Please ensure Javascript is enabled for purposes of website accessibility
Stock of the Week
The Best Stock to Buy Now

Cabot Stock of the Week Issue: February 3, 2025

Tariffs are here, and the market doesn’t like them. But how long are they here for? As this morning’s deal with Mexico to delay them by a month reveals, it’s possible tariffs are being used as more of a scare tactic than a permanent penalty. If so, that would be good for stocks. But the best thing to do with tariffs as an investor is to ignore them and focus on stocks that are performing well. And today, we do just that, adding a promising biotech that caught the attention of Cabot Top Ten Trader Chief Analyst Mike Cintolo.

Details inside.

Download PDF

Tariffs are here. For now. Or at least, they were here for Mexico (blinked and you missed them!), until President Trump agreed to delay them by a month as the two sides work on ways to improve border security.

As of this writing, Canada has struck no such deal, so their 25% tariffs are set to go into effect tomorrow, while a 10% penalty on Chinese goods is also on tap. The market doesn’t like tariffs, and stocks are down Monday in reaction to the news. The reason is simple: According to a Goldman Sachs note issued Sunday morning, tariffs on imports from Canada and Mexico alone “would raise core PCE prices by 0.7% and hit GDP by 0.4%.” The 10% tariff on Chinese goods could hike core prices by another 0.3%, says Goldman.

After two and a half years of inflation progress, that’s not good. But again, as we saw with Mexico already this morning, these tariff orders may be temporary – a “threat” intended to improve security at the U.S. border and reduce the influx of fentanyl, among other things. So, we’ll see how long the tariffs last.

In the meantime, the market remains healthy, despite today’s tariff-related selling joining last Monday’s DeepSeek-sparked AI selloff as rough starts to each of the last two weeks. Last week, stocks mostly bounced back after the Monday Massacre. Let’s see if they can do the same this week.

With the bull market still very much intact, today we add a speculative stock that has nothing to do with artificial intelligence or trade. It’s a promising biotech that is on the brink of gaining FDA approval for two drugs with massive markets. Mike Cintolo discovered it in last week’s Cabot Top Ten Trader. And this week, we add it to the Stock of the Week portfolio.

Here it is, with Mike’s thoughts.

Axsome Therapeutics, Inc. (AXSM)

Last week Axsome said that it expects FDA approval for its new treatment for Alzheimer’s, dubbed AXS-05, and one for narcolepsy, AXS-12, both of which have been in Phase III trials. The announcement revived shares, which had drifted down recently after a readout of trial results for its Alzheimer’s drug (in late December) was interpreted by the market bearishly. Sentiment was also helped by preliminary Q4 results, also released last week, with $118 million in revenue, up 65% from the year before and slightly ($1 million) over estimates. Though trial results weren’t as robust as some wanted, Axsome says the Phase III Alzheimer’s data met goals for rapidly reducing agitation without increasing the risk of death, falls or sedation; about 40% of people with Alzheimer’s have a form of treatable agitation, making for a promising market. (Results for the Phase III narcolepsy trials haven’t been discussed but the fact the company believes it can get approval is obviously bullish.) At this point, Axsome is a two-drug business. Its largest treatment is Auvelity, which came to market in late 2022 and treats major depressive disorder (MDD); it makes up about three-quarters of the top line at this point. Its other treatment, Sunosi, came via an acquisition in 2022 when Axsome bought the drug from Jazz Pharmaceuticals for $53 million (and future royalties). It treats narcolepsy in adults in a different way than AXS-12 and is growing well. On just the existing Auvelity and Sunosi businesses, investors have been expecting 2025 to see a big leg up, with expectations of a two-thirds jump in revenue to $643 million and a sharp narrowing of losses on the path to profitability in 2026, all of which provides a solid underpinning here—though investor sentiment likely hinges on what management says about AXS-05 and AXS-12 on the February 18 Q4 conference call.

