Cabot Stock of the Week Issue: May 19, 2025

*Note: Your next issue of Cabot Stock of the Week will arrive next Tuesday, May 27 due to the market holiday next Monday, May 26 in observance of Memorial Day.

Last Monday was a game-changer for the market, with the 90-pause on the U.S. and China’s tit-for-tat tariffs sending stocks soaring for a day and trickling slightly higher every day since. Stocks are clearly back in favor, and while volatility remains slightly elevated, it’s nothing like it was a month ago. Last week’s cooler-than-expected inflation report – in which the headline number dipped to 2.3%, a four-year low – seems to have further emboldened the buyers, and suddenly it feels like the bull market is back in full swing, even though it technically never went away, at least in the S&P 500.

So let’s take advantage of the renewed investor appetite for risk by adding a growth-y tech stock name that’s been gathering momentum to the point where Mike Cintolo added it to his flagship Cabot Growth Investor portfolio last week. Here it is, with Mike’s latest thoughts.

New Recommendation

Toast (TOST)

Timing is important when dealing with individual stocks, and after three years of declines, bottom building and general futzing around, we think TOST is finally ready for a sustained run. Toast is known as a leading cloud payments leader for restaurants, but its platform is really a one-stop-shop for all of a restaurant’s operational needs, and Toast’s move into some newer verticals (food and beverage retailers), international and enterprises (it inked Applebee’s and TopGolf contracts in Q1) is off to a good start. Of course, the underlying fundamental story—its platform is custom-built for the gigantic restaurant industry, not just payments but for all sort of activities—has remained strong, and now the firm is branching out. All in, Toast serves 140,000 locations now (just 10% of what it sees as its current addressable market), but the company thinks it will have 10,000 locations in these newer areas by year-end. Growth here has been rapid and reliable, and now the bottom line is kicking into gear, too—in Q1, total revenues were up 24%, but annualized recurring revenue boomed 31%, total locations served lifted 25% and EBITDA boomed 133%, with more growth like that on the way. Shares looked like they were getting going in November, but that rally was snuffed out and TOST eventually caved in with the market. But the Q1 report changed perception, with shares quickly ratcheting back to new highs. Like everything else, near-term wobbles are possible, but we’re OK starting a position here or on dips of a couple of points. BUY

Current Recommendations

Changes Since Last Week:
Axsome Therapeutics (AXSM) Moves from Buy to Sell

Our recent pattern of one stock in, one stock out continues, as this week mid-cap biotech Axsome Therapeutics (AXSM) gets the chop after a perfectly fine earnings report did nothing to move the needle on this stubbornly slow-moving stock. So that keeps our total at 21 stocks, which feels like the right amount given the much-improved market but with uncertainty and volatility still elevated. Most of the rest of our stocks are performing quite well, led by Sea Limited (SE) and Tesla (TSLA), both of which have been on a tear of late. Banco Santander (SAN) and BYD (BYDDY) aren’t far behind, and both now trade at multi-year 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, pulled back 4% this week after Citigroup downgraded its rating on the stock to “Neutral.” Healthcare stocks, and big pharma in particular, continue to take on water amid President Trump’s threats of tariffs and removing drug “middlemen” to reduce drug prices. Here’s what Tom had to say about it: “Market volatility is coming for healthcare. While the rest of the market is getting great tariff news, ABBV is in the crosshairs. The president said he would sign an executive order tying U.S. drug prices to international prices. But it is unclear how that will happen, and stocks of drug companies recovered after an initial selloff on the news. Plus, drugs are likely to be targeted for tariffs soon, according to the administration. AbbVie itself is doing great as the Humira expiration pain is behind it and earnings are growing again. Immunology drugs Skyrizi and Rinvoq grew sales by 65% in the quarter with revenue of $5.1 billion. The trajectory is great, but we’ll have to wait and see how these externally caused issues play out in the weeks ahead.” I suggest we do the same. We downgraded the stock to Hold last week, and let’s keep it right there. HOLD

Agnico Eagle Mines (AEM), originally recommended by Carl Delfeld in his Cabot Explorer advisory, bounced back slightly this week, up about 1.5%. Gold prices have pulled back the last couple weeks after peaking at new record highs above $3,400, as fears of a recession and high inflation have cooled, slowing the rush to gold as a safety play. However, it seems that gold prices may have bottomed in the short term, and as Clif Droke (who also recommends AEM) noted in his latest Cabot Turnaround Letter update, “In the company’s latest news release, it confirmed this week that it has agreed to subscribe for 30,000,000 voting common shares of Canada-based precious metals exploration and development company, Foran Mining (FMCXF). On closing of the first of two tranches of the placement on May 28, Agnico is expected to own over 64 million common shares, which will represent approximately 13% of the issued and outstanding shares of Foran on an undiluted basis.” BUY

