Cabot Stock of the Week Issue: November 3, 2025

Stocks were flat this week, as it’s possible we’ve reached a short-term top. Third-quarter earnings season is going well, with S&P 500 companies posting an average EPS gain of 10.7% thus far, according to data collected by FactSet. U.S.-China trade tensions have settled down. And the Fed cut interest rates by another quarter point. But none of it moved the needle much, and volatility is on the rise again.

This market has proven to be incredibly resilient, with the major indexes touching new highs on almost a weekly basis despite myriad warning signs (more stocks hitting 52-week lows, declining breadth, sentiment becoming over-exuberant, etc.) under the surface. So I’m not going to actually call a near-term top. But it’s probably worth playing things about more cautiously at these levels.

So today, we add a big-name value play that was recently recommended by Clif Droke to his Cabot Turnaround Letter audience. You know the name, you’ve almost certainly bought and consumed what it sells, and now its stock trades at a massive discount – a good recipe for an overcooked market.

Here it is, with Clif’s latest thoughts.

NEW RECOMMENDATION

PepsiCo. (PEP)

Reversion to the mean suggests an asset’s price will eventually revert to its historical average over time. In the case of this month’s featured stock, my application of “mean reversion” isn’t as much a reference to a stock’s share price as it is to the idea of a return to the norm in consumer tastes.

Enter PepsiCo (PEP), the world-famous food and beverage giant that’s such a huge part of American culinary and popular culture that it really needs no introduction. While famously known for its iconic Pepsi Cola, its portfolio has grown over the years to include other famous brands that millions consume daily. Among them: Gatorade, Mountain Dew, Lay’s, Cheetos and Quaker Oats and Tostitos, plus joint ventures with other major brands including Lipton, Tropicana and Starbucks.

Sensing that consumer tastes are changing, Pepsi has developed a strategic partnership with Celsius Holdings (CELH) to distribute Celsius products in the U.S. and Canada, with Celsius acquiring Pepsi’s Rockstar Energy brand in North America and Pepsi just increasing its ownership stake in Celsius to around 11%.

The Celsius partnership is a key to where Pepsi is likely headed in the foreseeable future, but also a pivotal factor in a longer-term reversion of consumer tastes away from energy beverages and back to classic sodas like Pepsi Cola.

For those of us old enough to remember the 1980s, it’s hard to believe that over 40 years have gone by since the highly successful ad campaign of that era, “Pepsi: The Choice of a New Generation.” It featured ubiquitous TV commercials with popular icons of the day, like Michael Jackson, which helped elevate Pepsi’s brand. And while it didn’t propel Pepsi past its rival, Coke, in market share terms, it did boost Pepsi’s sales while narrowing the competitive gap.

Since then, however, Pepsi’s soda brand has fallen out of favor to an extent, as younger consumers now prefer energy drinks. And while classic soda still maintains popularity, energy often wins out for a stronger, faster caffeine effect that aligns with the fast-paced lifestyle of today’s younger crowd.

What’s more, recent reports show that Pepsi has fallen behind its long-time soda competitors Coca-Cola, Sprite and Dr. Pepper, slipping last year from its long-held number two position in the U.S. soda category to become “only” the fourth most popular soda.

But first, let’s return to the energy drink discussion. Goldman Sachs just published a finding that underlines what I see as the main issue at stake here: energy drinks continue to be the top U.S. convenience store seller in 2025.

Goldman’s Bonnie Herzog identified several trends within the space that underscore the strength of this category, highlighting the potential of the zero-sugar Celsius energy beverages as having a particularly long growth runway—and now representing one-third of the total growth in the energy category.

This assumption, ironically, is one I believe will be upset by a long-term mean reversion scenario: Consider that on a comparative cost basis, energy beverages are significantly more expensive that traditional sodas like Coke and Pepsi, especially when comparing the price per can, with the per-can cost for Pepsi in the U.S. at 57 cents (when purchased as a multi-pack), while the average retail cost for a can of Red Bull energy drink can be anywhere from $3 to $4 per can.

