Cabot Top Ten Trader Issue: April 14, 2025

Note: Due to the Good Friday market holiday, Movers & Shakers will be sent on Thursday, April 17.

Starting to Repair

One of the big factors in the market is time—as Jesse Livermore (a famous investor from the early 20th century) said, big upmoves or downmoves and even the set-ups before those moves take time to play out as big investors reposition and as sentiment gradually changes. In terms of today, we think the odds favor the market has found a short-term low (last Monday) amid lots of panic selling, and it’s probably starting to repair the damage from the prior few weeks … but that process is likely to take some time, as the market deals with the tariff and economic uncertainty and as new potential leaders try to round out launching pads. Of course, how the market acts from here will be key, so we’re remaining flexible—a straight-up, powerful advance would obviously be good to see, though a quick give-up of last week’s lows would be ominous. Still, we always advise going with what’s in front of us, and right now the odds favor some upside testing in the days ahead, but more patience will likely be needed before a sustained advance can develop. We’ll leave our Market Monitor at a level 3, though we’re not opposed to some probes in resilient stocks at this time.

As the correction has gone on, it’s become easier to spot the names that are resisting the decline—and this week’s list is full of stocks that held near their early-March lows and are much more advanced in their base-building efforts than the average stock. Our Top Pick is Loar Holdings (LOAR), a newer player in the aerospace sector that’s shown accelerating accumulation the past three weeks.

Stock 1

Agnico Eagle Mines (AEM)

Why the Strength
In contrast to investors’ aversion to equities in recent months has been their seemingly insatiable appetite for all things gold thanks to safe-haven demand from the obvious uncertainties surrounding the global trade/economic outlook as well as gold’s “currency component”—as the dollar weakens, it further increases the metal’s appeal due to inflation being an ongoing/increasing concern. Both of these are tailwinds for Canada-based gold miner Agnico (covered in the February 3 issue), which has been one of only a handful of NYSE-listed stocks to consistently make new highs of late. Aside from broad gold-related demand, Agnico has lately announced a series of company-specific developments that have underscored the stock’s momentum. The company unveiled expectations for a stable first quarter with an estimated EBITDA of $1 billion (up 7% if realized) and year-over-year EPS growth of around 74%, which is a big reason a major investment bank recently increased its price target for Agnico based on bullish gold price forecasts and anticipated stable mining and processing operations. As for the firm itself, Agnico announced that it has just expanded its strategic investment in Canadian gold outfit Cartier Resources (another reason for the strength), increasing its ownership to approximately 28%. The stake in Cartier allows Agnico to expand its presence in the mineral-rich deposits of Quebec, providing it with access to promising exploration projects. As for Q4, the firm had 847,000 ounces of gold production at all-in sustaining costs (AISC) of $1,316 per ounce, less than half the current spot price. Revenue of $2.2 billion was 27% higher than a year ago, with per-share earnings of $1.26 more than doubling and topping estimates; Agnico also returned nearly $1 billion to shareholders in dividends and share buybacks while reducing net debt by $1.3 billion. Production should be flat-ish for the next couple of years before ramping toward the end of the decade. When Agnico reports Q1 earnings on April 24 (post-market), analysts see sales up 32%, while the full year should see the bottom line up nearly 30%.

Technical Analysis
We missed getting into AEM after it never entered our suggested buy range in February. The stock went on to make impressive strides after our initial coverage, running up from 95 to 110 when it ran into temporary trouble, with shares dropping by as much as 14% over a two-day period earlier this month. Even so, the reversal higher was equally as ferocious, as AEM leapt to new highs over the last couple of days on tariff-related hedging. A shakeout would be tempting.

