Cabot Stock of the Week Issue: April 28, 2025

April showers bring May flowers? That could be the scenario shaping up for investors.

After a historically brutal start to the month thanks mostly to President Trump’s unpopular “reciprocal” tariffs plan – now on 90-day pause aside from China – and his constant threats to remove Jerome Powell as Fed Chair – threats he has now backpedaled from – there’s some hope again on Wall Street, as stocks are closing the month on a nice little winning streak, at least entering today. The president’s softened stance (at least for now) on controversial and potentially economically crippling policies has certainly helped. So has earnings season, with the average EPS growth among S&P 500 companies so far (36% of them have reported) up 10.1%, ahead of the 7% estimates. For all the damage tariffs have done to consumer and investor sentiment, the hard data of first-quarter earnings still suggests a booming economy. Let’s hope that holds true in this week’s quarterly GDP and monthly jobs reports.

In the meantime, let’s continue to expand our portfolio’s international flavor, just in case the bears aren’t done with U.S. stocks. Today we add our first ETF in a while – a play on a very specific sector of the European market, at a time when European stocks are outperforming U.S. stocks by a wide margin. It’s a new recommendation from Carl Delfeld in his Cabot Explorer advisory.

Here it is, with Carl’s latest thoughts.

New Recommendation

Stoxx Europe Total Market Aerospace & Defense (EUAD)

I continue to search for companies and stocks that are insulated from U.S.-China-related trade tensions or stand to benefit from re-shoring and changing geo-economic trends and events. That means businesses in niche markets with strong positions in under-the-radar sectors.

Today we go to defense and national security as well as to Europe.

The 32-member NATO is in the headlines primarily due to cost-sharing pressures related to supporting Ukraine, but the issue goes way back.

U.S. Senator Bill Roth, whom I worked with on the U.S. Joint Economic Committee as president of NATO’s parliament, the North Atlantic Assembly, made the following comment to the U.S. Senate Committee on Foreign Relations.

“Somehow an understanding must be made clear that the United States did not create the NATO alliance and prepare for war and send our troops to fight and die in Europe and spend our country into debt for 50 years simply to defend European real estate or European economic interests. Our commitment was first and foremost to the defense of democracy and the preservation of human liberty and it must remain so.”

Momentum is now clearly shifting to Europe being more responsible for its defense and this means European defense companies and stocks are on the upswing.

The law of unintended consequences means the repercussions of this trend won’t all be positive for America. Europeans will demand more control over NATO. U.S. defense company sales to European countries will decline. If this is not handled well, America will lose influence, jobs, and security.

Europe is also going to be a formidable military competitor and exporter, especially to Asia and the Middle East. However, investors gain benefit from allocating some capital to this sector and the best way is via a shotgun approach with Stoxx Europe Total Market Aerospace & Defense ETF (EUAD). This ETF tracks an index of top defense contractors, including Leonardo, Rheinmetall, and BAE Systems, and is up roughly 24% this year while the S&P 500 is down.

In March, the European Commission released a proposal to step up defense spending by about $840 billion, including $165 billion in loans. The European Investment Bank also announced a big increase in funding for security projects and military equipment.

Germany and Denmark plan to increase defense spending to 3% of gross domestic product over the next two years, while the U.K. unveiled plans to boost military spending to 2.5% of GDP by 2027. America’s military R&D spending is currently 12 times as large as Europe’s, so some catch-up is warranted.

Most of the major weapons producers in Europe are partially state-owned, and each government has its own priorities, regulations and defense strategies, so coordination with the Pentagon will be important. One leading constituent of the EUAD basket is Leonardo (DRS). The company is developing a next-generation fighter jet, the Global Combat Air Program, with producers in Britain and Japan. Perhaps Germany could benefit the most from this trend because of its underused industrial base and low public debt. BUY

Current Recommendations

Changes Since Last Week:

DoorDash (DASH) Moves from Hold to Buy

Nearly all of our 20 existing stocks were up this week, with only previously fast-rising Agnico Eagle Mines (AEM) trading lower than it was a week ago. So, we again have no sells as we rebuild our portfolio in the wake of some late-March/early-April purging. Instead, we upgrade DoorDash (DASH) back to Buy as it has clearly regained momentum.

