Cabot Explorer Issue: July 3, 2025

Portfolio Change: None

Luckin Coffee Comes to New York

The S&P 500 and Nasdaq reached new records on Wednesday, reversing Tuesday’s declines. President Trump’s tax-and-spending bill squeaked through the Senate and is now at the heart of a battle in the House. This is hopefully settled today, and a setback would have an impact on the stock market.

Luckin Coffee’s (LKNCY) revenue in China has already surpassed Starbucks in China. This week, it brought the battle to America as its first two U.S. locations opened in New York. This may be just a public relations gambit.

The U.S. dollar continues to decline, with this year increasingly compared to 1973. The dollar index is down more than 10% against a basket of other currencies this year, hitting a three-year low. A declining dollar cuts both ways for U.S. stocks, as it provides an earnings boost for global companies when they convert their international revenue into dollars for their financial reporting. Apple (AAPL) gets about 60% of their revenue outside the U.S.

Concern about AI’s impact on jobs is growing. Salesforce CEO Marc Benioff said up to half of the company’s work is being done by AI, giving an early proof point to Anthropic’s CEO’s prediction that AI could soon eliminate half of all entry-level jobs. Microsoft (MSFT) also announced it is cutting 9,000 jobs.

A trade deal with key ally Japan is in the spotlight this week. If all of Trump’s proposed measures take effect, Japan faces a 25% tariff on automobiles and auto parts, a 50% tariff on steel and aluminum, and a 24% tariff on all other goods it exports to the United States. Japan has its own political situation to deal with, and there are also considerable cultural issues that make a deal with Japan particularly challenging.

China is consolidating its hold on the global auto market, beginning with dominating its own market. Foreign automakers’ share of the Chinese market has collapsed. China now makes 70% of the world’s EVs and plug-in hybrids.

The same trend can be seen in nuclear power even as the U.S. ramps up investments in new technology to address cost and safety issues. While America is the world’s largest producer of nuclear power, the average reactor age is about 43 years. The oldest entered commercial service in 1969. Nuclear power generates about one-fifth of U.S. electricity, while China has over 100 nuclear power projects in the pipeline.

New Recommendation

Expeditors International of Washington (EXPD)

Founded in 1979, Expeditors International of Washington (EXPD) is a global logistics company. Based in Seattle, Expeditors has 346 locations in 101 countries and employs more than 18,000 people. It is sort of a FedEx of trade logistics.

It handles such essential services as the consolidation and forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, order management, warehousing and distribution, as well as other customized logistics solutions.

The company also provides ancillary services that include preparation of shipping and customs documentation, packing, crating, insurance services, and the preparation of documentation to comply with local import and export laws.

This last task is keeping the company particularly busy these days.

The company has raised its dividend every year for the last 31 years.

Expeditors has been cash flow and earnings positive every year since its founding, which is remarkable. A Fortune 500 company, the company generated $10.6 billion in revenue and $5.72 in earnings per share for 2024.

This company quietly performs the tasks necessary to keep international trade and commerce humming. In some ways, Expeditors’ management team is too quiet and needs to work a bit harder to communicate with the financial media because they have a story to tell.

Expeditors grew its revenue by nearly 21% from the first quarter of 2024 to the first quarter of 2025. The company has zero debt and raised its quarterly dividend for the 31st time in May to $0.77 per share.

Finally, Expeditors’ shares are not volatile and have the potential to move higher as the tariff and trade situation brightens.

The stock is up 8% this year, and this is a rather conservative idea that investors across the spectrum can be comfortable with.

Buy a Half

Explorer Weekly Stock Commentary

Below is a brief update on each Explorer stock. Any changes in ratings will be highlighted. This section is all you need to read each week.

Explorer Disrupter Recommendations – need to watch more closely and have a 20% trailing stop-loss in place.

Agnico Eagle Mines (AEM) shares were steady this week as gold futures made small gains on market uncertainty and safe-haven demand. Agnico has low-cost, high-quality mines. Buy a Half

Banco Santander (SAN) shares were up 5.3% this week as the bank acquired TSB, a U.K. retail bank that operates 218 branches and serves approximately 5 million customers in personal and small business banking. Santander also sold seven branches in Pennsylvania last week as it transitions to a digital strategy in America. Buy a Half

BYD (BYDDY) shares pulled back 5.3% this week as price competition continues in the Chinese market. BYD is now selling as many vehicles as Tesla in Europe, and Chinese automakers now account for about 20% of European auto sales. Last year, BYD surpassed Tesla in total global revenue. Buy a Half