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Stock 2

BellRing Brands (BRBR)

Why the Strength
Sports nutrition beverages and energy foods have undergone a massive transformation in recent years, from what was once a niche market to what is now a major part of mainstream culture. BellRing is a fast-growing company in this space, offering ready-to-drink (RTD) protein shakes, protein powders, nutrition bars and other beverages, mainly under the Premier Protein (80% of sales) and Dymatize brands. Underscoring the company’s brand strength, its Premier Protein Shake holds the top spot in the RTD protein category in the U.S., particularly on Amazon, though it also has a big sales footprint across several major retailers, including Walmart. Meanwhile, its Dymatize brand of ISO100 protein powder is also a leading seller in the sports nutrition segment. Both segments have experienced outsized market share gains—from 19% to 26% in just the last five years—despite having only 13% of total retail distribution points in the domestic market. On that front, a major Wall Street bank recently initiated coverage on the stock with an “Overweight” rating (a reason for the strength), noting that BellRing’s exposure to the convenience store market is “significantly underpenetrated” at only around 10%, but the bank sees a major opportunity to increase its footprint in this category. Management acknowledges that “we should be there” and plans to expand on that front, but sees an even bigger near-term opportunity by enhancing its direct store delivery (DSD), which is a logistics method that bypasses the retailer’s distribution center, hence streamlining its supply chain, cutting inventory and ensuring fresher products on store shelves. In its fiscal Q1 (ended December) earnings call, the firm reported revenue of $533 million that increased a very strong 24% year-on-year and EPS of 58 cents that beat estimates by a dime and lifted 35%. Of significance, BellRing said its RTDs were the second fastest-growing category among its retail suppliers, behind only eggs, with Premier Protein maintaining its number-one brand rating with a 26% market share. Going forward, the outfit guided for fiscal Q2 sales and earnings growth in the mid-to-high teens, led by Premier Protein. Earnings are due out May 5 (post-market).

Technical Analysis
BRBR had a great run from late 2022 into early 2024 and, after a multi-month rest, another steady move toward the 80 level last November. Since then, shares have been building a big but normal-looking launching pad: BRBR double-topped at 80 in January before slipping 21%, but shares have held the 200-day line twice and, after a recent lift, are just 7% off their highs. If you’re looking to add exposure overall, we’re OK with a small purchase here and a stop in the upper 60s.

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Stock 3

Comstock Resources (CRK)

Why the Strength
Comstock Resources is a natural gas-heavy explorer that does a good business mostly in the Haynesville/Bossier shale plays in Texas and Louisiana, with north of 800,000 net acres. Like all of its peers, it went through the wringer last year, as gas prices were the lowest they’ve been in decades outside of the pandemic, which crunched cash flow and crimped exploration activity. But Comstock’s cost structure is about half that of the peer average (it expects further declines in costs per well this year, too), which allowed it to come through in good shape, and with fundamental positives for natural gas in place—namely higher AI-related electricity demand, as well as a predicted boom in LNG exports—prices should remain well off the low areas from the past two years. Indeed, the firm anticipates production to be flat-ish in 2025, though it recently upped its plans to operate seven rigs (instead of five) this year due to a better environment; even with that higher CapEx, the drilling program should be fully funded, with excess cash flow likely used to cut debt (though, after suspending their dividend last year, payouts could be back on the table, too). All in all, Comstock was free cash flow negative last year due to the downtimes, but the cost structure in place here means much of the higher realized pricing should fall right to the bottom line starting in Q1. It’s not changing the world, but Comstock is one of the most leveraged players to higher natural gas prices, which is likely to be a good thing in 2025. Earnings are due May 1.

Technical Analysis
CRK went up for most of 2022, then topped out and fell into early 2024 before a prolonged bottoming effort over the next few months. Shares finally broke free from a great-looking consolidation in early November and raced as high as 22 in January, and while shares have stalled out since then, the sideways action has been resilient compared to the market, and last week’s snapback from a bout of distribution is a good sign. If you want to probe, we’ll set our buy range up from here.