This is where an energy drink addiction can become prohibitively expensive over time—a key consideration as younger Millennial and Gen Z consumers report finding workforce entry to be increasingly difficult due to a cooling economy, decreased entry-level job postings and other factors.

That said, Pepsi is undergoing an operational turnaround, focusing on streamlining operations, cutting costs, innovating with new products (including protein-focused beverages and snacks, which it sees as a major growth driver) and re-evaluating its product portfolio and marketing to stay ahead of changing consumer trends.

A final consideration is the presence of a major activist investor, Elliott Management, which just bought a $4 billion stake in the company and is pushing for major changes. (Of particular significance, Pepsi is reportedly the hedge fund’s largest equity position ever.)

I see PepsiCo as both an intermediate-term opportunity thanks to its brand revitalization efforts and activist investor presence, and I recommend the stock for participants with a medium-to-long-term outlook. BUY

Current Recommendations

Changes Since Last Week:

AST SpaceMobile (ASTS) Moves from Hold Half to Buy Half

BYD (BYDDY) Moves from Buy to Hold

Coeur Mining (CDE) Moves from Hold to Sell

Oracle (ORCL) Moves from Hold to Sell

Two sells this week, both at a profit (a significant profit, in the case of CDE). Those two stocks have turned south quickly after major runs, and our portfolio was getting a bit overcrowded anyway. Fortunately, there were no earnings blowups among our holdings this week, though a handful more report this week. On the positive side of the ledger, both Banco Santander (SAN) and Tesla (TSLA) had solid upmoves this week.

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

Updates

Agnico Eagle Mines (AEM), originally recommended by Carl Delfeld in his Cabot Explorer advisory, continued to tumble, down another 1.5% despite reporting strong third-quarter earnings. Cabot Turnaround Letter editor Clif Droke also recommends AEM and had this to say about the company’s impressive quarter: “Agnico Eagle Mines (AEM) released Q3 earnings this week, which included record revenue of $3.1 billion that increased 42% year-on-year, earnings of $2.16 that beat estimates by 23 cents and record adjusted EBITDA of $2.1 billion.

“On the earnings call, CEO Ammar Al-Joundi spotlighted ‘record financial results, driven by, of course, record gold prices, but coupled with strong and consistent operational performance.’ Further highlights included Agnico delivering 867,000 ounces in gold production for the quarter, achieving 77% of the full-year guidance and selling gold at an average price of $3,476 per ounce, which was noted as a company record.

“Al-Joundi also drew attention to the company’s ability to maintain cost controls, stating, ‘Our Q3 cash costs would have been $933 an ounce, well below the midpoint of our cost guidance range,’ excluding higher royalties tied to gold prices, and further emphasizing that Agnico is ‘in the strongest financial position in the company’s history.’ He further noted the firm’s ongoing investments in five key pipeline projects and an ‘exceptional exploration program.’

“Concerning its Canadian and European mining activities, the firm drew attention to ongoing productivity and technology improvements, noting a 13% increase in tons mined per day at its Kittila property in Finland, plus a 4% decrease in euro-per-ton cost.

“Other highlights included the company repaying $400 million in debt during Q3, returning $350 million to shareholders and increasing its net cash position to $2.2 billion while receiving a credit rating upgrade.

“Looking ahead, the top brass affirmed confidence in achieving the midpoint of the full-year production guidance range of 3.4 million ounces and still expects to be at or near the top end of its cash cost guidance range of $965 per ounce for 2025.

“Agnico also said it continues to prioritize shareholder returns, capital discipline and reinvestment in high-return organic growth projects, while reiterating its strategic focus on the firm’s five key pipeline projects, which collectively represent around 1.5 million ounces of potential production.” BUY

Airbus (EADSF), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up marginally after reporting earnings last Wednesday. Revenue improved 7% year over year in Q3, and the French aircraft maker has now delivered 507 jets year to date – about two-thirds of the way to its 2025 delivery goal, but up from 497 jet deliveries at this point last year. The company reiterated full-year guidance of 820 commercial aircraft deliveries. Also, Airbus is getting into the space race, inking a deal with Leonardo and Thales to form a European space venture that’s expected to begin operation in 2027. So, there’s a lot to like about Airbus right now, even though it will take a banner quarter for the company to reach its ambitious delivery goal. And supply-chain issues continue to slow delivery times. But, there’s far more good than bad here. Keeping at Buy. BUY

