WHAT TO DO NOW: From a top-down perspective, there’s plenty of good news from the secondary evidence and our Cabot Tides is very likely to turn positive tomorrow, which is another good sign. That said, individual stocks remain very tricky, with lots of selling on strength and poor earnings reactions among names we own or have been watching—that’s not a reason to be bearish, but we advise going slow until we see more real breakouts. In the Model Portfolio tonight, we’re jettisoning our small stake in Argenx (ARGX), which has fallen apart this week pre- and post-earnings, but we’ll add two new half-sized positions: Halozyme (HALO) and GE Aerospace (GE). That will leave us with around 70% in cash—we’d like to put more cash to work but will wait for names to emerge instead of forcing the issue.
Current Market Environment
Stocks are rallying nicely today, with the S&P 500 up 1.2% and the Nasdaq up 1.8% as of 3 pm EST.
When it comes to the market’s bigger picture, we’re optimistic stocks have found a low and, when looking out many months, should be nicely higher—the panic selling on obvious, headline-grabbing news has pushed sentiment to very bearish levels, and the Three Day Thrust (and Zweig Breadth Thrust) during the rally phase promises very good things down the road.
The here and now is more up in the air, though, with some slowly improving top-down evidence battling a lot of selling on strength among individual stocks.
Looking at the overall market, our Cabot Tides are still on the fence, though given the way the indicator works, it’s likely to flash a green light tomorrow as long as the indexes don’t implode (it’s dropping off the crash days from early April, so the 25-day line should turn up). As for the longer-term Cabot Trend Lines, they remain firmly on the negative side of the fence.
Even so, from a trend perspective, things are improving, with a likely Tides buy signal obviously a good sign.
The trickier parts comes when looking at individual stocks: While many have shown solid relative strength in recent weeks (often testing their prior highs well ahead of the major indexes), a bunch, especially in the medical field, have seen selling on strength (often after earnings), as resistance levels are bringing out the sellers. Some examples: TG Therapeutics (TGTX), DoorDash (DASH), Guardant Health (GH), ADMA Biologics (ADMA), GeneDX (WGS) and Argenx (ARGX) are a few of the names that fall into this category.
To be clear, we’re not saying all of those names are completely broken, but the point is that breakouts remain few and far between among growth stocks. That can change, but until it does, it’s hard to make much progress unless you’re jumping in and out.
When we put it all together, the secondary data (sentiment, Three Day Thrust, etc.) is encouraging, and we’re not going to ignore the market’s improvement and the likely Tides buy signal … but until leadership kicks in, there’s still a decent chance that the market will back-and-fill for a while as individual stocks could get tossed around.
In the Model Portfolio, then, we’re doing a little re-jiggering, but overall, are still content to go slow until big investors get more conviction with growth stocks. On the sell side, we’re going to dump our small remaining position in Argenx (ARGX), which we held on to through the market meltdown and recovery, but it’s been rejected in a big way this week.
That said, we will put some money to work in stronger situations, adding half-sized stakes (5% of the portfolio) in Halozyme (HALO) and GE Aerospace (GE)—that will still leave us with a big 70% in cash. We’d like to put more to work soon, but will do so only if and as fresh leadership gets moving.