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Stock 4

CrowdStrike (CRWD)

Why the Strength
CrowdStrike was the lead dog in all things cybersecurity a year ago at this time, with its cloud-based Falcon platform attracting many big clients that were looking to consolidate on a best-in-class platform that addressed all angles of security (beyond the firm’s initial focus on endpoint security and including new-age offerings like threat intel, security information and event management (SEIM), cloud workloads and more). Last year’s massive snafu that shut down large parts of the global economy definitely slowed that trend to some extent, but the underlying positives remain in good shape: Falcon uses behavioral AI and predictive analytics to achieve a reported 100% detection rate in independent tests, offering unparalleled defense against AI-driven threats, and its customers continue to add more modules to their subscription in the aforementioned newer categories. The rise of agentic AI (systems, or “agents,” that can operate independently, make decisions and take actions to achieve specific goals without constant human input) is paving the way for a new series of cyber threats. Experts believe bad actors could use agentic AI to launch large-scale cyberattacks, which in turn offers cybersecurity providers like CrowdStrike even bigger opportunities to capture more big players looking for an all-in-one solution. The persistent demand for its offerings was on display in fiscal Q4 (ended January), which featured solid results above all the firm’s guided metrics. Revenue of $1.1 billion grew 25% from a year ago, along with earnings of $1.03 that beat estimates by 17 cents, though free cash flow and newly inked recurring revenue did shrink from a year ago (after effects of the mishap last summer). Even so, ending annual recurring revenue (ARR, a key metric) of $4.2 billion grew 23% from a year ago in Q4, and CrowdStrike noted several signs of the fundamental strength of its business, including 97% gross retention rates and a 12% same-customer revenue growth rate. The bottom line could be touch and go for another couple of quarters as it spends to keep clients onboard, but Wall Street sees the top line growing 20%-plus going ahead, and we think that could prove conservative.

Technical Analysis
CRWD was a big leader coming out of the November 2023 market liftoff, but after a fresh breakout in June 2024, the failed update last summer saw the stock get cut in half as investors worried business would dry up. Still, shares then began a long, jagged recovery that took them to new highs in February ... followed by another sharp slip, this time due to the market. Still, we see relative strength of late, as CRWD has essentially held its 200-day line twice, with the second low about in line with the first, and last week’s big-volume recovery hints that buyers are lurking. A continuation above the 50-day line and the prior high near 392 would be tempting.

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Stock 5

CyberArk Software (CYBR)

Why the Strength
About 80% of network breaches are due to mismanaged credentials. Hackers seek out identity credentials because they’re typically easier to secure than finding a backdoor into a specific system, and they also provide a much easier path for breaches through layers of corporate security. Stopping that is the basis of CyberArk’s business, which has an integrated platform that helps businesses identify threats in various connected and secured systems with intelligent, password-less, privilege controls. Since the dawn of systems security, identity security has always focused on human credentials – the identities and passwords of employees – while security of automated systems – an app that needs access through the security of a database, for instance – was left to developers. But the explosion of apps and machine identities thanks to the Internet of Things and the cloud means the vast majority of breaches come from machines today. CyberArk has been at the forefront of combating so-called machine identity theft, allowing it to grow its business with world governments, about 10% of revenue, and in sectors like healthcare, energy and banking. The explosion of AI makes machine identity security exponentially more important, with the company expecting (eventually) billions of apps with identities that are operating in cyberspace will need to be managed. One way to do that effectively is to create a dynamic security system, meaning CyberArk evaluates what an app is trying to do in addition to its digital certificates to help determine its threat level, compared to legacy security systems that focus only on static, password and credential-based protection. For 2025, management expects revenue to be about $1.31 billion, up more than 30% from 2024, with earnings per share of about $3.66, up north of 20%. Management expects a recent acquisition of an underfunded competitor, Venafi, to start to accelerate deals late this year and through 2026.