Coeur Mining (CDE) shares were up this week as silver attracts more attention, and Coeur offers us a diversified portfolio of assets expected to deliver increasingly stable and high-margin cash flow as well as a strong balance sheet. Coeur is a mining company that explores gold, silver, zinc, and other related metals in the U.S., Canada, and Mexico. The bulk of silver demand comes from industrial users. Buy a Half

Dutch Bros (BROS) shares pulled back a bit again this week, justifying my recent calls to take some profits off the table. This is a great growth story, but the stock’s 75% rally over the past year and premium valuation seem to be limiting its near-term upside. Hold a Half

Luckin Coffee (LKNCY) shares were up 7% this week as the company’s revenue in China has not only surpassed Starbucks in China, but this week, it brought the battle to America as its first two U.S. locations opened in New York. Buy a Half

Sea Limited (SE) shares have bounced off their 2024 lows, gaining 115% in the last year. Even so, the stock remains 58% below its 2021 highs. I suggest taking partial profits to protect gains. Sea is an e-commerce, gaming, and fintech company centered on the Southeast Asian region. Hold a Half

Explorer Dominator Blue-Chip Recommendations – More Buy and Hold

DBS Bank (DBSDY) shares were again up this past week. Southeast Asia’s biggest bank has a market value approaching $100 billion with a profit margin of just over 50%. Like JPMorgan (JPM), the stock is never cheap because its financial strength, reputation, and shareholder stability are highly valued. Buy a Half

International Business Machines (IBM) shares were steady this week as it now provides large language models and other AI tools to several key markets, including manufacturing and financial services. Rather than building public domain models like ChatGPT, IBM develops private models for organizations that can’t risk putting their proprietary data on the street. IBM’s history of dividend payments stretches back more than a century. Buy a Half

Visa (V) shares rose 2.6% this week as Mizuho Financial raised the stock to an outperform with a price target of 425. Visa’s dominant market share is holding steady, and the company is expected to report its third-quarter earnings on July 22nd. Buy a Half

Watch List – Stocks we like but do not follow day-to-day

ConocoPhillips (COP), Franco-Nevada (FNV), MOOG (MOG-A)

Explorer ETF/Fund Positions

Grayscale Bitcoin Trust (GBTC) offers investors a way to track very closely to the day-to-day or “spot” movement of bitcoin prices. For aggressive investors comfortable with volatility. Buy a Small Allocation

JPMorgan Equity Premium Income ETF (JEPI) offers a double-digit yield coming from both option premiums and dividends using a value-focused strategy. Buy a Full

Oberweis Micro-Cap Fund (OBMCX) stands out for several reasons. The fund’s sound investment process and strong management team earn it a rare Morningstar Medalist Rating of Gold. Over the past five years, it has posted an impressive average annual return of 24%. Buy a Half

ProShares MSCI EAFE Dividend Growers ETF (EFAD) seeks to capture the performance of companies with at least 10 years of consecutive dividend growth. Buy a Half

Sprott Platinum and Palladium ETF (SPPP) offers direct exposure to both platinum and palladium, which are selling at a sizable discount to gold, offering potential upside appreciation. Buy a Full

Stoxx Europe Total Market Aerospace & Defense (EUAD) tracks an index of top defense contractors, including Leonardo, Rheinmetall, and BAE Systems. Buy a Half

VanEck Junior Gold Miners ETF (GDXJ) is a basket of junior miners that has 84 positions, with the top 10 accounting for 44% of total assets. Half of the stocks are Canadian, 21% Australia, and 7% from South Africa. Buy a Half

WisdomTree Emerging Markets High Dividend Fund (DEM) offers a high dividend yield and some of the highest-quality emerging market stocks. Buy a Half

Model Portfolio

ETFs

Explorer Stocks Summary

Brief company summaries that will not change week to week.

Agnico Eagle Mines (AEM) follows a conservative strategy and with a history spanning more than 60 years, and now operates a sizable portfolio of 11 assets located in four countries. Management forecasted gold production of approximately 3.45 million ounces in 2024. The company estimates it has about 54 million gold ounces of proven and probable reserves. Furthermore, Agnico Eagle has paid a dividend for 41 consecutive years with a dividend compounded growth rate of 23% per year since 2005.

Banco Santander (SAN) was founded in Spain in 1857. The bank’s U.S. headquarters is in Boston, but its strength lies in Latin America and Europe where it has more than 8,000 branches with 171 million customers as well as 58 million digital accounts. About 55% of deposits and loans are in Europe with the balance in Latin America.

