Cabot Stock of the Week Issue: June 23, 2025

Stocks continue to act resiliently despite a seemingly endless barrage of geopolitical turmoil, the latest being that the U.S. has now joined Israel’s war against Iran after bombing three nuclear sites over the weekend. The market isn’t imploding today the way some had feared, though volatility is up to its highest point in a month. Where stocks go from here will largely depend on whether Iran-U.S.-Israel tensions mount … or if the sides start to work toward some sort of deal or cease-fire.

But again, we must focus on what’s actually happening in the market. And what we see isn’t all that different from what it was a week ago: a market that’s stuck in limbo but isn’t collapsing in the face of persistent headwinds either. So, let’s keep going with stocks we think put us in the best position to outperform – as we’ve done all year. Today, that means adding a fast-growing software company recently recommended by Tyler Laundon in his Cabot Early Opportunities advisory.

Here it is, with Tyler’s latest thoughts.

New Recommendation

Dynatrace, Inc. (DT)

Dynatrace is a software company that helps large enterprises monitor and manage their increasingly complex IT environments. It is a leader in the Application Performance Monitoring (APM) space, meaning its platform ensures applications run smoothly and securely across every layer of a customer’s tech stack, from infrastructure to code.

This comprehensive coverage means Dynatrace plays a direct role in shaping the end-user experience that many people enjoy when using common applications.

Like many modern software companies, Dynatrace is enhancing its platform with AI-driven capabilities. These tools have fueled the growth of newer product areas, including log management (now adopted by a third of customers), infrastructure monitoring, and application security.

A key business model strategy shift for Dynatrace is its evolution toward a consumption-based pricing model called the Dynatrace Platform Subscription (DPS). DPS offers customers the flexibility to scale their usage based on business needs, without worrying about renegotiating contracts or incurring unexpected costs.

On the Q4 fiscal 2025 earnings call (May 14), management noted that over 40% of the customer base is now on DPS, with the customer count doubling year-over-year.

Importantly, DPS customers use an average of 12 platform capabilities, compared to just five for those on traditional licenses. These customers also generate higher revenue, with average annual recurring revenue (ARR) of $600,000 versus $400,000 for traditional users.

Another highlight: the company reported 45% year-over-year growth in strategic accounts. These are large, high-value customers that represent significant long-term revenue potential.

Momentum also continues on the capital return front. Dynatrace repurchased $43 million in stock last quarter, bringing the total buyback to $173 million out of the $500 million authorized.

As for the stock, despite a notable pullback in December, DT was relatively stable last year. Shares rebounded in January and gained momentum following a mid-January earnings report, which pushed DT to a multi-year high of 63 by the second week of February. However, that strength quickly faded as trade tensions rocked the market. By April 7, DT stock had lost about a third of its value. The recovery began ahead of the company’s Q4 fiscal 2025 earnings report on May 14, which helped lift the stock back above 50 – a level it hadn’t seen since March 26. Since then, DT has been consolidating above its 200-day moving average line, trading in a relatively tight range between 52.5 and 55.6. BUY

Current Recommendations

Changes Since Last Week:

Kenvue (KVUE) Moves from Buy to Sell

Our portfolio is getting bloated again, and it’s time to start purging laggards. This week, that means cutting ties with Johnson & Johnson spinoff Kenvue (KVUE), which has long-term turnaround potential but hasn’t done much of anything since we recommended it two and a half months ago. In a portfolio in which nearly every stock is up, that’s too long for a stock to just sit there and not contribute.

Fortunately, many of our remaining stocks had very good weeks. Tesla (TSLA) is having a monster Monday after the long-awaited rollout of its robotaxi. AST SpaceMobile (ASTS) keeps soaring to new highs and has now well more than tripled for us. DoorDash (DASH) is also trading at 52-week highs.

Here’s what’s happening with all our stocks.