Model Portfolio
We’ll start with our new additions. First is Halozyme (HALO), which we owned a couple of years ago and which has had a couple of false starts in the past two years—but this week’s earnings reaction looks decisive. The firm’s claim to fame is its Enhanze drug delivery system, which allows for bulk delivery of drugs (it breaks down an enzyme in the skin that prevents bulk liquid flow) safely, which means it’s quicker and easier for the patient and the treatment center. Many big players have signed up (there are three blockbuster drugs driving things now, and there should be at least a couple more getting the thumbs up and/or ramping sales later this year), and Halozyme is getting an increasing share of royalties that are falling to the bottom line. There have been patent worries in the past and there’s even a lawsuit filed against Merck (though that won’t affect any of its Enhanze business either way), but a deal last June seemed to clear the air on the patent front for at least a few years (it expects all products to crank out at current royalty rates through at least 2030, with many into the 2040s), and the top brass thinks earnings and cash flow can lift nicely going forward. In Q1, sales lifted 35% and earnings boomed 41%, and Wall Street sees the bottom line up 27% this year and 34% next. (The firm stated in its conference call that tariffs shouldn’t affect its royalty revenue.) We are aware that drug-related stocks have been tedious of late, but after battling with resistance in the low 60s for years, HALO’s earnings reaction this week (heaviest daily volume since early 2021) looks decisive. If things go bad, we’ll keep our loss small, but we’re obviously optimistic perception is headed up. We’ll start a half-sized stake here (5% of the portfolio) and use a stop in the upper 50s. BUY A HALF
We’re also going to start a position in GE Aerospace (GE), which moved to new price highs today. To be fair, we don’t see this as an ideal entry point—the stock’s been moving higher the past couple of weeks, so could easily pull in a bit—but early in a potential new market advance we like to go with the names showing the best relative strength, and GE is one of those. We just wrote about the firm in last week’s issue, so we won’t go into all of it again here, but suffice it to say that aerospace is one of the best-looking growth-y sectors out there at this point, and GE looks like one of the main leaders of the space. We’ll buy a 5% stake here (half-sized position) with an initial loss limit near 190 or so; as always, we’ll aim to average up if the good vibes continue but want to do so if GE and the market continue higher. BUY A HALF
Argenx (ARGX) is one of many names that had been showing excellent relative strength (it hit a new relative performance peak this week), but it’s been hit hard in recent days, first on tariff fears (the entire group got whacked on Tuesday as pharmaceutical tariffs seem to be coming soon) and then, this morning, after its Q1 report—business is fine overall (sales up 96%, earnings of $2.58 per share up from a loss last year), but both figures missed estimates by a touch, and given the tricky environment, shares were walloped today, crashed back below its moving averages and testing its lows from last month. A near-term rally is possible, but given the big double top, we’re going to sell our small position here and move the money into stronger situations. SELL
Flutter Entertainment (FLUT) reported its quarter last night, and it was decent despite some headwinds (March Madness, with all four #1 seeds making the Final Four, didn’t help as unfavorable betting outcomes continued)—total revenue lifted 8% from a year ago, and while EBITDA was up 20%, it missed most estimates. That said, the underlying trends have remained steady: U.S. revenue was up 18% (user growth of 11%) despite the unfavorable outcomes, with iGaming revenue rising 32% and structural margins in line with estimates. Meanwhile, U.S. EBITDA soared many-fold, while international EBITDA was flat-ish. Shares dipped some early today, though FLUT found big-volume support. Given that we’ve held on through the stock’s big dip and partial recovery, we want to see FLUT move higher in the near term and, eventually, take out resistance near 250. If it does, we think it can work its way higher, but if it doesn’t, we’ll likely prune it and look elsewhere. Hold for now. HOLD
