Cabot Stock of the Week Issue: October 20, 2025

Stocks once again proved their resilience this week, rebounding from U.S.-China tariff escalation fears to gain more than 1% and get back close to their early-October highs. A cooling of tariff rhetoric helped, but so did the start of earnings season, with the big U.S. banks almost universally beating estimates as investment banking activity boosted their bottom lines. This week’s crop of earnings should be even more critical to the market’s next move, as big tech behemoths (and Stock of the Week portfolio holdings) such as Netflix (NFLX) and Tesla (TSLA) report, as do International Business Machines (IBM) and Intel (INTC).

Volatility is still high, though the VIX has dipped below 20 after touching as high as 29 late last week. And with a busy earnings season underway and the government shutdown now three weeks old, with no end in sight, there are plenty of things that could derail the good times in the market. But for now, stocks remain resilient.

To account for the increased volatility, however, today we add another lower-risk position in the form of a low-beta real estate investment trust for the healthcare sector. It’s a new recommendation from Tom Hutchinson in his Cabot Dividend Investor advisory. And it’s having a good year, up 30%.

Here it is, with Tom’s latest thoughts.

NEW RECOMMENDATION

CareTrust REIT, Inc. (CTRE)

CareTrust is a healthcare REIT that owns and acquires skilled nursing, seniors housing, and other healthcare-related properties. The REIT primarily leases to 46 different operators and currently has 581 properties in 34 states and the United Kingdom.

Skilled nursing facilities provide 24-hour medical care and rehabilitation services to patients who require assistance with activities of daily living and complex medical treatment. Senior housing refers to a wide range of housing options for older adults, from maintenance-free living to highly specialized care and everything in between. Other properties include medical office space and other facilities.

The property portfolio breakdown by percentage of overall rent collected in the first half of 2025 is as follows:

• Skilled Nursing 51.2%
• U.K. Care Homes 14.7%
• Multi-service campuses 10.4%
• Senior Housing 3.7%

About 80% of the properties are operated under net lease agreements, whereby the tenant is responsible for all maintenance and costs, including insurance and utilities. That makes the income stream highly predictable.

Of course, there are several REITs that own and operate similar facilities. But CareTrust stands out among its peers. It has the highest rent coverage among its peers at 2.7 times. It is also consistently well above the peer average in metric star rating and quality measures. It’s also financially solid with low debt levels, with net debt/EBITDA of 0.5 times compared to the peer average of 5.1 times.

The strong relative performance is reflected in the stock performance.

CTRE has outperformed both the overall market and the benchmark Vanguard Real Estate Index Fund ETF (VNQ) in every measurable period over the last 10 years. It has also outperformed the vast majority of other healthcare REITs over the same periods.

But that’s in the past. What matters is how CTRE performs going forward. And future potential is the chief reason why CTRE is highlighted. There are two primary reasons it’s worth buying. One, it is a well-run REIT with a strong balance sheet and solid metrics at a time when REITs are cheap and have a good chance of outperforming other sectors going forward. Two, CareTrust has a much higher level of earnings growth than other REITs.

In 2024, CareTrust made $1.4 billion in investments in a total of 172 new properties. That’s seven times the average investment level since inception. In fact, from 2021 through 2024, CareTrust’s net investments increased 84% compared to the peer average increase of just 18% over the same period.

The new properties propelled revenues to grow 58.4% in the first six months of this year. Normalized funds from operations (FFOs) per share have grown at a strong 20% clip, and the dividend increased 15.5% in the first half of the year. That’s why CTRE returned 35% YTD through September.

The expansion continues. In the second quarter of this year, CareTrust acquired Care REIT Plc, a U.K. healthcare REIT specializing in senior care facilities. The U.K. acquisition provides 132 care homes with 26 operators. All properties are covered with triple net lease agreements with an average lease of 20 years. It gives CareTrust exposure and expansion opportunities in the highly fragmented U.K. market, which has very limited supply and high demand. The deal is expected to yield an estimated $68.6 million in annual rental income.