Most stocks have merely rebounded from sharp post-Liberation Day declines. A few are close to or hitting new highs – most notably Netflix (NFLX). And all but a handful of our stocks are now rated Buy. Buying after big dips like the one we just experienced is a good way to take full advantage of the next big upswing. Whether that’s officially begun or not is unclear. What is clear is that things are much better than they were a few weeks ago.

Here are all the good things that happened with our stocks this week.

Updates

AbbVie (ABBV), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, was up more than 9% this week to begin its recovery from a rough first three weeks of April. Last Friday’s narrow earnings beat helped ($2.46 EPS vs. $2.40 expected), as the company beat on the top line ($13.3 billion vs. $12.9 billion estimate) as well. Better yet, AbbVie raised full-year EPS guidance by 10 cents, to a range of $12.09 to $12.29. The big pharma company continues to replace the lost revenue from patent expirations on its signature Humira drug with booming sales on Rinvoq and Skyrizi, which rose 59% and 71%, respectively, in the quarter. (Humira sales were down 50% due to increased competition from generic drugs.) So perhaps the strong quarter will trigger a long rebound in the stock, which is already up 4.7% year to date in a down market. BUY

Agnico Eagle Mines (AEM), originally recommended by Carl Delfeld in his Cabot Explorer advisory, finally hit a snag, pulling back 4% despite another decisive earnings beat. Clif Droke, who also recommends the stock to his Cabot Turnaround Letter audience, offered some color on the report and AEM’s reaction to it: “Agnico Eagle Mines (AEM) reported Q1 earnings on Thursday that easily beat estimates on both the top and bottom lines. Revenue of $2.5 billion increased 35% year-on-year and earnings of $1.53 a share jumped 66%.

“Other highlights of the quarter included payable gold production of 874,000 ounces at production costs per ounce of $879 an ounce, led by strong operational performances in all its key Canadian mines, as well as strong free cash flow and record quarterly net income of $815 million.

“The top brass extolled the strong start to the year, stating that its performance has allowed Agnico to further strengthen its balance sheet while positioning it for strength for the remainder of the year. It further stated the company increased its cash position by $212 million, to $1.1 billion, and approached a zero net debt position.

“Agnico reiterated its strategic focus cost controls, while continuing to expand operating margins and use other initiatives to benefit from the rising gold price environment. The company also plans to accelerate its exploration and the advancement of its five key pipeline projects, while further strengthening its financial position and increasing returns to shareholders. (To that end, a quarterly dividend of 40 cents per share was declared at a yield of 1.3%.)

“Meanwhile, on the buyback front, Agnico plans to continue share repurchases in 2025. The firm intends to renew its normal course issuer bid (NCIB) for another year on substantially the same terms and increase the limit of purchases under the NCIB to $1 billion of common shares. Most recently, Agnico repurchased nearly 500,000 shares during the first quarter of 2025.

“Looking ahead, the company said it’s well positioned to achieve its 2025 gold production guidance of approximately 3.5 million ounces, its 2025 total cash costs per ounce guidance of approximately $940 per ounce and its 2025 all-in sustaining cost (AISC) per ounce guidance of $1,275.

“While I expect gold and gold mining stocks to pull back and consolidate during the next few weeks, I also expect the mining complex to continue its outperformance for much of 2025 and I remain bullish on Agnico.”