Technical Analysis
CYBR had a great run from November through mid-February, putting the finishing touches on a solid overall advance from November 2023. The correction from there was sharp (27%), but found support above the 200-day line, and last week’s retest of that support area brought huge buying—weekly volume was the second-heaviest in years as CYBR rose 14% on the week. A move above the recent swing high and the 50-day line would be a sign shares are aiming higher.

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Stock 6

Duolingo (DUOL)

Why the Strength
Duolingo is the leading educational app out there, with the vast majority of business coming from language learning, as more than 40.5 million people per day (up 51% year-on-year) log in to learn a wide variety of languages from all over the world. Far from a college-type course, the company has leaned into the gamification of its offering, with fun tasks and achievements, and users are often enticed to share their progress and achievements via social media, which in turn keeps engagement elevated and entices more and more people to sign up for added features. Indeed, most users are free (though they are served ads), but 9.5 million as of Q4 have signed up for the paid offering (up 43% from a year ago), which is the main driver of growth. Obviously, AI should be big here in terms of making its offerings more valuable and interactive—the firm recently released a higher paid tier (including Duolingo Max, which is up to 5% of paid subscribers) that, among other things, allows for a virtual phone call with an AI assistant that will have a conversation with clients in their chosen language. (Duolingo has also introduced family tier plans that have shown higher retention rates than the average subscriber so far.) There’s also big potential down the road for the firm’s music and math offerings—remember, this is an education app, not just a language app—with those products having around three million daily active users at year-end and growing quickly. The combination of the firm’s underlying offering and its marketing programs has produced a string of outstanding results: Sales have been lifting in the 40% range in recent quarters, while EBITDA more than doubled in Q4 and free cash flow lifted 84% to about $1.90 per share. Analysts and the top brass do expect growth to slow some as larger investments are made to capture what is seen as a big opportunity, but Duolingo also regularly lowballs the outlook, so we’ll see. Earnings are due May 1.

Technical Analysis
DUOL had a huge correction last year, but then had an even bigger rebound, soaring to new highs in September and gyrating its way to 442 in February when the market correction began in earnest. Frankly, the action soon after that top looked big-picture abnormal to us, with DUOL falling 40% in less than four weeks, but shares found support at their 200-day line and, after a modest bounce, held that prior low (and 200-day line) even as the indexes crashed to lower levels last week. A move above the 50-day line would likely open up a short-term (or longer) opportunity.

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Stock 7

Howmet Aerospace (HWM)

Why the Strength
Reliably growing demand for commercial aerospace components, thanks in part to a global surge for new aircraft as travel demand has boomed, is a big reason why Howmet (covered in the January 21 issue) is still outperforming despite the unsteady broad market backdrop. The company is a leading provider of fasteners and highly engineered metal products (mainly aluminum and titanium) used in defense and commercial transportation applications, with customers like Airbus and Boeing gobbling up its wares. However, the company’s spare parts sales (which typically have higher profit margins than sales to new aircraft makers) are a significant part of its business mix, with delays in new plane deliveries, coupled with strong demand for existing equipment, driving the firm’s spare parts sales in recent quarters. Aside from aerospace sector strength, Howmet is also benefiting from the growing demand for industrial gas turbines (IGT) to fuel the ongoing buildout of AI data centers. A recent analysis concluded the global gas turbine market could double to 100 GW per year between now and 2030, and as the leading supplier of IGT blades, Howmet expects substantial top line and margin growth in this segment of its business over the next several years thanks to hyperscalers building their own mini-power stations to ensure a steady electricity supply. On the financial front, Howmet posted record-breaking results in Q4, as revenue grew by 9% year-on-year, to $1.9 billion, with earnings of 74 cents up a strong 40% as margins boomed. Commercial aerospace revenue grew 13% in Q4 and 20% for the year, while defense aerospace sales rose 22% in Q4 and 15% for the year. Additionally, the Engineered Structures segment achieved a 55% EBITDA increase in the quarter, with margins improving to 19%, while the Fastening Systems segment expanded its margins to 28%, supported by a 39% EBITDA growth. Looking ahead, the top brass anticipates 2025 growth will be well rounded among its segments, with overall 10%-ish top-line growth, earnings growing about twice that pace and free cash flow continuing to trend higher. It’s not the fastest-growing outfit, but the commercial aerospace boom should continue for years to come.