Updates

AbbVie (ABBV), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, was off 3.5% this week despite positive Phase III clinical trial results for its migraine drug candidate, atogepant. The stock remains within its recent range. The 3.5% yield adds to our modest return thus far. Keeping at hold until the stock can demonstrate some sustained momentum. HOLD

Agnico Eagle Mines (AEM), originally recommended by Carl Delfeld in his Cabot Explorer advisory, is down slightly, from 124 to 123, in the last week, but is getting a bump today on increased flight to safety in the wake of America bombing Iran’s nuclear facilities over the weekend. You can bet gold will remain hot as tensions in the Middle East – and America’s involvement in them – increase. AEM is a great way to gain exposure to the yellow metal. BUY

Airbus (EADSF), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up a point this week after the aircraft maker secured $21 billion in new orders at the Paris Air Show last week. Airbus cleaned up at a time when rival Boeing (BA) was largely silent after yet another tragic, highly public incident involving one of its planes – the Air India Flight 171 crash earlier this month, which killed some 270 passengers. We added Airbus to the portfolio on the premise that it is likely to improve market share at a time when distrust of Boeing – its only true competition in the global aircraft manufacturing space – is at an all-time high. That’s even more true now, and it played out in Paris last week. BUY

AST SpaceMobile (ASTS), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, was up another 18% this week and has risen 90% in the past month! B. Riley raised its price target on ASTS from 36 to 44 – a level it has already eclipsed. The company also announced a deal with Vi, India’s leading telecom provider, to expand mobile connectivity across India’s many unconnected regions. AST SpaceMobile is attempting to become the first company to ever provide worldwide internet access to smartphones via a space-based cellular broadband network. Also, the stock is joining the Russell 1,000 large-cap index today.

Earlier this month, I recommended selling half your ASTS shares to book profits, as the stock had tripled in the 11 months since we added it to the Stock of the Week portfolio. It’s even higher than that now. Let your remaining half position ride and see how high this stock can go. But I probably wouldn’t start a new position at these elevated levels. HOLD HALF

Banco Santander (SAN), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was flat this week as it continues to hover around 8 per share this month after a huge run-up through the first five months of the year. The Spain-based bank is one of Europe’s top banks, with a U.S. presence – both physical and via its Openbank mobile option – that’s quickly expanding. At a time when European stocks are outperforming and Europe’s interest rates are lower than in the U.S., this stock is benefiting. BUY

BYD Co. Ltd. (BYDDY), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was down about 5% this week and has dipped to a six-week low. The only news was that the company plans to introduce its most affordable model yet – the Dolphin Surf, with a starting price of just $25,000 – in Europe, likely in an effort to capitalize on the company’s recent momentum on the continent. BYD outpaced Tesla’s EV sales in Europe for the first time in April, demonstrating major progress in the company’s push to become a global brand. But, price cuts in China of as much as 34% on 22 of its models have given some investors pause of late, and the stock peaked about a month ago. The price cuts are temporary, however, and the growth in Europe and elsewhere is encouraging. Thus, you could treat this pullback as a buying opportunity. BUY

Carnival Corp. (CCL), originally recommended by yours truly in my Cabot Value Investor advisory, was up 5% this week ahead of tomorrow’s (June 24) earnings report. Analysts are optimistic, looking for 4.4% sales growth and 31.7% EPS growth. And the company has blown EPS estimates out of the water in each of the last four quarters. If it happens again, perhaps the stock can start to creep back toward its January highs above 28. BUY

Coeur Mining (CDE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, is off about 1% in the past week as silver prices cooled a bit with the gold trade back in full swing. Coeur is a mining company that explores for gold, silver, zinc, and other related metals in the U.S., Canada, and Mexico. BUY

DoorDash Inc. (DASH), originally recommended by Mike Cintolo in Cabot Top Ten Trader, advanced another 4.5% this week to reach a new 52-week high! There was no news, other than Jim Cramer saying he’d buy the stock. The company is coming off another strong quarter and recently announced two big acquisitions worth roughly $5 billion. DoorDash is buying London-based Deliveroo for $3.9 billion, plus hospitality tech company SevenRooms, for $1.2 billion. Wall Street loved the deals, and the stock is now up 36% year to date, and our gains are now north of 70%. BUY

Dutch Bros (BROS), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was flat this week and hasn’t budged much since making a big leap on earnings in the first half of May. The fast-expanding drive-through coffee store chain’s loyalty rewards program has been accounting for about 70% of traffic as the company opened 30 new locations in the first quarter. The company plans to open at least 160 shops in 2025. It is now up to 1,012 locations and is targeting 2,029 stores by 2029 and believes it has a total market opportunity of 7,000 locations. BUY