So do I. Buy the dip. BUY

Airbus (EADSF), originally recommended by Carl Delfeld in his Cabot Explorer advisory, had a nice bounce-back week, up more than 3% ahead of earnings this Wednesday (April 30). Analysts are looking for modest 3.4% revenue growth. Carl notes that the aircraft manufacturing “industry is in a bit of upheaval as China returned a Boeing jet to the U.S. and Boeing’s CEO threatened to end aircraft shipments to China. The Chinese market is expected to account for 20% of global demand over the next two decades. Airbus has been gaining market share by beating Boeing to develop a line of fuel-efficient, mid-sized aircraft that are cheaper for airlines to fly.” So, that’s a reason to invest in Airbus. Let’s see if Wednesday’s earnings can spark some more buying. BUY

AST SpaceMobile (ASTS), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, is up more than 18% since we last wrote, mostly due to the rebound in the market, but this morning’s announcement of a new deal with the U.S. National Science Foundation may also be helping matters. The stock is still well off its early-March highs near 34 but is also comfortably above the early-April lows (20). Earnings are due out in a couple weeks, which could be a major catalyst for shares as it has been in recent quarters. With momentum returning to the stock, this could be a great entry point if you don’t own shares of this potentially revolutionary company. BUY

Axsome Therapeutics, Inc. (AXSM), originally recommended by Mike Cintolo in his Cabot Top Ten Trader advisory, was up 4% this week on no news. There are some big potential needle-movers on the calendar, however: Earnings are due out May 5, Axsome will present at the Life Sciences Conference in New York on May 7, then at the BofA Securities Health Care Conference in Las Vegas on May 13. So we’re about to get a lot more info on this mid-cap biotech. The stock is up more than 27% year to date but trading about 22% below its February highs. Earnings could go either way, but overall, I like the upside. BUY

Banco Santander (SAN), originally recommended by Carl Delfeld in his Cabot Explorer advisory, remains on a tear, up 10% in the last week and more than 62% year to date. The Spain-based bank has been immune from tariffs and reports earnings this Wednesday, April 30. Analysts are looking for modest improvements (2.4% sales growth, 11.1% EPS growth). A miss could send shares tumbling after such a fast start to the year, so I would wait to start new buys until after the report if you don’t already own SAN. But with the stock trading at just 8x earnings and 97% of book value, long term, it’s a Buy. BUY

BYD Co. Ltd. (BYDDY), originally recommended by Carl Delfeld in his Cabot Explorer advisory, had another strong quarter. Profits for the Chinese EV maker exactly doubled in the first quarter, its best bottom-line performance in nearly two years, while sales improved 36.4% to 170.4 billion yuan. Market share in its home market of China – where it does roughly 90% of business, though it’s making a hard charge at expanding globally (BYD is targeting 800,000 cars exported this year) – increased to 13.6%, up from 12.1% in Q1 a year ago. Shares were up 8% this week, despite a sharp pullback this morning. Coming on the heels of introducing a new God’s Eye self-driving car technology and rolling out a charger capable of charging up to 300 miles in just five minutes, Friday’s earnings report only adds to our bullishness on BYD. It’s probably our favorite stock in the portfolio. BUY

DoorDash Inc. (DASH), originally recommended by Mike Cintolo in Cabot Top Ten Trader, is back in business, up 10% this week on reports of its $3.6 billion bid to buy Deliveroo, a British food-delivery company. The deal isn’t done yet, but if it goes through, it would get DoorDash’s foot in the door of a major market it’s currently missing – the company does most of its business in the U.S. and Canada, with deliveries in select cities in Australia and New Zealand. DoorDash also reports earnings next week, May 7. And while the stock is well above its early-April lows, it still trails its February highs by a wide margin. Having just poked above its 50-day moving average for the first time all month, let’s restore a Buy rating. MOVE FROM HOLD TO BUY

Dutch Bros (BROS), originally recommended by Carl Delfeld in his Cabot Explorer advisory, is also up 10% since we last wrote. There was no news. The company reports earnings on May 7. Similar to DASH, BROS has bounced back nicely but is still well shy of its February highs. If you don’t own shares of this fast-growing drive-through coffee store chain, this looks like a great entry point. BUY

Eli Lilly and Company (LLY), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, is up more than 7% in the last week ahead of Thursday’s (May 1) earnings report. Big things are expected: Analysts are anticipating 45.1% revenue growth and 41% EPS growth. The company has topped EPS estimates in three of the last four quarters. LLY shares are up more than 13% year to date but are well shy of their early-March highs. Let’s maintain our hold rating until after the earnings report. HOLD