Technical Analysis
We exited HWM with a profit back in late February, and frankly, after a double top near 140 in March and a nosedive to the 200-day line this month, we figured shares were set to see meaningfully lower prices. But HWM is one of a decent number of stocks that found support at that key longer-term trend line, and not only did it snap back last week, but it did so on much larger volume than the prior week’s decline, a good sign demand is picking up. If you want to dabble, we’re OK with a small buy on dips.

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Stock 8

Loar Holdings (LOAR) ★ Top Pick ★

Why the Strength
Driven by global tensions, military spending has soared in the last couple of years, led by the U.S. with a nearly $900 billion military budget, while other countries like China, Russia and India have also significantly increased their military expenditures. Loar, which is actually a collection of several company brands across multiple industries, is a niche manufacturer of components and systems for commercial and military aircraft, as well as aerospace and defense systems, and much of its strength is a result of this trend. The New York-based firm focuses on proprietary products and processes to maintain leading positions across its segments within the broader sector, with products that include parts for commercial and military aircraft—including those used in the Airbus A320 and Boeing 737 families—ranging from auto-throttles to motion actuators, flight control systems and cockpit door barriers. In total, Loar makes over 15,000 aerospace and defense items, with no single product accounting for more than 3% of sales and none of its customers making up more than 14% of the sales, which provides it with exceptional diversification, with a close split (roughly 50/50) between OEM and aftermarket sales. A solid Q4 financial performance was the main reason for the stock’s latest show of strength. Revenue posted records for both the quarter and the full year, with Q4 total sales of $110 million jumping 28% from a year ago, driven by a 39% increase in defense sales, while earnings of 11 cents were in line with estimates and adjusted EBITDA of $40 million increased 37% (also a record). For 2025, management guided for “strong demand” across the company’s end markets—particularly in commercial aerospace where new aircraft demand is expected to outstrip supply until at least 2030—in addition to “solid progress” being made against Loar’s productivity and value pricing initiatives. The results and guidance prompted a major investment bank to increase its target price (another reason for the strength), based on Loar’s cross-selling opportunities and ability to improve margins. Analysts see revenues up 20% or more this year and next, with EBITDA likely to expand at a quicker pace.

Technical Analysis
LOAR came public last April at 45 and avoided the typical post-IPO doldrums, instead galloping ahead over the next several months and more than doubling before hitting a wall at 97 in December. It experienced its first correction after that, with shares tumbling 34% over the next three months before finding support at 64 in early March and tightening up for a couple of weeks. Earnings then came to the rescue, with LOAR popping higher on great volume the past two weeks. If you want to test the waters, aim for dips of a few points.

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Stock 9

Palantir (PLTR)

Why the Strength
Palantir has a monstrous valuation and a CEO that can come across a bit hype-y, but the fundamental story might be as attractive as any out there, especially as the AI story continues to shift from the infrastructure providers (chips, networking gear, etc.) that will allow the training of large models, toward platforms that can provide real, actionable benefits using those models. That’s where Palantir fits in—the firm’s advanced software has always been popular with western-friendly governments (especially for military use; today it announced a sale of its AI-powered Maven battlefield situational awareness offering to NATO), and as the commercial AI age has dawned, it’s been in pole position in offering ontology (Palantir’s term) that can securely tap into all or part of a client’s database and produce immediate and sizable cost savings and productivity enhancements. (Palantir’s “boot camps” have been a huge draw, with the company able to set up a test run within a few days for potential clients, who can see in real time the insights provided by the platform on their own data.) In a sense, the opportunity here is massive, with Palantir’s offering possibly being the AI equivalent to what Microsoft Windows was back in the 1980s and 1990s—the basis that the vast majority of firms could use to get value from their AI technology in the years ahead. Growth has always been solid, but as (mostly) U.S. commercial clients have ramped purchases, growth has accelerated: In Q4, the top line lifted 36%, but U.S. revenue was up 52% (64% growth in commercial, 45% in government), while the remaining deal value from U.S. outfits finished at $1.79 billion, up 99% from a year ago and up a huge 47% from Q3! (Overall, the customer count lifted 43% from the year before, which shows you how many companies are at least testing out Palantir’s wares.) While margins are already big, profits are growing faster than sales, and analysts see another many quarters of excellent sales and earnings growth ahead. Again, the valuation is certainly up there, but there’s little doubt Palantir is going to get much, much bigger over time.

