Cabot Explorer Issue: June 18, 2025

Portfolio Changes: Increase Allocation to Sprott Platinum and Palladium ETF (SPPP) from Buy a Half to Buy a Full Position

Platinum Upgrade

The market is weathering rising uncertainty as every major group of companies in the index, from banks to commodities, has climbed since the low point in April, with a small number of the usual mega-cap tech stocks leading the charge.

The World Bank announced it would lift its longstanding ban on funding nuclear power projects. The tide of sentiment is turning along with nuclear power stocks. The ban has been in place since 2013, but the last time the bank funded a nuclear power project was 1959.

One trend not changing is China’s export machine and trade surplus with the world. In 2025, it is already $500 billion - 40% higher than the same period last year. China imports are down this year, but it remains a major importer at $2.6 trillion in 2024, compared to America’s $3.4 trillion of imports.

Gold is on a nice run from $1,991/ounce in mid-February 2024. This is a gain of 73% since then, with central bank buying a contributing factor, which you can see in the chart below. Gold has now replaced the Euro as the second-largest component of reserves.

To put things into perspective, the entire crypto sector has a market cap of about $3.2 trillion, while gold is close to $23 trillion. And the total market cap of all gold mining stocks is about $500 billion.

Gold will no doubt pull back at some point, as I’m hearing that some are buying gold bars at Costco with credit cards. This week, the Chase Sapphire credit card announced a $795 annual fee, surpassing even that of the American Express Platinum Card.

This brings me to this week’s upgrade recommendation of Sprott Platinum and Palladium ETF (SPPP).

There is 30 times more gold in the Earth’s crust than platinum, and in the early 70s, platinum was five times the price of gold. Now, gold is three times the price of platinum.

Platinum has major industrial applications but, as a precious metal, also works well as a store of value.

Platinum group metals are also in a supply deficit

Analysts from the World Platinum Investment Council currently put the expected supply shortfall for 2025 at 966,000 ounces. This is mainly due to declining production volumes in South Africa and falling recycling volumes. Demand for platinum is currently also being supported by the jewelry sector, particularly in China.

Platinum is up 38% this year, ahead of gold, and you can also purchase physical platinum at Costco using your credit card.

I prefer our Sprott ETF recommendation, which moves to a full position today with the added benefit of giving you additional exposure to palladium.

Increase Allocation to Sprott Platinum and Palladium ETF (SPPP) from Buy a Half to Buy a Full Position

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 up 5.8% this past week and are up 60% so far in 2025. Geo-political uncertainty, inflation, and central bank purchases have been the primary factors driving up demand. Buy a Half

Banco Santander (SAN) shares were steady this week. You may wish to take some profits off the table from one of Europe’s top-performing stocks, though this bank is poised for solid growth. Buy a Half

BYD (BYDDY) shares were down again this week as an EV price war is hurting the sector. In 2024, BYD surpassed Tesla’s revenue, generating $107 billion and $5.6 billion in profits. One of BYD’s advantages is that it is vertically integrated and makes some of the best batteries on the market. Buy a Half

Coeur Mining (CDE) shares were up a bit this week as silver prices hit the pause button. A $75 million share buyback began this month, which gives this stock a tailwind. Coeur is a mining company that explores gold, silver, zinc, and other related metals in the U.S., Canada, and Mexico. Buy a Half

Dutch Bros (BROS) shares have been trading sideways around 70 over the last month. With about 1,000 locations in 18 states, Dutch Bros has a long runway ahead of it. It is targeting 2,029 stores by 2029 and believes it has a total market opportunity of 7,000 locations. Hold a Half

Luckin Coffee (LKNCY) shares were off a little this week as the company continues to scale up and gain market share against rival Starbucks (SBUX). In the first quarter, it opened 1,757 new outlets for a total store count of over 24,000, whereas Starbucks sits at 7,500. Luckin is an agile rival with a deep connection to Chinese consumers. Buy a Half

Mitsui (MITSF) shares were flat again this week despite the stock trading close to book value and at only 10 times forward earnings. Buy a Half

Sea Limited (SE) shares were steady this week. It is an e-commerce, gaming, and fintech company that is seeing healthy growth in profits and free cash flows in the dynamic Southeast Asian market. In the first quarter, its sales climbed 30% to $4.84 billion. Hold a Half

Explorer Dominator Blue-Chip Recommendations – More Buy and Hold

DBS Bank (DBSDY) shares were off 2% this week. With a market value approaching $100 billion, this bank offers us financial strength and shareholder stability, with retail investors owning 46% of shares and private equity with a 28% stake. Buy a Half

International Business Machines (IBM) shares started the year at 218 and this week went from 275 to 283. IBM is building what it calls the world’s first large-scale, fault-tolerant quantum computer at its New York data center before the end of the decade. It is expected to have 20,000 times the computational power of today’s quantum computers. Buy a Half

Visa (V) shares were lackluster this week as the company is expected to report its third-quarter earnings on July 22, 2025. Visa recently announced a $30 billion share buyback program. 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. Move from Buy a Half to Buy a Full Position

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% are 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. In its most recent quarter, Santander’s revenue was up 8% while net profits increased 16%.

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 (CD) 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. Its new coconut latte sells nearly $140 million worth annually.

Mitsui (MITSF) stands out among the big five by leaning into mining and materials. Mitsui has entered joint ventures around the world, taking project stakes in iron ore, metallurgical coal, copper, nickel, and LNG with 50%-60% of profit coming metals and energy. But Mitsui’s chairman emphasizes that Mitsui is not a resource company. Rather, he describes the company as a place where smart people identify new trends and pursue big profits through small experiments. For example, Mitsui owns a 33% stake in IHH Healthcare, the largest hospital group in Asia, and a stake in Penske Automotive in North America. Other sectors of activity include energy, infrastructure, agriculture and food, and consumer retail.

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 3, 2025.

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