The REIT reiterated 2025 estimates in the most recent quarterly report. Management estimates 30.4% revenue growth, 79% net income growth, and an 18% increase in FFO per share. That’s sensational growth for a conservative investment with a beta that is lower than the overall market.

No discussion of a REIT would be complete without the dividends, which are among the highest in any market sector. As a REIT, CareTrust pays no income tax at the corporate level, provided the bulk of earnings are paid out in the form of dividends. They usually have a higher payout because of money available that is normally lost to taxes.

The current quarterly dividend of $0.335 per share, raised earlier this year by 15.5% from $0.29, translates to a solid 3.82% yield at the current price. While that’s certainly a healthy payout in today’s market, there’s also a compelling story for dividend growth. The dividend has been raised for 11 consecutive years, and the quarterly payout has more than doubled over the past 10 years. BUY

Current Recommendations

Changes Since Last Week:

Life360 (LIF) Moves from Buy to Sell

One more sell this week, as Life360 (LIF) has simply fallen too far too fast to keep its spot in our still-crowded portfolio. The rest of our stocks, led by the two mining plays, are acting well, while several are biding their time awaiting earnings results in the next week to 10 days. The rest of this month should be a busy time for our portfolio, so keep your antennae up.

For now, here’s what’s happening with all our stocks.

Updates

Agnico Eagle Mines (AEM), originally recommended by Carl Delfeld in his Cabot Explorer advisory, added another 6% this week despite a sharp decline on Friday. In the absence of any company-specific news, this gold mining stock is essentially moving in tandem with gold prices, which were also up another 6% to reach new record highs above $4,300 an ounce. We have a better than 75% gain on the stock in just over seven months. The next news will likely come October 29, when the company reports earnings. BUY

Airbus (EADSF), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was mostly stagnant this week and has hit the pause button in October after a strong September. Rival Boeing (BA) reported third-quarter aircraft deliveries, which still trailed Airbus’s; we’ll see if it stays that way when Airbus reports earnings (and delivery numbers) on October 29. BUY

Alibaba (BABA), originally recommended by Carl Delfeld in his Cabot Explorer advisory, stopped the bleeding after a 10% pullback the previous week. Shares were knocked back the previous week after U.S.-China trade tensions escalated again. This week, those tensions subsided a bit, but with no real resolution yet, BABA shares settled into a holding pattern. Two potential big catalysts loom next month: Singles’ Day on November 11, which is the biggest online shopping day of the year in China; and earnings, due out November 14. In the meantime, let’s see if BABA has put in a bottom and can get back to close to its early-November highs. The recent pullback looks like a buying opportunity into a stock that has been gaining favor with investors due to its new AI offerings. BUY

American Electric Power Company (AEP), originally recommended by Tom Hutchinson in the Safe Income Tier of his Cabot Dividend Investor advisory, keeps inching higher, up another 1% this week. The company will report earnings on October 29. In his latest update, Tom wrote, “After a month and a half of weakness, AEP has regained traction over the past month and is trading at a new 52-week high. Utilities are hot. It’s the best-performing market sector over the last month. The AI data center-induced electricity trade has heated up again, and utilities are benefiting. There is a strong chance that the skyrocketing growth in electricity demand will transform performance into something much better than it has been. It is well positioned for growth ahead as well as in a possible down market.” BUY

ArgenX (ARGX), originally recommended by Mike Cintolo in his Cabot Top Ten Trader advisory, added more than 6% this week after Wedbush raised its price target on the stock from 800 to 880. Also, the immunology treatment company will present data on some of its drugs at a conference in San Francisco from October 29-November 1; it also will report earnings on October 30. Perhaps Wall Street was anticipating some of the potential on-the-horizon catalysts. We have a double-digit gain already in the month since we added this biotech. BUY

Armstrong World Industries (AWI), originally recommended by Mike Cintolo in his Cabot Top Ten Trader newsletter, got back the 1.5% it lost the previous week. There was no news, but it’s coming: the company reports earnings on October 28. The stock has been mostly stagnant since making a big leap after the last earnings report, when it jumped from 168 to 190. Hopefully this next earnings report will precipitate a similar move. BUY

