Cabot Top Ten Trader Issue: April 21, 2025

Re-test Underway

The market continues to exhibit softness, near term, with stocks getting off to a weak start on Monday. There are obviously lingering concerns on Wall Street regarding the tariff situation and possible stagflation, and it’s clear that a re-test of the recent lows in the major indexes is underway. However, as we’ve written about recently, there have been a good number of encouraging signs on the breadth and volatility front which suggest panic may be giving way to capitulation. New lows on both the NYSE and Nasdaq recently spiked to above 1,000 for two straight days, while the VIX briefly surged above 50—signs that normally precede worthwhile bottoming formations. There has also lately been a conspicuous show of bullish activity in the crypto market, which suggests that traders are showing a willingness to embrace more risk after several weeks of playing defense. That said, the primary evidence is still negative, as the major indexes remain under their intermediate- and longer-term moving averages, as do most issues, with more than three-quarters of S&P 1500 stocks (large, mid and small caps) under their 200-day lines. To reiterate, patience will likely be needed before a sustained advance can develop. Accordingly, we’ll keep our Market Monitor at level 3.

This week’s list has a fair number of stocks that should be able to shake off tariff-induced headwinds, with a nice mix of industries and companies in varying stages of growth. Our Top Pick is ADMA Biologics (ADMA), which is showing solid relative strength and has excellent potential in a fast-growing business.

Stock 1

ADMA Biologics (ADMA) ★ Top Pick ★

Why the Strength
Immunoglobulin treatments (which involve antibodies) are a big and fast growing business, estimated to be $12 billion or so in 2023 and growing to $20 billion by 2030, with a few big players (Takeda is #1 by far) involved. But little ADMA, with 2% of the market, is rapidly gaining share and the top brass believes that will continue for many years. One of the big advantages here involves the firm’s vast and proprietary plasma collection processes, with a screening system that ID’s “hyperimmune” donors and a unique way to test the plasma and to create “plasma pools” (all company words) that are most effective. (It also has a new production process that should soon garner FDA approval that will boost plasma output by 20% with the same starting input.) The firm has three drugs on the market, but the big draw is Asceniv (now more than half of overall revenue and expanding), which is targeted to treat what’s known as primary immunodeficiency (PI), which is really a collection of various genetic disorders that lead to a poorly performing immune system. Asceniv is given via injection every every few weeks and is targeted to those that aren’t helped by standard treatments, which the company believes is a 25,000 person opportunity in the U.S. alone. It has been a hit so far, and with only 3% of the market penetrated, ADMA believes the treatment should steadily expand, with the top brass believing growth can continue through the next decade and eventually score $1 billion plus in sales. There’s also a compound in development for a strep-related disease that could have something like $400 million in peak annual sales if/when it gets approved by the FDA, but the focus for now is on Asceniv. Growth on the top and bottom lines has been explosive, and while that will slow, EBITDA is still expected to rise 35% this year—and that should prove conservative. ADMA is one of many solid growth stories we like.

Technical Analysis
ADMA’s 43% correction from mid-November through the start of March was sharp, but also reasonable given the prior gigantic run. The tightness seen in February was a plus, and the big volume shakeout-and-recovery after earnings was certainly a big clue. ADMA did pull in with the market’s tariff tumble, but held the 200-day line and, as the market has bounced, immediately surged to higher highs—classic leadership-type action. We’re OK with a nibble here and a loose stop toward the recent lows.