Freshworks (FRSH), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, was back with a vengeance ahead of tomorrow’s (April 29) earnings report, up 18% since we last wrote. The big move came on no news – and despite several lowered price targets from industry analysts this month – so perhaps Wall Street knows something about tomorrow’s earnings results. Analysts are looking for 16.2% revenue growth and 30% EPS growth. We’ll see what happens. Maintaining our Hold rating for now. HOLD

Kenvue (KVUE), originally recommended by Clif Droke in his Cabot Turnaround Letter, was up from 22 to 23 on no news. The company reports earnings on May 8. As my colleague Jacob Mintz notes, there’s a new activist investor involved with Kenvue, which could be pushing the board to make some under-the-surface changes that will improve the share price. As it is, the stock is up a solid 7.8% year to date. The high-yielding Johnson & Johnson spinoff was added to the portfolio earlier this month as a safety play, regardless of what happens to the economy, since people always need most of the things it makes – Band-Aids, Benadryl, Tylenol, Nicorette gum, Listerine, etc. It’s an all-weather dividend stock that should sustain us through tariff turbulence. BUY

Main Street Capital Corp. (MAIN), originally recommended by Tom Hutchinson in the High Yield Tier of his Cabot Dividend Investor advisory, bounced back from 52 to 54 on no news. The business development company reports earnings on May 8. It’s nice to have a high-yielding (7.8%) monthly dividend payer in the portfolio during a time of such rampant uncertainty in the market. BUY

Netflix, Inc. (NFLX), originally recommended by Tyler Laundon in Cabot Early Opportunities, is up to new all-time highs, spurred on by last week’s stellar earnings report. Earnings per share of $6.61 topped analyst estimates ($5.66) by almost a full dollar, while revenue improved 13% year over year. Perhaps most importantly, the global streaming giant reaffirmed its full-year revenue guidance of between $43.5 billion and $44.5 billion. Shows and movies aren’t subject to tariffs, and the company seems unbothered by the potential for a global economic slowdown. As a result, 19 different brokerage firms, including Morgan Stanley, have raised their price targets on NFLX since earnings, with a median target of 1,147. At a time when the Magnificent 7 have been struggling mightily, NFLX is perhaps the surest bet among mega-cap tech stocks in this market, as discussed in-depth on the recent episode of my Cabot Street Check podcast. BUY

Planet Fitness (PLNT), originally recommended by Mike Cintolo in Cabot Top Ten Trader, was up about 2.5% this week on no news. The fitness center chain will report earnings on May 8. The firm is the biggest national fitness center player, with 2,722 gyms at year-end that cater to people who want to use the gym ... but aren’t exactly fanatics about fitness and don’t want to pay for some premium offerings seen among many high-end local competitors. And after a rough few years during Covid, the company is showing signs of life, with sales up 10% last year, EBITDA up 12% and memberships up 5%. Meanwhile, PLNT shares are 13% off their late-January highs. BUY

Sea Limited (SE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up 9.5% this week on no news. Shares of the Singapore-based conglomerate that does most of its business in fast-growing Southeast Asia are still well off their early-March highs but have done an admirable job of clawing their way back from an early-April dip to around 105. The stock is up nearly 19% year to date. All three of the company’s major business segments – Shopee (e-commerce), SeaMoney (fintech) and Garena (gaming/entertainment) – are thriving, producing double-digit sales growth in the last quarter. BUY

Sirius XM Holdings (SIRI), originally recommended by Clif Droke in his Cabot Turnaround Letter, advanced 7% this week ahead of this Thursday’s (May 1) earnings report. Analysts aren’t expecting much: a 3.7% decline in sales, with a 5.7% dropoff in EPS. Sirius has topped EPS estimates in three of the last four quarters, so we’ll see what happens. Shares of the satellite radio giant are off to a slow start for us but have been flagged by Clif as a prime turnaround candidate. Perhaps an earnings beat this week can accelerate the turnaround. BUY