AST SpaceMobile (ASTS), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, pulled back about 4.5% this week, which was probably to be expected given that the stock had more than doubled in the previous month. Barclays analyst Mathieu Robilliard downgraded ASTS from Buy to Sell, which likely put a short-term dent in the shares. But that’s done little to slow the upward trajectory of this potentially revolutionary company, which is getting closer to its ambitious goal of delivering space-based internet service to smartphones around the world thanks to recent major deals with cellular network giants AT&T and Verizon. You could buy this dip if you missed the boat previously, but having sold half our shares to book profits a couple months back, we will keep our official rating at Hold a Half. HOLD HALF

Banco Santander (SAN), originally recommended by Carl Delfeld in his Cabot Explorer advisory, fell another 2% this week as the stock has been pulling back slightly after a monster run through the first nine months of the year. Recent weakness among bank stocks has likely helped drag SAN shares down a bit, but there’s been no company-specific news. That will come next week, when the company reports earnings on October 29. The bank has narrowly beaten EPS estimates in each of the last three quarters. BUY

BYD Co. Ltd. (BYDDY), originally recommended by Carl Delfeld in his Cabot Explorer advisory, was mostly flat this week and could remain that way ahead of its pivotal third-quarter earnings report on October 30. The only news this past week was that the Chinese EV maker plans to open 200 to 300 charging stations by the end of 2026, as the company continues to stretch its tentacles into corners of the globe well outside China’s borders. But coming off a rare down quarter in Q2, shares have been unable to regain their footing. It will need better results this time around. BUY

Cinemark Holdings (CNK), originally recommended by yours truly in the Buy Low Opportunities portfolio of my Cabot Value Investor advisory, bounced back convincingly after a few down weeks, advancing 6.5%. The only news was that the movie theater chain will report third-quarter earnings on November 5. The stock trades roughly 40% below its pre-Covid highs despite being on track for its best sales year yet. Thus, I think this is an undervalued gem at a time when movie theaters are making a comeback after being all but left for dead during Covid. BUY

Coeur Mining (CDE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, remains on fire, adding another 3.5% this week as gold and silver continue to soar to new heights. Earnings estimates for this precious metals miner have been surging ahead of its third-quarter report on October 29. Raymond James just raised its price target on the stock from 13.5 to 22, which is about where it is right now. With a gain that’s north of 150% in just four and a half months, we downgraded the stock to Hold a couple weeks ago. If you got in early after our late-May recommendation, I suggest taking some partial profits. I wouldn’t start a new position at these levels – especially ahead of earnings – but there’s a very good chance CDE’s remarkable run is far from over. HOLD

CurrencyShares Swiss Franc Trust (FXF), originally recommended by Carl Delfeld in his Cabot Explorer advisory, had a solid first week in our portfolio, advancing more than 1.5%. 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 another 3% this week after a 4% downturn the previous week. The pullback comes despite the online food delivery giant announcing a new partnership with Waymo, the driverless car company available in select U.S. cities, to test-drive robot food deliveries in Phoenix, Arizona. Waymo’s DoorDash deliveries in Phoenix could start before the end of the year. It’s no surprise a deal in just one U.S. city failed to move the needle for the share price, but it could signal the start of a much broader partnership if all goes well. In the meantime, DASH is still a double for us, and I recommend holding the remaining half of your stake after we sold our first half near the highs a few weeks ago. HOLD HALF

Doximity (DOCS), originally recommended by Tyler Laundon in his Cabot Early Opportunities advisory, finally stopped falling, advancing 1.5% this week. There was no news. A recent downgrade from a JPMorgan analyst sent DOCS shares tumbling more than 10%, but that came on the heels of a much bigger run-up. One under-the-radar catalyst, as Tyler notes, is that “there have been reports that some pharma companies … have recently stopped airing TV commercials after receiving letters from the FDA saying that the commercials were ‘misleading.’ The FDA has ramped up scrutiny on pharma companies and their direct-to-consumer advertising methods. This could lead to more of these companies pushing advertising spend toward the healthcare practitioner (HCP) channel, which would benefit DOCS.” That’s a good reason to buy, especially after the recent dip. BUY