BYD (BYDDY) Most of BYD’s sales are still in China, but it has a big international expansion underway, including in the U.S., Europe, and Asian markets. BYD will also launch a next-generation Blade battery in 2025, with longer range and faster charging. That, along with various other models, could help rev up BEV sales growth next year. BYD expects solid-state batteries for high-end models by 2027, but not fully reaching lower-end models until 2030-2032.

Coeur Mining (CDE) is a mining company that explores gold, silver, zinc, and other related metals in the U.S., Canada, and Mexico. For many precious metal investors, silver is seen as gold’s “little brother,” but it has a long history as a means of payment going back centuries, as the Spanish silver dollar was once the reserve currency of the day. In 2025, we passed the 100:1 mark for only the fourth time in a hundred years – a strong signal that silver may be underpriced. While gold has reached a historic high, the silver price is almost 50% off its all-time high in U.S. dollars per ounce.

Watch List: ConocoPhillips (COP) is a global energy industry giant and one of the largest independent exploration and production (E&P) companies in the world, as measured by production levels and proved reserves. The company, founded in 1917 and based in Houston, has operations in 13 countries, although almost half the company’s production is derived from U.S. sources.

DBS Bank (DBSDY) is one of the largest banks in Southeast Asia with a presence in 19 markets. It is headquartered in Singapore, with its main listing on the Singapore Stock Exchange, and is the largest constituent of the Singapore Straits Times Index. The Government of Singapore established DBS in July 1968, and its largest and controlling shareholder is Temasek Holdings, which is one of two large sovereign wealth funds controlled by the Government of Singapore. DBS has assets of roughly $750 billion and a growing presence in the three key Asian areas of growth, which it defines as Greater China, Southeast Asia, and South Asia, meaning India. It is the largest and strongest bank in Southeast Asia and the leading consumer bank in both Hong Kong and Singapore.

Dutch Bros (BROS) is an operator and franchisor of drive-through coffee stores, with 1,012 stores as of the end of the first quarter, including 30 that it opened in the quarter. It’s expanding at a steady pace, expecting up to 150 new stores in 2025, and it envisions up to 7,000 stores over the next 10 to 15 years.

Watch List: Franco-Nevada (FNV) is a company with more than half of its revenue coming from gold, but it also offers exposure to platinum, silver, and oil and gas. Franco-Nevada’s focus on royalties and streaming reduces risk and enables it to sidestep the huge capital costs that impact traditional miners. It enjoys cash flow and profits as its mining partners finance and complete exploration and expansion projects. That cash flow enables it to invest in new deals, pay a dividend, and operate debt free. Franco-Nevada has increased its dividend each year since its IPO in 2008.

International Business Machines (IBM) is a blue-chip artificial intelligence (AI) and India play with a nice dividend yield. Known as “Big Blue,” IBM now primarily helps businesses and governments manage their information technology in the cloud era. The stock sells at a discount to the S&P 500 multiple and the information technology sector’s forward earnings multiple. IBM has paid a dividend every quarter since 1916 and has had 30 consecutive years of dividend increases.

Luckin Coffee (LKNCY) is a leading purveyor of coffee and specialty drinks in China. The price of a cup of Starbucks coffee is more than double that of Luckin coffee. In addition, Luckin is adept at adapting to local tastes and launching new products that broaden the market. For instance, it brings to market about 60 new products each year, offering a new drink every week.

Watch List: Moog, Inc. (MOG-A) supplies advanced primary flight controls on the most modern military aircraft. That includes the Lockheed Martin F-35 Lightning II and the Future Long Range Assault Aircraft program. The company’s major platforms include the 787, A350, Joint Strike Fighter (F-35 Lightning II). The company also supplies primary flight controls for the Boeing 787 and Airbus A350 widebody aircraft, as well as business and regional jets from Embraer (ERJ) and Gulfstream, owned by General Dynamics (GD).

Sea Limited (SE) has three core businesses: 1) digital gaming/entertainment, 2) e-commerce, and 3) digital payments and financial services, known as Garena, Shopee, and Monee (formerly SeaMoney), respectively. Garena is a leading global online games developer and publisher. Shopee is the largest e-commerce platform in Southeast Asia and Taiwan. Monee is a leading digital payments and financial services provider in Southeast Asia.

Visa (V) doesn’t extend credit but provides the plumbing for financial payments and communications throughout the world. Visa’s financial infrastructure also underpins much of the world’s commerce. The duopoly between Visa and Mastercard is often referred to as one of the best businesses in the world, with insurmountable moats, low operating costs, and plenty of opportunities for unlocking additional value. Visa currently trades at a discount to its archrival MasterCard.

The next Cabot Explorer issue will be published on July 17, 2025.

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