The market continues to struggle with the rapid jump in interest rates (10-year at 4.63% after hitting 4.7% on Tuesday).
I think we’re still fluctuating somewhere between a code yellow and a code orange situation (was code green a few weeks ago!) so long as that yield doesn’t go over 4.7% and all hell doesn’t break loose in the Middle East.
That’s part of why we’ve lightened up a little this week – I’d like to have some dry powder available if the broad market heads south since the most likely scenario (given what we know now) is a pullback in an otherwise pretty healthy bull market.
We go above 4.7% and it’s a solid code orange with 4.8% marking the beginning of code red. Let’s hope that doesn’t happen (again) as stocks have been a heck of a lot happier since the 10-year yield fell below 4.8% last November.
It wasn’t long after that that the Nasdaq hit a new high, and the downward trend in yields helped the S&P 600 Small Cap ETF (IJR) rally from 89 (November 1, 2023) to 110 (December 27, 2023).
The glass-half-full perspective here is that the price of oil has come down a little and interest rate cuts this year are not completely off the table, though it’s increasingly looking like a best-case scenario is two cuts. The European Union Central Bank seems more inclined to start with some cuts this summer.
It’s a bit frustrating to have inflation/interest rates continue to dominate market direction. But we’ll get something of a distraction as earnings season gears up. Nothing expected out of our portfolio next week, but then action will heat up at the end of the month and into May.
Recent Changes
EverQuote (EVER) moves to SELL A QUARTER, HOLD REST
Remitly (RELY) moved to SELL REMAINING HALF
Liquidity Solutions (LQDT) moved to SELL
Updates
Alphatec (ATEC) will report Q1 results on Monday, May 7. The focus will likely be on tying results and forward guidance to the company’s recently updated long-range plan, which calls for average revenue growth of 20% through 2027 (when sales should hit $1 billion) and continued EBITDA margin expansion (to 18%, from slightly negative now). More granular details will cover the expected cadence of surgeon additions and revenue per procedure, along with projected orders for EOS and international expansion (Australia, New Zealand, Japan). Shares down through support at 12.8 yesterday in another weak day for MedTech so keeping at hold. HOLD
Earnings: Tuesday, May 7
Docebo (DCBO) is seeking support at its 200-day moving average line, which has been extremely reliable going back to last summer. Tactically, a good place to buy here so keeping DCBO at buy at potentially a very attractive price, despite ongoing weakness in the cloud software space (CLOU and WCLD yet to bounce). Earnings on May 9. Takeaway from the last quarter was that Docebo has a strong competitive position and is picking up customers at the larger end of the market and average contract value is growing. Revenue is expected to top 21% this year and next with EPS growth (yes, it’s profitable) well over 30%. BUY
Earnings: Thursday, May 9
Enovix (ENVX) hasn’t been a fan of the jump in interest rates but we got significant positive news this week. Management announced completion of Factory Acceptance Testing (FAT) for the Agility Line at Fab-2 in Malaysia. That means it moves on to Site Acceptance Testing (SAT) next and management restated their expectation to have sample cells (EX-1M) coming off Fab-2 this quarter. Those cells are destined for mobile and IoT uses. There’s no doubt investors are wondering if production will ramp up as hoped. This should help to allay some company-specific concerns, though in the current environment, macro concerns are still top of mind. Looking forward to updates on SAT and sample cell production. Earnings are coming on May 1, and on May 6, CEO Dr. Raj Talluri will host an “Ask Me Anything” video call at 5:00 PM ET. That should be interesting. BUY
Earnings: Wednesday, May 1
EverQuote (EVER) has been rock solid since we jumped in two months ago but we’ll move to hold today and sell a small chunk (a quarter-size position) just in case, simply because the broad market is sending caution signals. Hopefully this is a mistake and the stock just keeps cranking higher, but we’re up 33% in two months and stocks like this can move quickly in both directions. No company-specific news this week, though one of EverQuote’s biggest customers, Progressive (PGR) reported better-than-expected results with auto a particular area of strength. SELL A QUARTER, HOLD REST
Intapp (INTA) seems to have found support in the low 30s, and we have news of another deal. Tech consulting firm Accordion has selected the company’s platform for its relationship management solution. We’ll stick with a hold rating, for now. HOLD
Liquidity Solutions (LQDT) was sold yesterday as the stock fell through support and to reduce our exposure to the market and raise cash for future buys. SOLD
Remitly Global (RELY) was sold earlier in the week after shares fell through support. Earnings will be out on May 1. SOLD
RxSight (RXST) management discussed the benefits of its various solutions, including its new Light Adjustable Lens+ (LAL+) two weeks ago at the annual meeting of the ASCRS in Boston. I covered some of the details last week. Management followed up that event with participation at the Needham Healthcare Conference, which pretty much reviewed the ASCRS updates. BUY
Talkspace (TALK) is a small, virtual behavioral health company that we jumped into a few weeks ago with a half-sized position. The story is good and the stock had great momentum, but that’s faded with the broad market. I wanted to leave the door open to average down (hence the half-sized initial position) and that’s looking increasingly likely, though I’m not in a huge rush despite TALK trading right around its 50-day line now. I’d like to see what happens with interest rates here in the coming days, and we have the company’s Q1 earnings report coming up on May 7. Whether we add to our position before that remains to be seen. For now, smaller buys are the way to go. BUY HALF
Earnings: Tuesday, May 7
TransMedics Group (TMDX) announced Q1 earnings will be out on April 30. Other than that, no big news. The stock continues to hold up. HOLD A QUARTER
Earnings: Tuesday, April 30
Weave (WEAV) will be out with Q1 earnings on May 1. The company continues to put out press releases touting integrations, the latest being with Shepherd, a cloud-based practice management software solution for vets. We have a half-sized position and I’m starting to more carefully consider adding to it, though will likely wait until after the earnings report before making a call.
Earnings: Wednesday, May 1
That’s it for this week. Please email me at tyler@cabotwealth.com with any questions or comments about any of our stocks, or anything else on your mind.
Currently Open
| Ticker | Stock Name | Date Bought | Price Bought | 4/18/24 | Profit | Rating |
| ATEC | Alphatec | 4/10/23 | 15.7 | 12.5 | -20% | Hold |
| DCBO | Docebo | 12/7/23 | 44.6 | 44.5 | 0% | Buy |
| ENVX | Enovix | 10/6/22 | 20.4 | 6.5 | -68% | Buy |
| EVER | EverQuote | 2/1/24 | 13.7 | 18.4 | 34% | Sold 1/4, Hold 3/4 |
| INTA | Intapp | 1/4/23 | 25.7 | 31.6 | 23% | Hold |
| LQDT | Liquidity Services | 11/2/23 | -- | 17.1 | -- | SOLD |
| RELY | Remitly Global | 9/7/23 | -- | 19 | -- | SOLD |
| RXST | RxSight | 3/7/24 & 3/28/24 | 52.7 | 52.8 | 0% | Buy |
| TALK | Talkspace | 4/4/23 | 3.7 | 3 | -18% | Buy A Half |
| TMDX | TransMedics Group | 7/7/22 | 34.1 | 88.8 | 161% | Hold a Quarter |
| WEAV | Weave Communications | 1/4/24 | 11.3 | 11 | -2% | Buy A Half |
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