Eli Lilly and Company (LLY), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, gave back all of its 6% gain from the previous week. As Tom notes, “LLY is a juggernaut that’s been stuck in the mud. It’s down more than 15% from the 52-week high and is down over 6% over the past year. This is a stock that has returned over 400% over the last five years. That’s a big slowdown. Drugs are likely soon to be targeted for tariffs and inputs for Lilly’s weight loss drugs come from Ireland. However, the Administration indicated that time would be given to relocate facilities to the U.S. and Lilly has already begun that process. Tariffs are unlikely to sting Lilly that much. There’s also the issue of ‘most favored nation’ drug pricing. But it’s unclear how that will work and how much other nations will reduce their prices.

“Lilly is still knocking the cover off the ball with huge demand for its weight loss and other drugs. There is also likely approval for an oral weight loss drug later this year that could be a game-changer. But until there is more clarity on these issues, LLY is unlikely to generate lasting upside traction. That’s why it is rated ‘HOLD’ for now. But the stock should soar on the other side of this uncertainty and make up for lost time.” Let’s keep our rating at Hold as well. HOLD

Freshworks (FRSH), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, lost about 1% this week. In his latest issue, Tyler wrote, “Freshworks (FRSH) stock has acted about the same as the broader cloud software space (i.e., a little up and down but mostly sideways) and is currently trading right on our blended average entry price. The company offers customer experience (CX) and employee experience (EX) software solutions and is benefiting as mid-market customers try to reduce software costs. The EX business is about one-third new customer growth and two-thirds current customer expansions and leans toward larger customers, while the CX business is a more mature solution set that leans toward smaller businesses. Freshworks’ solutions have improved in recent years and, with the help of AI, are increasingly ticking the boxes that customers are looking for, including ease of use and integrations.” BUY

Kenvue (KVUE), originally recommended by Clif Droke in his Cabot Turnaround Letter, just isn’t getting the job done and is down slightly in the two and a half months since we added it. This Johnson & Johnson spinoff may be a long-term turnaround story, but we don’t have that kind of timeline in a crowded portfolio like this one. Let’s get rid of it. MOVE FROM BUY TO SELL

Main Street Capital Corp. (MAIN), originally recommended by Tom Hutchinson in the High Yield Tier of his Cabot Dividend Investor advisory, was up ever-so-slightly this week on no news. The 7.3% yield and the monthly dividend are the appeal here for this business development company. Any share price gains are gravy. Thankfully, we’ve had some of those, to the tune of a 27% gain in 15 months. Add in the high dividend, and MAIN has delivered a hefty total return thus far. BUY

Netflix, Inc. (NFLX), originally recommended by Tyler Laundon in Cabot Early Opportunities, just keeps inching to new all-time highs, up another 2.5% this week. Wells Fargo became the fourth major ratings firm to raise its price target on the stock in the last month, bumping up to 1,500 a share. Pivotal Research, a smaller outfit, went one better, raising its target to 1,600 and saying Netflix is “underpenetrated globally” and that its relatively new ad-supported tier should drive subscriber growth and average revenue per user (ARPU) growth for years to come. The streamer’s increased focus on live sports like WWE and last year’s Mike Tyson/Jake Paul boxing match and Christmas Day NFL games could open up an entirely new revenue stream and address its one true blind spot. NFLX is a must for any growth-oriented portfolio, even at such elevated prices. BUY

Palomar Holdings, Inc. (PLMR), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, was off about 2.5% this week as the stock struggles to gain traction with investors of late. In his latest issue, Tyler wrote, “Palomar (PLMR) received price target increases from Piper Sandler (to 177) and Evercore ISI (to 168) at the end of May, shortly after completing its annual reinsurance placement. Following that milestone, management raised its full-year 2025 adjusted net income guidance range to a range of $195 - $205 million from the previously indicated range of $186 - $200 million. The specialty insurer is focused on delivering consistent earnings and has made considerable efforts to reduce its continental hurricane exposure. The stock had a lot of momentum when we jumped in a month ago and ran to 176 soon after. PLMR has since pulled back to its 50-day moving average line and trades right near our entry point at 162.” It’s currently lower than that, at 157. PLMR will need to show some signs of life in the coming weeks or it won’t be long for this portfolio. But for now, I’ll keep it at Buy on the expectation that a bounce-back is coming. BUY