As for the stock, AXSM tested all-time highs near 100 in February of last year before correcting sharply, and it gradually and jaggedly worked its way back to the century mark in recent months … but it’s been unable to really break through, with the most recent dip below 80 looking ugly. But AXSM’s snapback the past three weeks on positive comments has been excellent, raising the odds that the December slide was the final shakeout. We’ll set our entry range down a bit with a stop in the low 90s. BUY

AXSM.png

AXSMRevenue and Earnings
Forward P/E: N/A Qtrly RevQtrly Rev GrowthQtrly EPSQtrly EPS Growth
Current P/E: N/A (mil) (vs yr-ago-qtr)($)(vs yr-ago-qtr)
Profit Margin (latest qtr) -91.9%Latest quarter10581%-1.0024%
Debt Ratio: 244%One quarter ago87.287%-1.0830%
Dividend: N/ATwo quarters ago75.0-21%-1.02-292%
Dividend Yield: N/AThree quarters ago71.5194%-2.08-38%

Current Recommendations

StockDate BoughtPrice BoughtPrice 2/3/25ProfitRating
AbbVie Inc. (ABBV)1/7/251801905%Buy
Airbus (EADSF)1/28/25173172-1%Buy
American Airlines (AAL)1/7/251817-6%Buy
AST SpaceMobile (ASTS)7/10/24122175%Buy
Aviva plc (AVVIY)6/21/23101327%Buy
Axsome Therapeutics, Inc. (AXSM)NEW--107--%Buy
Blackstone Inc. (BX)8/1/2310517566%Buy
Broadcom Inc. (AVGO)8/8/2388219149%Hold Half
BYD Co. Ltd. (BYDDY)12/17/2469713%Buy
Capital One Financial (COF)10/1/2414820237%Buy
Centuri Holdings, Inc. (CTRI)10/22/24192115%Buy
Constellation Energy (CEG)9/4/2417930067%Hold
Dexcom, Inc. (DXCM)12/10/24708825%Buy
DoorDash, Inc. (DASH)8/13/2412619252%Buy
Dutch Bros Inc. (BROS)8/20/243164105%Buy
Eli Lilly and Company (LLY)3/21/23331814146%Hold
Flutter Entertainment (FLUT)9/24/2422926315%Buy
GoDaddy (GDDY)5/7/2413021565%Buy
Intuitive Surgical (ISRG)3/26/2439558347%Buy
Klaviyo, Inc. (KVYO)10/15/24374624%Buy
Kyndryl Holdings, Inc. (KD)1/2/2535387%Buy
Main Street Capital Corp. (MAIN)3/19/24466134%Buy
Microsoft (MSFT)3/7/2325641362%Sell
Netflix, Inc. (NFLX)2/27/2459998264%Buy
On Holding (ONON)6/4/24415842%Buy
Primo Brands (PRMB)12/24/24------%Sold
Reddit, Inc. (RDDT)1/22/251862039%Buy
Sea Limited (SE)3/5/2455122123%Buy
Tesla (TSLA)12/29/11238021022%Buy

Changes Since Last Week:
Microsoft (MSFT) Moves from Buy to Sell

We have another sell today, and it’s one that I didn’t expect to sell as recently as a few weeks ago: Microsoft (MSFT). Bottom line: it simply hasn’t performed for a while, with shares exactly flat in the last year after an underwhelming earnings report sparked another round of selling. Long term, MSFT will likely be fine, and for those who want to hang on to it, I won’t fault you. But in a crowded portfolio, it’s simply not producing the way most of our other stocks are, or at least it hasn’t for the last year. Fortunately, we recommended the stock nearly two years ago, when ChapGPT and the AI narrative were bright-eyed and bushy-tailed, so we captured a gain of better than 60% even after a full year of stagnation. But there are stocks with more immediate upside out there right now.

Many of them already reside in the Stock of the Week portfolio. Here’s what’s happening with all of them.