Alibaba (BABA), originally recommended by Carl Delfeld in his Cabot Explorer advisory, tumbled 6.5% this week despite the company making a $281 million strategic investment in Taobao convenience stores and signing a deal with location data and technology platform HERE Technologies to co-develop AI-driven navigation and digital cockpit solutions for its Amap subsidiary. Perhaps those two deals were a bit too “inside baseball” for a company known as China’s leading e-commerce giant. But we added Alibaba to the portfolio in part due to its burgeoning AI strength, and the HERE Technologies pact – intended for Chinese automotive brands – further enhances that case. So, with Singles’ Day (the largest online shopping day of the year in China) coming November 11 and earnings due on November 14, there are plenty of upcoming catalysts that could have BABA shares bouncing right back. So I’d buy this dip if you don’t already own the stock. BUY

American Electric Power Company (AEP), originally recommended by Tom Hutchinson in the Safe Income Tier of his Cabot Dividend Investor advisory, advanced 2.5% this week even though its third-quarter EPS ($1.80) missed estimates by a penny. The company did up its full-year earnings guidance by 8%, however, and operating earnings year to date are up 9%. The utility also projects 9% CAGR through 2030. Citigroup raised its price target on AEP from 111 to 132 in the aftermath of the report. We have a modest gain on AEP thus far, though the 3.2% dividend yield enhances it. BUY

ArgenX (ARGX), originally recommended by Mike Cintolo in his Cabot Top Ten Trader advisory, pulled back 2% this week despite a massive earnings beat. The $4.44 in EPS outpaced the $3.56 estimate by 25%, and shares initially popped before pulling back on Friday and today. Sales of the biotech’s signature Vyvgart drug for autoimmune conditions helped drive $1.13 billion in global product net sales – nearly double last year’s Q3 tally. It’s unclear why the stock has pulled back slightly since the initial post-earnings fervor. But my guess is this impressive quarter will serve as a catalyst for shares going forward. BUY

Armstrong World Industries (AWI), originally recommended by Mike Cintolo in his Cabot Top Ten Trader newsletter, pulled back about 5.5% this week after earnings narrowly topped estimates. Sales improved 10% year over year and came in at a new record. And adjusted EBITDA improved by 6%. So why the pullback? Cost pressures have put some pressure on EBITDA margins, and the company noted on its earnings call that lingering market softness and macroeconomic conditions could weigh on future performance. Still, the quarter was good enough that I’d expect some kind of bounce-back in the share price, especially now that the stock is bumping up against two-month support in the low 190s. If it holds the line there, it could rebound quickly. BUY

AST SpaceMobile (ASTS), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, continues to consolidate after its massive October run-up, down 6.5% this week. The pullback comes despite more good news for the company, as it inked a 10-year deal with stc group to deliver direct-to-smartphone satellite internet connectivity to people in Saudi Arabia and other key markets in the Middle East and Africa. It’s another feather in AST’s quest to deliver satellite-based internet access to smartphones around the world, after the company signed much larger deals with Verizon and AT&T. But the stock is up 250% year to date and nearly doubled in the first two weeks of October on news of the Verizon deal and upcoming satellite launches. We booked profits on half our position several months ago and have been holding the remaining half, looking for even better gains. Let’s bump that rating back to buy, given the sharp pullback of late. Let’s still limit it to half a position, given the run-up, but we’ll upgrade from Hold Half to Buy Half. BUY HALF

Banco Santander (SAN), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was up more than 3% after another solid earnings report. Earnings per share were in line with estimates, but the Spanish bank posted record profits for a sixth straight quarter, with its ever-expanding U.S. operations responsible for much of the growth. After one year in the U.S., Santander’s Openbank generated more than $6 billion in revenue. Also, profit margins improved to 25.3% from 22.9% a year ago, and earnings improved 20% year over year. A lot to like here, and SAN continues to be one of our better 2025 success stories. BUY