FedEx Corp. (FDX), originally recommended by yours truly in my Cabot Value Investor newsletter, bounced back nicely after a down week, rising 4.5% this week. There was no news. With the U.S. economy stable, the upcoming holiday shopping season should be a boon for FedEx – package deliveries are expected to increase 5% during the holiday season, according to estimates from ShipMatrix. Meanwhile, FDX shares are undervalued, trading at 13x forward earnings estimates and just 0.66x sales. This is a classic growth-at-value-prices opportunity in a big-name stock that tends to thrive when the global economy is healthy. BUY

Fidelity National Financial (FNF), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, inched up slightly after dipping 5% the week before. There was no news. Fidelity is a title insurance company that should benefit from falling interest rates – if and when mortgage rates follow suit. The stock is off to a slow start for us since we added it to the portfolio last month. Hopefully it bottomed just below 55 about 10 days ago. If it didn’t, we may give this one a short leash. Leaving at Buy for now. BUY

Life360, Inc. (LIF), originally recommended by Mike Cintolo in Cabot Growth Investor, has totally fallen apart in recent weeks, down more than 20% since peaking above 110 a share in early October. Regardless of the reason (and there doesn’t appear to be one beyond just sellers coming for a stock with big gains), it’s not worth hanging on to a stock that’s in freefall – not in a portfolio that’s still a bit overcrowded. Let’s sell before our modest loss worsens. SELL

Netflix, Inc. (NFLX), originally recommended by Tyler Laundon in Cabot Early Opportunities, was up about 1% ahead of earnings tomorrow, October 21, after the close. Analysts are looking for 17.2% sales growth and 29% EPS growth; the company has beaten EPS estimates in each of the last four quarters. We’ll see what happens. BUY

Oracle Corp. (ORCL), originally recommended by Tom Hutchinson in the Dividend Growth Tier of his Cabot Dividend Investor advisory, pulled back again after a couple good weeks, retreating more than 9%. The stock is bumping up against its late-September bottom around 280. The pullback comes despite UBS raising its price target on the stock from 330 to 380. However, developing concerns about an AI bubble – which Oracle’s record-shattering earnings report and subsequent stock run-up last month helped fuel – has left ORCL on somewhat shaky ground. Still, we have a 20%-plus gain in just a few months, and we downgraded the stock to Hold a couple weeks ago to account for its increasing volatility. We’ll leave it there for now, though a sharp move below the 280 support line could prompt me to reconsider its standing in the portfolio. HOLD

Sea Limited (SE), originally recommended by Carl Delfeld in his Cabot Explorer advisory, continued to decline, falling 9% this week. The only news was positive, as BofA raised its price target on the stock from 206 to 215. The recent downturn is likely due to a mix of profit-taking in a stock that was back near 52-week highs less than two weeks ago and the U.S.-China tariff tensions, which likely won’t impact Sea Limited much since the Singapore-based company does most of its business in Southeast Asia, and outside of China. So, I think this mini-sell-off is an overreaction, and SE shares will bounce back soon. If you don’t already own shares of this fast-growing conglomerate, this looks like a good entry point. BUY

Stoxx Europe Total Market Aerospace & Defense (EUAD), originally recommended by Carl Delfeld in his Cabot Explorer advisory, pulled back about 1% this week and 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, regained its footing a bit ahead of its pivotal earnings report this Wednesday after the close. The stock was up nearly 2% after falling 6% the previous week. Analysts are anticipating 5.5% revenue growth but with a 23.5% EPS decline. The company has fallen short of EPS estimates in each of the last three quarters, so it will need to reverse that trend if it hopes to avoid the kind of steep decline that followed the January and July reports. The stock is already trading near its 2025 apex of around 460 from the beginning of October. Any new developments mentioned on the earnings call in regard to progress in AI and autonomous driving could also help move the needle. We’ll see what happens. Keeping at Hold ahead of the report. 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 we welcomed on Stock of the Week contributor and Cabot Early Opportunities Chief Analyst Tyler Laundon to discuss why small-cap stocks are finally showing signs of life after years of underperformance.

The next Cabot Stock of the Week issue will be published on October 27, 2025.

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