Technical Analysis
PLTR decisively changed character last August, soon after the market’s summer meltdown, gradually gaining steam, with earnings gaps in November and again in February bringing the stock to a high above 120. The drop from there was ugly, falling to near 80 by the end of that month, but shares have been relatively resilient since, with every dip below the 80 area quickly finding buyers. There is old overhead to chew through, of course, but a move above today’s high would be intriguing if you’re aiming to start a position. If you test the waters, use a loose stop given the stock’s volatility.

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Stock 10

Sprouts Farmers Market (SFM)

Why the Strength
American food sellers do $1.6 trillion in annual retail sales, but Sprouts is laser-focused on serving a $200 billion portion of that: Consumers who focus almost solely on organic and healthy groceries. Sprouts has 451 stores in the U.S., mostly in the west and mid-Atlantic southward, drawing customers who are looking for both unique items and products that fit a healthy lifestyle, whether it’s grass-fed or specific staples for keto and vegan diets. Sprouts does a lot of store promotions to excite its core customer, like giving away free basil plants on Earth Day. Another way management distinguishes its stores from other grocery chains, including the larger Whole Foods, is with dedicated “foraging” teams that seek out products to stock competitors don’t sell. In recent years, that includes putting new finds under its in-house Sprouts brand, which introduced a ridiculous 7,200 individual new products last year; the store seeks to add variety to the mix by evaluating new offerings from some 46,000 vendors a year. That also brings higher margins (5.4% pre-tax margins in the grocery sector is solid), helping the business make $3.75 of earnings per share last year on $7.7 billion revenue, both better than expected. Groceries are staples that people will still spend money on even when economics get tough, and Sprouts naturally benefits from that. While natural foods often cost more, the firm shields itself from a lot of commodity volatility by locking in long-term commitments with small vendors; that allowed the chain to not raise the price of eggs when larger chains were recently, for instance. That’s part of the reason Sprouts sees remarkably loyal customers – they may do some shopping elsewhere but consistently dedicate about 14% of their total grocery budget to Sprouts. Management expects same-store sales to rise at least 10% for Q1 and the quarter to produce sales growth around 11%, to $1.9 billion in the period. The yearly outlook is more conservative: Same stores growth of 5.5% on revenue growth of 11% is projected by Sprouts, thanks in part to continued store growth (at least 35 new stores this year, which translates into 7.7% growth). Long term there are plans to triple the number of locations while building out early-stage loyalty and delivery programs. Earnings are due April 30.

Technical Analysis
SFM had a huge run during the last couple of years, mostly riding its 50-day line higher until late last year, when the sellers began to step up—shares cracked some support near year-end, and after one more rally to new highs, were clonked on earnings in February and ended up correcting 27% from their highs. But while the market cascaded to a lower low last week, SFM etched a nicely higher low, moved back above its 50-day line and hit a higher swing high today. We wouldn’t go wild, but we’re OK with a small position here and a stop in the low 140s.

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Previously Recommended Stocks

The next Cabot Top Ten Trader issue will be published on April 21, 2025.

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