BYD Co. Ltd. (BYDDY), originally recommended by Carl Delfeld in his Cabot Explorer advisory, pulled back more than 7% after another disappointing quarter. Revenue declined 3% in the third quarter – its first quarterly dropoff in four years – while profits fell by 33% for a second straight quarter. Those are not good trends. The price-cut wars in electric vehicles, both around the world but especially in BYD’s native China, have put a damper on profits this year, despite the company’s global vehicle sales being up 14% through the first 10 months of the year (sales tumbled 12% in October). But most of that growth came in the first half of the year, before rampant price slashing took hold. So, the company – and really the industry – will need to pump the brakes on all the cuts to its vehicle prices, which are not delivering desired results. I still believe in this Chinese EV maker long term – and the inroads it’s made in Europe and elsewhere this year remain encouraging. But given the weakness in the stock of late – shares are down 36% from their late-May high – let’s downgrade BYD to Hold until it proves itself again. MOVE FROM BUY TO HOLD

CareTrust REIT, Inc. (CTRE), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, was down just over 1% this week ahead of earnings this Wednesday, November 5. Analysts are expecting big things: 58% revenue growth, 31% EPS growth. However, the company has fallen well short of earnings estimates in each of the last three quarters, so let’s see if Wall Street is overestimating CTRE again. I’d keep new buys small ahead of Wednesday’s report, just in case. BUY

Cinemark Holdings (CNK), originally recommended by yours truly in the Buy Low Opportunities portfolio of my Cabot Value Investor advisory, was off 1% this week ahead of Wednesday’s pre-market earnings report. The bar is quite low: analysts anticipate an 8.8% sales decline and a whopping 61% EPS decline. Perhaps those are overly pessimistic after three straight quarters of earnings misses. After a red-hot summer, movie theater ticket sales have slowed to a crawl, with the worst October performance at the box office since the 1990s. However, those won’t count toward the Q3 tally, and November and December are expected to be big for the industry with numerous anticipated films coming to theaters. But first things first: We’ll see if Wednesday’s report can exceed very low expectations. BUY

Coeur Mining (CDE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, has imploded, and it’s time to get rid of this stock while we still have a sizable gain on it. CDE shares are down more than 11% on Monday, 13% in the last week and 33% since the mid-October top above 23, as silver prices have lost momentum and the company fell short of third-quarter earnings estimates last week. A $7 billion all-stock deal to buy New Gold (NGD) is the thing that sent CDE shares tumbling today, as acquiring companies are typically punished in the short term (though not by this much). With a full portfolio, let’s pocket our near-triple-digit gains on this stock in just over five months, as the stock now trades below its 200-day moving average. But this was a massive success for our portfolio. SELL

CurrencyShares Swiss Franc Trust (FXF), originally recommended by Carl Delfeld in his Cabot Explorer advisory, pulled back about 1.5% this week as the U.S. dollar has strengthened a bit of late. The fund is a hedge against U.S. dollar weakness and tracks the price of the Swiss franc. As Carl noted, “The Swiss franc is backed by ample gold reserves, fiscal discipline, a trade surplus, and very little foreign debt. Switzerland represents the third-largest financial center in the world after New York and London. Switzerland enjoys a stable government, vibrant democracy and a reputation as an asset haven in times of stress.” BUY

DoorDash Inc. (DASH), originally recommended by Mike Cintolo in Cabot Top Ten Trader, was off 8% this week despite UBS raising its price target from 280 to 316. The company reports earnings this Wednesday after the close, so a quick turnaround is possible here. Analysts are looking for 24% revenue growth with 79% EPS growth. The company has beaten estimates in each of the last two quarters. Let’s see what happens. Keeping our remaining half at hold after selling the first half near the top a few weeks ago. HOLD HALF

Doximity (DOCS), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, gave back most of its 3.5% gain from the previous week. The company reports earnings this Thursday, November 6. Analysts anticipate 15% revenue growth and 27% EPS growth. The company has topped earnings estimates by double digits in each of the last four quarters. Another beat could send shares back toward their late-September highs above 75. BUY