Sprouts Farmers Market (SFM), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, had a good first week in the portfolio, up 5% ahead of earnings this Wednesday, April 30. Analysts are looking for 17% sales growth with 38% EPS growth. Those estimates are a reflection of a grocery store chain that’s growing like a weed. It’s a health-food, organic-based grocery store chain designed to replicate a high-end farmers’ market. Sprouts has 440 stores today and sees potential to get to around 1,200. Around half of new store growth should be in newer markets, with the Northeast and Midwest representing entirely new market opportunities. The stock is up 31% year to date but is still well off its February highs. Beating lofty earnings expectations this week could potentially send it to new heights. BUY

Tesla (TSLA), originally recommended by Mike Cintolo in Cabot Top Ten Trader, reported what were perhaps its worst quarterly results as a public company last week. And yet the stock is up more than 20%. Why? EPS of 27 cents, after all, came in miles below the 41-cent consensus estimate, while revenue of $19.3 billion was equally shy of expectations ($21.1 billion) and was down 9% year over year, with automotive revenue down 20%. The company didn’t even update its full-year guidance, saying it would do so in the Q2 report, which seems like a red flag. And yet, the stock soared after the Department of Transportation (DoT) unveiled plans to streamline self-driving car regulations and “slash red tape,” in the words of Transportation Secretary Sean Duffy. That’s been the reason all along to hang in there with TSLA stock, even when things looked at their bleakest in recent months thanks to CEO Elon Musk’s extracurriculars: Musk’s prominent spot in President Trump’s cabinet likely means he’ll get “rewarded” with legislation and deregulation that help his company. Autonomous driving has long been Musk’s white whale, yet just as elusive. Now, the DoT’s intent to fast-track self-driving technology in America could be a lifeline for Tesla at a time when it needs it most. So let’s keep holding. TSLA has made a sport out of roaring back to life just when people start to count it out. Last week may have been the start of another new life for a company that seemingly has nine of them. HOLD

Waste Management (WM), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, was flat this week ahead of today’s (after-market) earnings report. Analysts are looking for 18.3% revenue growth but with a 9.1% decline in EPS. In his latest update, Tom wrote, “The garbage king is delivering as advertised so far. It faced a huge defensive test shortly after being added to the portfolio and it passed. WM did fall sharply early this month but has since gained back nearly all of the losses already. WM is also one of the few portfolio stocks that is trading close to the high. You can depend on garbage. As the market plunges and uncertainty swirls, investors are attracted to safety and the relative performance of stocks like WM tends to thrive. Of course, this stock also has a good track record in bull markets. It’s a good holding if the market turns around too.” We’ll see what happens with earnings in a few hours. BUY

If you have any questions, don’t hesitate to email me at chris@cabotwealth.com.

Here, too, is the latest episode of Cabot Street Check, the weekly podcast I host with my colleague Brad Simmerman.

The next Cabot Stock of the Week issue will be published on May 5, 2025.

Copyright © 2025. All rights reserved. Copying or electronic transmission of this information without permission is a violation of copyright law. For the protection of our subscribers, copyright violations will result in immediate termination of all subscriptions without refund. Disclosures: Cabot Wealth Network exists to serve you, our readers. We derive 100% of our revenue, or close to it, from selling subscriptions to our publications. Neither Cabot Wealth Network nor our employees are compensated in any way by the companies whose stocks we recommend or providers of associated financial services. Employees of Cabot Wealth Network may own some of the stocks recommended by our advisory services. Disclaimer: Sources of information are believed to be reliable but they are not guaranteed to be complete or error-free. Recommendations, opinions or suggestions are given with the understanding that subscribers acting on information assume all risks involved. Buy/Sell Recommendations: are made in regular issues, updates, or alerts by email and on the private subscriber website. Subscribers agree to adhere to all terms and conditions which can be found on CabotWealth.com and are subject to change. Violations will result in termination of all subscriptions without refund in addition to any civil and criminal penalties available under the law.