Airbus (EADSF), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up more than 2% this week, partially on a report that the aircraft maker is in talks with Malaysia to supply its airlines with its A220 aircraft. Malaysia currently uses about 150 Airbus aircraft; it expects another 400 aircraft orders from Malaysian commercial airlines going forward. So despite some new momentum from Airbus’ much-maligned rival Boeing, the stock is starting to curry favor with investors, up more than 10% year to date and having recovered nearly all its losses after a rough April. BUY

AST SpaceMobile (ASTS), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, pulled back from 27 to 25 (where it was two weeks ago) after earnings were in line with estimates. Because the company is still mostly pre-revenue, however, what mattered most about the earnings report were the business updates. Those included a satellite orbital launch every one to two months over the next nine months, starting with its Block 2 BlueBird satellite launch in July (the first BlueBird satellite launch was last September); expectations to build six new satellites per month, starting in the third quarter; and reaching straight-to-smartphone internet service via low-Earth orbit satellites in the U.S., Japan, Europe, the U.S. government and other markets by 2026. Also, the fledgling company has $874.5 million in cash, with adjusted operating expenses in Q1 of $44.9 million. This potentially revolutionary company is still in its beta phase, but the growth could be immense if it achieves even close to its ambitious goal. The next six to nine months should be pivotal. BUY

Axsome Therapeutics, Inc. (AXSM), originally recommended by Mike Cintolo in his Cabot Top Ten Trader advisory, pulled back more than 3% this week and is now down since its earnings report two weeks ago despite a solid EPS beat. We are now at a small loss, and after three and a half months in the portfolio, it’s safe to say this speculative mid-cap biotech just isn’t getting the job done. Let’s get rid of it and open up a spot for a stock that’s less stuck in the mud than this one. MOVE FROM BUY TO SELL

Banco Santander (SAN), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up another 5% this week and has now risen a whopping 72% year to date. There was no company-specific news this week. European-based banks have been getting a boost as the Bank of England slashed interest rates by a quarter point earlier this month and the European Central Bank is forecast to cut rates this year. But none are performing as well as SAN, which last month reported a 19% increase in profits in the first quarter, is projected to return 10 billion euros to shareholders over the next two years via buybacks, and is trading below book value despite a 63% run-up year to date already. There’s a lot to like here, even after the big run-up year to date, and the stock is trading at multi-year highs. BUY

BYD Co. Ltd. (BYDDY), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up another 4.5% this week on no news. The stock is now trading at all-time highs and is up 62% year to date. The Chinese EV maker is starting to flex its increasing strength globally, out-selling Tesla in Germany and the U.K. in April. That comes on the heels of yet another strong quarter, and, earlier this year, the rollout of a self-driving technology called God’s Eye, the introduction of a car charger capable of charging a car as fast it takes to fill up a gas-powered car at the pump, and an AI partnership with news-making Chinese startup DeepSeek. As a company, BYD is clicking on all cylinders, and its stock price is finally catching up to the company’s Tesla-toppling performance. BUY

Carnival Corp. (CCL), originally recommended by yours truly in my Cabot Value Investor advisory, got off to a good start for us, up more than 4.5% in its first week in the portfolio. There was no major company-specific news. More than any other aspect of the global travel industry, cruises have come back in the post-Covid era with flying colors, reporting a record 35.7 million passengers last year, up from 31.7 million the previous year, and 30% higher than their pre-Covid peak. More than half of those passengers were American, and Carnival is one of the two largest American cruise lines, along with Royal Caribbean (RCL). The difference is that while RCL shares reached new all-time highs earlier this year (though they’re down more than 20% since), CCL shares have never come close to getting back near pre-Covid levels, when the stock peaked in the low 70s in 2018. CCL currently trades at 23 a share and hasn’t gotten any higher than 28 (this January). So the stock trades at less than a third of its all-time highs at a time when sales are higher than ever and profits are back in the black after four straight years of losses.

Revenues were up 15.9% in 2024 to $25 billion and are estimated to top $26 billion (+4.25%) this year, with EPS expanding by 30% to $1.84. And those estimates might be conservative: In the first quarter, Carnival blew EPS expectations out of the water, with 13 cents far outpacing the 2-cent estimate. Revenue of $5.81 billion also easily beat estimates, by $70 million, and marked a $400 million improvement from the same quarter a year ago. Occupancy was 103%, with 3.2 million passengers, and the Miami-based company raised its full-year guidance, bumping up its adjusted net income expectations by $185 million to $2.49 billion.