Updates

AbbVie (ABBV), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, was up roughly 3% after reporting fourth-quarter revenue that topped estimates and adjusted EPS that missed. Revenue of $15.1 billion exceeded the $14.8 billion estimated and marked a 5.6% improvement from the same quarter a year ago. However, earnings per share of $2.16 fell short of the $2.26 estimate. For full-year 2024, however, adjusted EPS came in at $10.12, exceeding guidance by 49 cents. (2024 revenues of $56.3 billion also topped guidance, by $2 billion.) So, there was more to like than not like, and investors snatched up shares on Friday after the report came out. Perhaps most encouragingly, new drugs Skyrizi and Rinvoq raked in a combined $17.7 billion for the year, topping the $16 billion estimate and representing a $6 billion improvement from 2023. It further demonstrates that AbbVie has filled the void after patents expired on its most dominant drug, Humira. This is one of the more versatile, well-diversified large biopharma companies on the market. BUY

Airbus (EADSF), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was down from 175 to 173 in its first week in the portfolio. The modest decline came despite good news on two fronts: Airbus helicopter deliveries improved 4% in 2024 to 361, its best performance since 2017. Also, the company’s CEO confirmed that Airbus will reach its target of manufacturing 75 single-aisle aircraft a month in 2027. Airbus delivered 766 jets in 2024. The company reports full earnings results on February 20. BUY

American Airlines (AAL), originally recommended by Clif Droke in his Cabot Turnaround Letter, had a rough – and tragic – week. As I’m sure you all know, an American Airlines passenger plane crashed into an Army helicopter near Reagan Airport in Washington, D.C., killing 67 people. It was the deadliest air crash in the U.S. in two decades. While the crash did not appear to be the fault of American or its pilots, it’s still never a great look to have your name associated with such a terrible tragedy. So, AAL shares are down 5% since the crash. Coming on the heels of an underwhelming earnings report the previous week, in which current-quarter guidance came in a bit light, and AAL is in a bit of a funk at the moment. Still, fourth-quarter revenue for the airline was up 5% year over year, and EPS of 86 cents beat estimates by 30%. The company also managed to reduce its debt by $15 billion a year ahead of its stated schedule. Also, analysts have forecast 25% EPS growth this year. So let’s hang in there and ride out the current storm. Shares are bumping up against their December lows; as long as the stock doesn’t dip much below that number, AAL still looks buyable. BUY

AST SpaceMobile (ASTS), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, was up from 19 to 20 on no company-specific news. One potential headwind is that Elon Musk’s Starlink is building its own direct-to-smartphone space-based internet to potentially rival AST SpaceMobile’s and is working with Apple and T-Mobile to get it built. However, considering AST’s first five satellites are already up and running, it has a head start on any would-be competition. Perhaps the Starlink news will prompt AST to get its network up and running quicker, so it’s possible the competition could be a good thing. Keeping at Buy to see how the stock behaves in the coming days and weeks. BUY

Aviva plc (AVVIY), originally recommended by Bruce Kaser in Cabot Value Investor, has finalized its agreement to buy Direct Line Insurance Group for 3.7 billion pounds ($4.65 billion), creating the largest motor insurance company in the United Kingdom. The deal is expected to be completed by mid-2025. AVVIY shares were down about 8% after the company’s Direct Line takeover bid was first reported on November 27, but they’ve come roaring back of late and are trading at three-month highs as of this writing. The Direct Line addition should give this U.K.-based insurance and investment management firm a market cap of $21.2 billion, up from its current $17 billion. That gives AVVIY shares 25% upside from their current price. The 6.8% dividend yield adds to our total return. BUY