Palantir (PLTR) also got hit on earnings, though this comes after a good-sized run of late—and shares have already begun to bounce back. As for the numbers, they were solid, with the U.S. business going wild—overall sales lifted 39% (yet another quarter of acceleration), led by a 55% boom in U.S. sales (71% commercial, 45% from government), and possibly more impressive was the forward-looking metrics, as Palantir inked $810 million of U.S. commercial contracts in the quarter (up 182%) while total remaining deal value for U.S. commercial clients rose 127% (and 30% from the prior quarter). To be fair, earnings of 13 cents per share (up 63%) “only” matched estimates, though free cash flow of $370 million was larger than earnings and represented a ridiculous 42% of revenue. After a modest-volume rally into its old highs, PLTR did fall sharply on the report—but it didn’t do anything “wrong” (above all moving averages, etc.) and we’re happy to see it quickly pop more than halfway back. For now, we’re going to stay on Hold, but the action and story are encouraging, so if PLTR can stabilize a bit, we could restore our Buy rating (and possibly add back a few shares). Tonight, though, let’s sit tight and see how it goes over the next few days. HOLD
Penumbra (PEN) looks good overall, popping nicely on earnings and holding most of those gains of late with low-volume, tight-ish action. There’s still work to do here, namely lifting over round-number resistance near 300 even as many medical stocks have hit the skids, but the setup here is proper and, unlike many names, very much “under control” thus far. Plus, of course, business remains in great shape, as the firm’s various blood clot removal tools take huge share and margins go vertical; analysts see earnings up 32% this year and another 33% next. A drop into the 260 area would be a red flag, but right here, we’re OK starting a position if you’ve yet to do so. BUY A HALF
Take-Two Interactive (TTWO) was hit very hard a week ago when it announced a delay in the release of Grand Theft Auto VI to next May (most expected a fall release), though shares have recovered decently since then, likely because the underlying story and demand haven’t changed, just the timing. Given the wobbles among strong stocks out there, we’re not complacent, and earnings next week (May 15) will be key, but we’re holding on to our half-sized position and are still optimistic shares can do well going ahead. A drop below 190 would be a near-term yellow flag, but right here, we’re OK buying a little if you’re not yet in. BUY A HALF
Watch List
ADMA Biologics (ADMA): ADMA reported a solid quarter (sales up 40%, earnings up 75%) and hiked guidance, too, though the stock had a big shakeout early in the day before recovering some. We really like this story, but given today’s wobbles, we’ll keep it on the watch list.
GE Vernova (GEV): GEV is the big investors’ way to play the boom in electricity and power demands, with numerous leading products. Like everything else, the stock has shown good power of late but is also fighting with some old resistance here.
Insulet (PODD): PODD will report earnings after today’s close, with Wall Street looking for sales to rise 23% and earnings of 79 cents per share. The stock hasn’t bounced as well as some others, but it’s 10% off its highs and has built a reasonable multi-month launching pad, so a big gap up would be tempting.
Marex Group (MRX): MRX is one of the few stocks out there that looks genuinely great, breaking out a couple of weeks ago and zooming higher. It’s still thinly traded for us, and earnings are out next week (May 15), so we’ll watch.
Mosaic (MOS): MOS reported earnings last night, and they were fine (sales a bit worse than expected, earnings a bit better), but the focus here is on the future, and the stock remains in a nice recovery phase as investors discount higher prices and earnings in the quarters to come.
Rubrik (RBRK): Cybersecurity is probably the best-looking growth area out there (along with aerospace), and while many names are still battling with their old highs (including RBRK), there’s no question the group is perking up. RBRK is our favorite story, and while shares are a bit wide and loose, they did tag relative performance highs this week.
ServiceTitan (TTAN): TTAN’s had a normal pullback after a powerful move to new highs from an IPO base. We think its specialized cloud software offering for the trades has big long-term potential, though the stock could use some more sponsorship.
Uber (UBER): UBER reported a solid Q1 yesterday morning, with currency-neutral revenues rising 18%, EBITDA up 35% and free cash flow of $2.3 billion ($1.08 per share, well ahead of the 83 cents of earnings), up 66%. Shares wobbled a bit but remain perched near the highs of a big 15-month consolidation—we could take a swing at it soon if it holds up.
That’s it for now. You’ll receive your next issue of Cabot Growth Investor next Thursday, May 15. As always, we’ll send a Special Bulletin should we have any changes before then.
Model Portfolio
| Stock | No. of Shares | Price Bought | Date Bought | Price on 5/8/25 | Profit | Rating |
| Argenx (ARGX) | 196 | 540 | 9/13/24 | 554 | 3% | Sell |
| Flutter Entertainment (FLUT) | 480 | 231 | 9/20/24 | 243 | 5% | Hold |
| GE Aerospace (GE) | - | - | - | - | - | New Buy a Half |
| Halozyme (HALO) | - | - | - | - | - | New Buy a Half |
| Palantir (PLTR) | 1,904 | 32 | 8/16/24 | 120 | 275% | Hold |
| Penumbra (PEN) | 492 | 300 | 4/25/25 | 292 | -2% | Buy a Half |
| Take Two Interactive (TTWO) | 658 | 224 | 4/25/25 | 227 | 1% | Buy a Half |
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