The stock is still down more than 7% year to date, even after the recent rally, and trades at a mere 12.6x forward earnings estimates. CCL is the best kind of “growth at value prices” bargain in a red-hot sector. BUY

DoorDash Inc. (DASH), originally recommended by Mike Cintolo in Cabot Top Ten Trader, is up 5% in the last week on no major news. Shares are now up more than 20% year to date. The stock had coughed up its post-earnings gains but is now attracting investors again as the market has taken off. The quarter was good: EPS of 44 cents easily topped estimates of 38 cents, up from a net loss the previous year, and the company announced two big acquisitions worth roughly $5 billion. The online food delivery giant is buying London-based Deliveroo for $3.9 billion, plus hospitality tech company SevenRooms, for $1.2 billion. Last week, I wrote that the post-earnings dip was a buying opportunity. So far, that’s proving true, but you likely haven’t missed the boat. BUY

Dutch Bros (BROS), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up another 3% this week as the company continues to draw strength from another solid earnings report. EPS of 14 cents topped the 11-cent estimate and were up from 9 cents in Q1 a year ago; sales of $355 million edged past estimates and were 29% higher year over year; and same-store sales improved by 4.7%. Meanwhile, the drive-through coffee store chain added 30 new locations in the quarter to bump its total to 1,012 stores – crossing the psychologically meaningful benchmark of 1,000, an important hurdle on the way to the company’s ambitious goal of opening 7,000 stores in the next decade. Also, Dutch Bros plans to introduce a food menu soon – something it currently lacks, as it offers a wide range of coffees, teas, lemonades and other drinks at its drive-through locations, but no food. That could be a game-changer. BUY

Eli Lilly and Company (LLY), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, was flat this week after falling 10% last week. As Tom wrote in his latest update, the recent weakness in LLY is more related to the sector than the company: “Healthcare is in the crosshairs. It’s the only S&P 500 market sector that’s lower over the past week. The big news is the executive order tying U.S. drug prices to international prices. Initially big pharma stock sold off on the news. But they have rebounded as it is unclear how the pricing will work or if it will have a big effect outside of Medicare. There is also the tariff issue. The Trump administration has already warned that it intends to target drugs for tariffs soon. The company itself is doing great. But there could be some turbulence in the near term as these external issues play out.” For those reasons, we will keep the stock at Hold. HOLD

Freshworks (FRSH), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, pulled back nearly 4% this week to give back most of its gains from the prior week. There’s been no news. The company is coming off a strong first-quarter report in late April in which EPS of 18 cents topped the 13-cent estimate and Q2 revenue guidance came in ahead of estimates. That, accompanied by a 5% bump in early May, was enough to restore our Buy rating in last week’s issue. We’re sticking with that rating. BUY

Kenvue (KVUE), originally recommended by Clif Droke in his Cabot Turnaround Letter, is flat this past week on no news. The company reported earnings the previous week, which were decent enough to give the stock a minor jolt. EPS narrowly topped estimates (24 cents vs. 23 cents expected). Sales came in at $3.74 billion. Both numbers were down year over year, but the Johnson & Johnson spinoff did raise full-year revenue guidance to a range of 1-3%, up from a range of a 1% loss to a 1% gain. The maker of Band-Aids, Tylenol, Listerine and other signature consumer staples conceded that tariffs are taking a toll on estimates, with EPS expected to be flat for the year and adjusted operating income margin expected to decline. But the sales forecast improvement mostly outweighed the bad news, and investors nudged the stock up slightly. This remains an all-weather stock that should hold up well even in a recession, and the 3.4% dividend yield helps. BUY

Main Street Capital Corp. (MAIN), originally recommended by Tom Hutchinson in the High Yield Tier of his Cabot Dividend Investor advisory, was up 3% this week as the previous week’s earnings continued to act as a tailwind. In his latest update, Tom wrote, “The BDC reported basically solid earnings with recovering net asset value (NAV) and higher distributable income. Although earnings slightly exceeded expectations, they were slightly lower than last year because of rising costs. The investment outlook is cautious because of rising expenses and tariff concerns, like most other companies.” Though the stock is still down 5% year to date, that’s more than offset by the 7.7% dividend yield, and we have a solid 20% share price return since adding this monthly dividend payer to the portfolio a little over a year ago; the return is even better when you include the yield. BUY