Blackstone Inc. (BX), originally recommended by Mike Cintolo in Cabot Top Ten Trader, pulled back about 5.5% as the market has retreated a bit in the last week. Blackstone is what Mike calls a “Bull Market Stock”, meaning it tends to outperform in bull markets, which it has done beautifully for us. But when stocks are down, BX is typically down even more sharply, which was the case this past week. The company also reported earnings last Thursday. Its full-year 2024 results were strong, with revenue improving 66% year over year, earnings per share nearly doubling (from $1.84 in FY 2023 to $3.62 last year), and profit margin climbing to 22% from 18% the year before. In the fourth quarter, both earnings and revenue topped estimates as inflows, investment activity and realizations all reached two-and-a-half-year highs for the world’s largest alternative asset manager. Also, the commercial real estate market is finally stabilizing as the Fed has started to cut interest rates. With the company in a very healthy place, the stock will likely remain in our portfolio as long as the bull market is still intact. BUY

Broadcom Inc. (AVGO), originally recommended by Tom Hutchinson in Cabot Dividend Investor, bounced back nicely after last Monday’s DeepSeek-inflicted bloodbath. Shares plummeted 20% last Monday just before our last issue came out, dipping to 200; they have since stabilized, and are up 8.5% in the last week. Here’s what Tom had to say about it: “Ouch! It was a one-day bludgeoning of nearly 20%. News about Chinese start-up AI company DeepSeek providing the same AI much cheaper roiled all AI-related stocks on Monday, especially those that had rallied the most, and AVGO was a prime offender. It was the worst single-day selloff in years for a stock that had remained within 3% of the high after a massive 42% two-day price surge last month. As mentioned above, I believe the selloff on Monday was overblown, even though the AI trade was due for a reckoning. Broadcom has a unique infrastructure niche that is not easily duplicated, and the stock was up for very good reasons, skyrocketing profits. This should be a rare opportunity to buy AVGO when it’s cheaper.” We sold half our stake in AVGO after the aforementioned 42% December bump and have been holding the remaining half. Let’s continue to hold for now. HOLD HALF

BYD Co. Ltd. (BYDDY), originally recommended by Carl Delfeld in his Cabot Explorer advisory, just keeps holding in the 70-71 range. There wasn’t much company-specific news, and China’s top electric vehicle maker isn’t affected by Trump’s China tariffs since it does not currently sell cars in America – making it the rare Chinese large-cap that’s immune to a U.S.-China trade war. But that doesn’t mean BYD isn’t expanding in other parts of the globe. As Carl noted, BYD “sold more EVs in Japan last year than Toyota. Remarkable given that BYD only launched its first EV in Japan in early 2023, quickly gaining due to a price tag starting around $30,000 for its Atto 3 vehicle. BYD also plans to complete its $1 billion plant in Indonesia by the end of 2025.” BUY

Capital One Financial Group (COF), originally recommended by yours truly in the Growth/Income portfolio of my Cabot Value Investor advisory, gave back about 2% after rising 5% following earnings the previous week. The earnings results were good: EPS came in at $3.09 in the fourth quarter, outpacing estimates of $2.80 and marking a 38% improvement from the same quarter a year ago. Higher interest income and a bump in loans and deposits, resulting from the Fed finally cutting interest rates, were largely responsible for the big quarter. For the year, adjusted EPS came in at $13.96, ahead of the $13.53 estimate and 12% higher than in 2023. Revenues improved 6% in 2024, to $39.1 billion.

Of course, the bigger catalyst for COF shares – a $35.3 billion merger with Discover Financial (DFS), which would create the largest credit card issuer in the U.S. and the sixth-largest bank by assets – is still awaiting approval, which the company expects to happen sometime this year. COF shares are up 45% in the last six months, partly in anticipation of the Discover deal closing. BUY

Centuri Holdings Inc. (CTRI), originally recommended by Clif Droke in his Cabot Turnaround Letter, fell back from 23 to 21 but remains in its recent 20-24 range. There was no news. Shares of the small-cap utility have been on an upward swing since new CEO Christian Brown took over in early December – a move that prompted famed investor Carl Icahn to up his stake in CTRI by 38%. BUY