FedEx Corp. (FDX), originally recommended by yours truly in my Cabot Value Investor newsletter, continues its late-October recovery and is trading at its highest point since March, up more than 2% this week. There was no company-specific news, but there also was no reason behind the drop-off in shares last month other than the escalation of U.S.-China trade tensions potentially throwing a wrench into the global economy and, by proxy, FedEx’s business. Now that those trade tensions have seemingly eased, faith in the global economy has been restored (for now), and FedEx remains a great way to play a healthy economy. BUY

Fidelity National Financial (FNF), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, was off 3% this week ahead of earnings this Thursday. Analysts expect a 1% decline in revenue but a 9.2% increase in EPS. Stay tuned. BUY

Morgan Stanley (MS), originally recommended by Mike Cintolo in his Cabot Top Ten Trader newsletter, was down about 1.5% in its first week in our portfolio. There was no company-specific news. The world’s fourth-largest investment bank by revenue has been on a tear of late due to high-margin performance in its wealth management division plus big strategic investments in AI. Increased M&A and IPO spending has also delivered a return on investment – and an administration that’s more favorable to big mergers is certainly helping. Investment banking revenue improved 44% in the third quarter, leading to a record $31 billion in total revenues and a 35% EPS beat. The bank is firing on all cylinders and is having a strong year (+30%) despite this week’s mild dip. BUY

Netflix, Inc. (NFLX), originally recommended by Tyler Laundon in Cabot Early Opportunities, stabilized after a big post-earnings drop the previous week; it was essentially flat this week. There are some good things coming down the pike, including the highly anticipated new season of its hit show Stranger Things, due out later this month. But the stench of the previous week’s earnings miss – even though it came with a considerable asterisk – lingers. EPS of $5.87 was well shy of the $6.97 estimate, while revenues met estimates and improved 17% year over year. The big earnings miss comes with a bit of a caveat, as it was mostly due to a 10% tax levied by the Brazilian government – an item that was not in Netflix’s own internal estimate. Company CFO Spence Neumann claims, “Absent this expense, we would have exceeded our Q325 operating income and operating margin forecast, and we don’t expect this matter to have a material impact on our results going forward.” A biased opinion, but probably the right one. Besides, the streaming giant is still on track for 16% revenue growth this year, with an operating margin of 29%. And even with the Brazilian tax weighing on Q3 profits, they still improved 8.7% year over year. The stock will be back, once we get some distance from the sticker shock of the earnings report. BUY

Oracle Corp. (ORCL), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, tumbled 8% this week and is now a solid 21% off its post-earnings September highs. I’ve been a bit uncomfortable with the extreme wild swings here since that report, and now the stock has simply fallen too far to rationalize having such a volatile stock in our portfolio. Let’s pocket our modest profit while we still have one and devote the extra cash to something that’s a bit more stable-seeming. SELL

Sea Limited (SE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was down another 1% this week, but the bleeding appears to be slowing. There has been no company-specific news this week, but it’s coming next week, as the Singapore-based conglomerate reports earnings on November 11. Despite the recent weakness, SE remains one of our top performers and is a great way to play outsized growth in Southeast Asia. The recent pullback offers an appealing buying opportunity. BUY

Stoxx Europe Total Market Aerospace & Defense (EUAD), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was flat again this week but has backtracked about 4-5% since touching new 52-week highs in early October. We still have a gain north of 30% on this niche European play. BUY

Tesla (TSLA), originally recommended by Mike Cintolo in Cabot Top Ten Trader, was up another 4% this week and has weathered another underwhelming quarter to reach new 2025 highs above 470. Thursday’s shareholder meeting on whether to meet CEO Elon Musk’s $1 trillion asking price (!) could be polarizing and may move the shares in one direction or another, no matter what happens. The stock currently trades right at its average analyst price target of 470, so there’s some downside risk at these levels. 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, in the spirit of Halloween, we rated stocks like candy bars, and rated them as “fun size,” “full size” and “king size” buys.

The next Cabot Stock of the Week issue will be published on November 10, 2025.

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