily expand into a broader conflict and draw the U.S. (and Iran, among others) deeper into a situation with no clear exit ...
After a very difficult September during which the S&P 600 SmallCap Index fell back to the May lows, things have finally stabilized in small-cap land over the last two weeks.
Energy stocks have been one of the main contributors lately, as have consumer staples and discretionary stocks. These guys have helped offset weakness in small-cap healthcare and tech.
Energy stocks have been one of the main contributors lately, as have consumer staples and discretionary stocks. These guys have helped offset weakness in small-cap healthcare and tech.
Things have been rough in the MedTech world lately.
The new class of weight loss drugs (GLP-1s) is shaking things up way more than expected. And rather than think things through it appears that larger investors have decided to take down their exposure to MedTech now and ask questions later.
Just take a look at the iShares Medical Device ETF (IHI). It has fallen from 58 in late July to under 46 today, a greater than 20% decline.
The new class of weight loss drugs (GLP-1s) is shaking things up way more than expected. And rather than think things through it appears that larger investors have decided to take down their exposure to MedTech now and ask questions later.
Just take a look at the iShares Medical Device ETF (IHI). It has fallen from 58 in late July to under 46 today, a greater than 20% decline.
The market has been on edge since the Fed’s hawkish tone and updated Summary of Economic Projections (SEP) last week. But if we can get oil and interest rates to back off a little and some stock-specific catalysts during the upcoming Q3 earnings season maybe we can finally take our macroeconomist hats off and get back to doing what we’d rather do. Which is talk about some of the great small growth stories out there!
The highlight of my week so far just might be waking up this morning and realizing I can count the remaining days in September just using my fingers. That’s not because the weather hasn’t mostly been beautiful in Rhode Island. It has. It’s because, as you know, the market has struggled this month.
There have been a number of conferences going on lately, so today’s update is partially focused on what our attending companies had to say.
There were no really big reveals, but also no change in tone from the management teams I listened to – and certainly nothing edging toward the more negative side of the scale.
Big picture, I’d say leadership teams continue to be somewhat conservative. Given that we only have a couple weeks left of Q3 they should have a pretty good handle on how the quarter should shake out (and the year for that matter).
There were no really big reveals, but also no change in tone from the management teams I listened to – and certainly nothing edging toward the more negative side of the scale.
Big picture, I’d say leadership teams continue to be somewhat conservative. Given that we only have a couple weeks left of Q3 they should have a pretty good handle on how the quarter should shake out (and the year for that matter).
Alerts
Alphatec (ATEC) Taps Equity Market to the Tune of $150 Million
Alphatec (ATEC) Releases Better Than Expected Preliminary Q3 Results
The broad market was taken down a notch yesterday, supposedly because job openings increased in August. I’m not buying it.
We’ll get average hourly earnings for September on Friday, which will probably show wage inflation continues to ease and the labor market isn’t as tight as yesterday’s market reaction implies.
We’ll get average hourly earnings for September on Friday, which will probably show wage inflation continues to ease and the labor market isn’t as tight as yesterday’s market reaction implies.
Braze (BRZE) delivered Q2 results after the close yesterday that beat expectations. Revenue grew 33.6% to $115.1 million, beating by $6.4 million while EPS of -$0.04 was up from -$0.16 in Q2 last year and beat by $0.10.
Intapp (INTA) delivered Q4 results after the close yesterday that beat expectations. Revenue grew 25.3% to $94.6 million, beating by $1.5 million while EPS of $0.04 was up from -$0.04 in Q4 last year and beat by $0.03.
It’s nice to see Duolingo (DUOL) responding well to another very solid earnings release. The company reported that Q2 revenue grew 43.5% to $126.8 million (beating by $3.1 million) while adjusted EPS of $0.08 improved from -$0.38 in the year-ago quarter and beat by $0.27.
SI-Bone (SIBN) reported yesterday afternoon that revenue rose by 30% to $33.3 million (beating by almost $2 million) and EPS came in at -$0.30, a penny better than expected. Management raised full-year guidance by $3.5 million to $133 million (at the midpoint), about $1 million more than the Q2 beat.