Constellation Energy Corporation (CEG), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, bounced back nicely after last Monday’s (you guessed it) DeepSeek-induced implosion, up 7.5% to recover about a third of its losses. The DeepSeek news cast uncertainty over utilities, especially nuclear energy providers like Constellation, which inked a record deal with Microsoft to power its AI-focused data centers by reopening Three Mile Island. In his latest update, Tom wrote, “Holy cow. The biggest recent beneficiary of the electricity trade took the worst hit of any stock in the portfolio on Monday, down more than 20%. CEG had been on fire after announcing the deal to acquire Calpine Corp. and the Trump administration’s announcement of a $500 billion private sector investment in AI and data centers. At Friday’s close, it was up 43% in January and 202% over the past year. If ever there was a stock itching to get knocked down a peg it was this one. But AI and data center investments aren’t going anywhere, and Constellation will continue to benefit.” I agree. We downgraded CEG to Hold last week after the 20% haircut and will keep it right there until we have more clarity on the nuclear energy sector in the DeepSeek era. But my instinct is the selling was overdone. HOLD

DexCom, Inc. (DXCM), originally recommended by Clif Droke in his Cabot Turnaround Letter, finally pauses after rising more than 10% the previous two weeks. The company will report earnings on February 13. The preliminary, unaudited results showed an 8% improvement in revenue for the quarter and 11% growth in 2024. It was enough to convince Baird to raise its price target on the stock from 86 to 104. This morning, Redburn Capital joined Baird in the bullish outlook for DXCM, upgrading the stock to Buy with a price target of 115. The stock is off to a fast start since we added it to the portfolio less than two months ago; according to at least two prominent Wall Street analysts, it has plenty more upside. BUY

DoorDash Inc. (DASH), originally recommended by Mike Cintolo in Cabot Top Ten Trader, was up another 4% this week on no news. The online food delivery giant will report earnings results next Tuesday, February 11. Shares are already up nearly 12% year to date as five major Wall Street firms have raised their price targets on the stock through the first five weeks of the year. As a result, DASH is trading at new 52-week highs. BUY

Dutch Bros (BROS), originally recommended by Carl Delfeld in his Cabot Explorer advisory, advanced another 6% ahead of next week’s (February 12) earnings call. Shares of the upstart drive-through coffee store chain are already up 20% year to date, and last week’s Starbucks earnings beat seems to bode well for Dutch Bros’ own report next week. BROS shares have now doubled from our 31 entry price last August. BUY

Eli Lilly and Company (LLY), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, was mostly unchanged this week after a nice 9% recovery the previous week. The real test will come this Thursday, February 6, when the company reports earnings. Analysts are looking for 43% revenue growth with 107% EPS growth. We’ll see if the company can match, or exceed, those lofty estimates. BUY

Flutter Entertainment (FLUT), originally recommended by Mike Cintolo in Cabot Top Ten Trader, was up slightly after UBS raised its price target on the stock from 320 to 335. In his latest update, Mike wrote, “We’re optimistic the next major move in Flutter Entertainment (FLUT) will be up as the underlying business is strong, the top brass (via a new share buyback program) is becoming shareholder friendly and, by our measures, the stock is still early-stage (base-on-base breakout in November). That said, while the past eight weeks look totally normal (today shares were likely boosted by a bullish report from Las Vegas Sands—loosely the same sector), there hasn’t been much buying power to this point and the stock is right up into resistance. Thus, we’ll again stand pat here and see if this rebound gathers steam, while looking around for any tidbits on Super Bowl betting amounts and trends.” Keeping at Buy, as both the Super Bowl this month and March Madness next month – the two biggest sporting events on the calendar to sports bettors – loom as potential near-term catalysts, as does next month’s earnings report. BUY

GoDaddy Inc. (GDDY), originally recommended by Tyler Laundon in Cabot Early Opportunities, just keeps rising, up another 4% this week to reach new all-time highs above 212. There’s been no company-specific news, though the website registration giant will report earnings on February 13. Keeping at Buy, but it makes sense to keep new buys on the small side ahead of the earnings report. BUY