Planet Fitness (PLNT), originally recommended by Mike Cintolo in Cabot Top Ten Trader, finally pushed above 106 resistance and has kept going, up 5.5% in the past week to reach its highest point since January. A price target raise (from 120 to 126) from Canaccord Genuity surely helped. Otherwise, there hasn’t been much news. We have a nice gain on this fitness center chain thus far. Having cleared a key technical threshold, perhaps it can climb much higher. BUY

Sea Limited (SE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was unchanged 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. The stock is up 43% year to date but has backtracked a bit this month. SE still trades at less than half its 2021 peak. BUY

Stoxx Europe Total Market Aerospace & Defense (EUAD), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was unchanged this week but is off to a fast start for us. This ETF, the only one in our mostly stock-centric portfolio (hence the name), is a play on the strength of European stocks and Europe’s increased focus on defense spending as its economy improves. European stocks are up roughly 5% year to date, while U.S. stocks are up less than 2%. BUY

Tesla (TSLA), originally recommended by Mike Cintolo in Cabot Top Ten Trader, is up 8.5% in the last week, with all of the gains coming today after the company finally rolled out its long-awaited robotaxi. The Model Y robotaxi had a “successful” launch in Austin, Texas, over the weekend, according to Elon Musk. The Tesla CEO hopes the driverless taxi can compete with Google’s Waymo, which has become ever-present in some western cities like Los Angeles. And the launch of something entirely new – despite being much later than promised – comes at a perfect time for Tesla, when the company is bleeding customers thanks to Musk’s governmental activities and due to heavy pricing competition in China and elsewhere. Tesla’s ability to innovate and reinvent itself is why TSLA remains in our portfolio, and likely will for some time, despite the sharp downturn to start the year. HOLD

The Williams Companies, Inc. (WMB), originally recommended by Tom Hutchinson in the High-Yield Tier of his Cabot Dividend Investor advisory, was up 1.5% in its first week in the portfolio. I added this high-yielding midstream energy stock to the portfolio as a play on rising tensions in the Middle East and the spike in oil prices that may follow. So far, the spike has been modest, but as tensions mount, I expect crude oil prices will go higher. Of course, Williams specializes in natural gas and natural gas liquids (NGLs), but the Trump administration has been highly encouraging of NGL exports, which is great news for Williams: roughly 30% of natural gas in the U.S. runs through its systems. Our timing may have been very good here. BUY

Toast Inc. (TOST), originally recommended by Mike Cintolo in his Cabot Growth Investor advisory, added 2% this week but continues to run mostly in place. As Mike wrote in his latest update, “Toast (TOST) is now five weeks into a tight (10% from high to low) range, which follows two weeks of big-volume buying after the Q1 report. We’re optimistic due to the fundamentals (including what should finally be a huge upmove in the bottom line going ahead), though the payment sector is under pressure due to stablecoins (a type of crypto tied to the U.S. dollar/Treasury bills), which some fear could take share away from traditional payments. We don’t think that’s a huge deal for a firm like Toast, and the playbook from here is simple: A decisive breakout north of the 45 to 46 range on good volume would likely kick off a sustained advance, while a breakdown to 39 or so would lower the odds TOST is actually a leader. We’ve been patient here, holding a half-sized stake for a while, and will follow the stock’s lead from here. If you’re not yet in, we do think a small buy here is a solid risk-reward, with a mental stop in the 38 to 39 range.” BUY

Veeva Systems Inc. (VEEV), originally recommended by Mike Cintolo in his Cabot Top Ten Trader advisory, was off about 1% this week on no news. The stock has scarcely budged since a big earnings-fueled run-up from the 230s at the end of May. Veeva is the leading cloud software services provider for the life sciences industry, with expectations that it will achieve double-digit revenue growth for years to come. 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 June 30, 2025.

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