Netflix, Inc. (NFLX), originally recommended by Tyler Laundon in Cabot Early Opportunities, is up nearly 7% since we last wrote to reach a new all-time high above 1,180! Both Canaccord Genuity (to 1,380) and TD Cowen (to 1,325) raised their price targets on the stock, as did JPMorgan this morning (to 1,220) despite downgrading their rating to “Neutral.” Shares are admittedly getting a bit frothy at nearly 48x forward earnings estimates and up 33% year to date, so don’t be surprised if there’s some short-term slippage. But this remains one of the very best growth stories on the market, and it belongs in any long-term portfolio. BUY

Penumbra (PEN), originally recommended by Mike Cintolo in his Cabot Top Ten Trader advisory, pulled back about 6% this week as biotech types take on water. Penumbra makes devices that remove blood clots, which affect 800,000 Americans and contribute to 100,000 deaths a year. The company is growing thanks to the popularity of its CAVT technology (computer-assisted vacuum thrombectomy), with revenue up 16% in the first quarter, margins expanding to 12.4% (up from 7% a year ago), and EPS more than doubling (102%). So the company itself hasn’t done anything wrong, but we may just have to weather the storm in biotech/healthcare names for another week or two. Chances are this stock – which Mike has singled out as a potential “emerging blue chip” – will start to attract attention once its sector is back in favor. BUY

Planet Fitness (PLNT), originally recommended by Mike Cintolo in Cabot Top Ten Trader, was up nearly 8% this week to recover every bit of its losses from the previous week on the heels of a fairly mixed earnings report. EPS of 59 cents fell short of the 62-cent estimate. Revenue, however, improved 11.5% year over year, while same-club sales expanded by 6.1%. And the earnings were up from 53 cents a share a year ago. The fitness club chain opened 19 new locations during the quarter, upping their total to 2,741, and added 900,000 new members to bump their total to 20.6 million. That’s pretty solid growth across the board, despite the earnings shortfall. I advised buying the dip, saying the stock had quick “bounce-back potential.” Sure enough, that’s what happened. Still well off its January highs, the stock may have plenty of room to run. BUY

Sea Limited (SE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, reported yet another excellent quarter last Tuesday, and shares exploded accordingly, up more than 14% in the last week. Sea reported net income of $410.8 million compared with a year-earlier loss. Sales climbed 30% to $4.84 billion, roughly in line with estimates. EPS of 86 cents fell short of estimates but more than quadrupled the 21 cents it earned in the first quarter a year ago. Broken out by segment, Garena (gaming/entertainment) generated $495.6 million in revenue, up 8.2% year over year; Shopee (e-commerce) brought in $3.1 billion, up 28.7% year over year; and Monee (formerly SeaMoney, its fintech wing) generated $787 million, the fastest-growing segment at 57.6% growth. So the three-pronged Singapore-based conglomerate is seeing strong growth in all three segments. And investors are pushing up shares accordingly, up 51% year to date and 121% in the last year. The stock still trades at less than half of its late-2021 highs near 360. BUY

Sprouts Farmers Market (SFM), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, is up 7.5% in the last week, recovering most of the 9% loss from the previous week. Both the big loss and the quick recovery came on no company-specific news. There’s been no real news for this organic grocery store chain since a late-April earnings report. There was nothing wrong with the earnings report, as the company upped both top- and bottom-line guidance, with 12-14% sales growth expected this year. Plenty of upside here. BUY

Stoxx Europe Total Market Aerospace & Defense (EUAD), originally recommended by Carl Delfeld in his Cabot Explorer advisory, is up nearly 7% in the last week and 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 7.7% year to date, while U.S. stocks are up just 1.5%. BUY

Tesla (TSLA), originally recommended by Mike Cintolo in Cabot Top Ten Trader, was up another 7.5% this week as Mizuho raised its price target on the stock from 325 to 390. It’s clear TSLA is suddenly back in favor with the big institutions, up 41% in the last month. Its problems remain – sales are no longer growing, and the brand has taken a major hit due to Elon Musk’s unpopular involvement in the Trump administration. But, as I wrote more than a month ago when the stock was in the dumps to start the year, TSLA has a long history of roaring back just when most people are counting it out. And that’s precisely what’s happening again. Keeping at Hold. HOLD

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, with Brad out, I was joined by Stock of the Week contributor Mike Cintolo and options expert Jacob Mintz to discuss the state of the market and examine what the bulls are buying. It was a good chat – give it a listen!

The next Cabot Stock of the Week issue will be published on May 27, 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.