Intuitive Surgical (ISRG), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, ticked up about 1% and has been gaining momentum since last month’s earnings report. Q4 EPS and revenues easily topped estimates and the company installed 493 new platform placements – 174 of which were the new da Vinci 5 robot surgical systems. 2025 guidance for gross margins came in a bit light at 67-68% (Wall Street expected 69%), but there was way more good than bad, and shares have risen accordingly. BUY

Klaviyo, Inc. (KVYO), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, was up another 4% this week and is now up more than 7% year to date. There’s been no news, other than Scotiabank raised its price target on the stock from 35 to 45 – which is the current price. Three other analysts raised their price targets to more meaningful levels in January. Earnings are due out February 19. It’s clear this mid-cap software solutions stock is starting to make believers out of Wall Street. BUY

Kyndryl Holdings, Inc. (KD), originally recommended by Mike Cintolo in his Cabot Top Ten Trader advisory, reports earnings after the bell today – and after you receive this issue. Expectations are mixed: a 3.2% drop in revenue, but with earnings per share flipping from a 5-cent loss last year to a 41-cent gain this year. We’ll see what happens. The stock has pulled back from 39 to 37 in the last two weeks prior to today’s report but is still up in the month since we added it to the portfolio. BUY

Main Street Capital Corp. (MAIN), originally recommended by Tom Hutchinson in the High Yield Tier of his Cabot Dividend Investor advisory, just keeps advancing, up from 60 to 61, a new high. In his latest update, Tom wrote, “Main Street’s portfolio of companies not only makes high-interest loans, but it also takes equity stakes. The equity stakes are the primary reason the total returns have been better than just about every other BDC. MAIN is also breaking out and made a new high last Friday. MAIN was a rare stock that didn’t have a December swoon. The improving economic outlook leaves room for further appreciation.” BUY

Microsoft (MSFT), originally recommended by Tyler Laundon in Cabot Early Opportunities, was down 5.5% this week after DeepSeek rattled all U.S. AI leaders and Microsoft’s fiscal second-quarter earnings (reported last Wednesday) failed to impress investors despite a top-line beat. Third-quarter revenue guidance came in light, as growth in its signature Azure cloud computing business is starting to slip. So investors sold off MSFT, which is now trading at a three-month low; bigger picture, the stock hasn’t moved an inch in the past year. In a crowded portfolio, in which nearly all our other stocks have momentum, MSFT is starting to stick out like a sore thumb. While no company has been better at reinventing itself and finding new avenues for growth in the 21st century, as Microsoft did more than two years ago with ChatGPT, the stock has stagnated for too long, and the DeepSeek narrative could further weigh on it in the short to intermediate term. If you own MSFT and hold on to it for the next five to 10 years, you’d likely do quite well. But we can no longer rationalize keeping it in this portfolio. Let’s sell and pocket the 62% return in less than two years. MOVE FROM BUY TO SELL

Netflix, Inc. (NFLX), originally recommended by Tyler Laundon in Cabot Early Opportunities, has held its gains since getting a big 11% earnings bump in late January. The numbers were eye-popping: 102% EPS growth and 16% subscriber growth with a record 18.9 million new subscribers added. The influx of new subscribers had mostly to do with Netflix’s first toe-dip into live sports – previously its one remaining blind spot – as the streamer aired two NFL games on Christmas Day and a Mike Tyson/Jake Paul boxing match that drew 108 million live viewers globally in November. It could be just the tip of the iceberg, as Netflix is sure to see its success with live sports as an opportunity to make it a more regular feature, similar to how Amazon has Thursday Night Football, Apple TV+ has an MLB package, and Max has NBA and March Madness thanks to its Turner Sports ties. After such a big post-earnings runup, the fact that NFLX held its gains in a down week for the market shows how much institutional support this red-hot stock has right now. BUY

On Holding (ONON), originally recommended by Mike Cintolo in Cabot Growth Investor, has pulled back sharply since topping out at 63 last week but is still up nearly 6% year to date. In his latest update, Mike wrote, “On Holding (ONON) doesn’t light up the sky, but it continues to make progress, with its latest tedious pullback and test of support (in the low/mid-50s) giving way to a good-volume move to new price and relative performance highs. The firm remains quiet on the news front, and earnings aren’t likely out for another month or so, but clearly, investors are taking their cues from management’s fireside chat earlier this month that pointed to continued great results as we roll into 2025. We’re not expecting a runaway upside move, both because of the market environment and the stock’s character (which has been two steps forward, one step back), but we’ll restore our Buy rating here given the action.” We already had a Buy rating on ONON, so we’ll keep it right there. BUY

Reddit (RDDT), originally recommended by Tyler Laundon in Cabot Early Opportunities, had a great bounce-back week, rocketing up 12% in its second week in the portfolio. There was no major news. Mike Cintolo, who also likes RDDT, had this to say about it in last week’s Cabot Growth Investor update: “Reddit (RDDT) is a wild child and certainly could hit some potholes here and there, but we love the story and are encouraged by the recent action, as shares barely flinched during the big Monday selloff and then spiked up to new highs the next day. Frankly, we’d consider adding a few more shares here if the market were a bit healthier and if earnings (out February 12) weren’t approaching quickly—analysts are looking for a 62% leap in sales and earnings of 24 cents per share. Back to the stock, there’s obviously risk given the big upmove and with the quarterly report coming, but the fact that RDDT has held up well and poked to new highs while glamour names (in December) and AI names (January) have hit air pockets is very impressive, as are the accelerating growth and earnings/free cash flow trends. We’re OK buying a small position here or on wobbles and will see what comes on earnings.” Good advice. BUY

Sea Limited (SE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up another 6.5% this week on no news. Shares are already up 14% year to date and have pushed above their December highs. This remains one of my favorite stocks in the Stock of the Week portfolio – a Singapore-based conglomerate that is a play on Southeast Asian growth due to its three dominant businesses there, Shopee (e-commerce), SeaMoney (fintech) and Garena (gaming/entertainment). Even after doubling in the last six months, SE shares trade at barely more than a third of their 2021 highs. BUY

Tesla (TSLA), originally recommended by Mike Cintolo in Cabot Top Ten Trader, fell another 4% this week after the company reported another underwhelming quarter. Both earnings and sales fell short of estimates, with sales up 2% year over year but automotive sales down 8%, while EPS fell off a cliff, plummeting 71% year over year from $2.27 a share to 66 cents. Operating margin narrowed from 10.8% in the third quarter to 6.2% in Q4. It’s clear that the post-election party for TSLA is over, as shares are now trading at two-month lows. For all of Elon Musk’s promises of autonomous driving features and AI capabilities being the future of Tesla, in the here and now, EV sales are what make or break the stock, accounting for 79% of total revenue in Q4. And last year, they did a poor job selling cars, with 1.8 million deliveries representing the first annual year-over-year decline in the company’s history.

Despite the bad year for the company, TSLA stock has doubled in the last 12 months. It seems investors are clinging to the many promises Musk has made about driverless technology and robots being game-changers for the company’s future. Perhaps they will be, but it’s time for Musk to start delivering, and maybe spending less time on his other pet projects, like X and the U.S. government. That said, I wouldn’t dare doubt the company – and the stock’s – ability to bounce back. For that reason, I’m keeping TSLA at Buy even after the sharp dropoff in the last six weeks, as this could be a nice entry point. 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. This week, we did a deep dive on DeepSeek ... and why it may actually be good for the market.


The next Cabot Stock of the Week issue will be published on February 10, 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.

Chris Preston is Cabot Wealth Network’s Vice President of Content and Chief Analyst of Cabot Stock of the Week and Cabot Value Investor .