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Stock 2

Fortinet (FTNT)

Why the Strength
As one of the world’s top cybersecurity software providers, Fortinet is known for its software solutions that combine artificial intelligence (AI) and machine learning (ML) to stay ahead of evolving network threats, as well as hardware products like firewalls and switches. Despite heightened economic uncertainty, demand for cybersecurity is growing, with multiple industry reports estimating a 15% year-on-year spending rise for 2025, prompting one industry analyst to call the sector “recession resilient” as security spending is considered “must-have” technology in the current environment. The higher spending is mainly due to increasing cyber threats related to the acceleration of artificial intelligence, since the emerging technology allows cybercriminals to augment their capabilities by creating more sophisticated and destructive attacks. In addition, AI can automate tasks and make more convincing social engineering attacks, while also developing malware that can elude detection. To stay ahead of the curve, Fortinet uses a multi-layered approach that combines network, endpoint and cloud security with AI-powered tools like FortiAI (which uses ML to analyze network traffic, user behavior and application usage for spotting anomalies and suspicious patterns) and FortiEDR (which reduces the attack surface, making it harder for attackers to succeed), to proactively identify and mitigate such threats. A major investment bank just named Fortinet as its top cybersecurity pick (a reason for the stock’s latest show of strength) based on the company’s relative insulation from the ongoing tariff threat. The firm noted that while Fortinet makes most of its hardware in Taiwan, more than 70% of its billings are from outside the U.S. The company’s financial strength was highlighted in Q4, which saw a 17% year-on-year revenue growth, to $1.7 billion, and a record operating margin of 39%. Earnings of 74 cents a share beat estimates by 13 cents. Meanwhile product revenue jumped 18%, the highest in six quarters, driven by secure networking advancements, with annual recurring revenue (ARR, a key metric) growth of 32%. When Fortinet reports Q1 earnings on May 7, Wall Street expects top- and bottom-line growth of 14% and 24%, respectively.

Technical Analysis
After spending a year in the doldrums, FTNT kicked out of its funk last August on a strong earnings reaction that gapped shares out of a 30-point trading range and, by October, to new highs. From there, the stock leapt by another 20 points in November before encountering resistance at the century mark, where it spent a couple of months tightening. The calendar flip saw renewed strength, with shares peaking at 115 in February when the market tide’s reversal sent FTNT tumbling. However, it found strong support at the 40-week line recently and has shown some resilience since then. We’ll set our buy range up from here, thinking a decisive move above 50-day line will signal the onset of a new rally.

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Stock 3

GE Vernova (GEV)

Why the Strength
GE Verona is the electricity business of the old General Electric, created when the GE split into units three a year ago. It makes natural gas turbines for power plants, wind turbines and electrification equipment, as well as associated software for power storage and grid management. The natural gas business is reliable, since about a third of the world’s has plants that use Verona equipment, offering good opportunities for upgrades and maintenance sales. But the future of the business is in the unstoppable trend toward electrification and decarbonization given that green energy is the cheapest to produce on a utility scale: solar is the cheapest and wind the second-cheapest, each more than half the price of a new coal plant and a third cheaper than a new gas plant brought on line for full-time service, according to an annual study by Lazard Freres. GE Verona isn’t directly exposed to solar, but its grid and electrification equipment benefits from its growth, while its wind business is a significant arm, producing wind turbines and blades for massive wind farm developments globally. Still, renewable energy production is affected by interest rates, so wind in particular is expected to be soft in the first part of this year, but the gas business is strong, especially in the upgrades and maintenance area, as well as overall electrification. The company reports Q1 results before the market opens Wednesday, which will give a clearer picture of how GE Verona sees the year developing, particularly in light of potential impacts of tariffs (although the company has plentiful factories outside the U.S. to support international business). Wall Street is expecting the period to produce sales of $7.6 billion, up 4% from the year-ago period, and net income of 35 cents, a good swing from the 41 cent per-share loss in the comparable quarter.

Technical Analysis
A miss on sales and income consensus for Q4 reversed a strong bull run for GEV in late January, knocking shares from their all-time high of 447. Still, GEV has weathered the market turmoil better than most, and after touching a six-month low at 250 earlier this month, the stock established support above the 40-week line, and now there are signs the buyers are stepping up. There’s obviously still some overhead supply to contend with, plus earnings at mid-week, but if you want to probe, we’ll set our buy range up from here.

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Stock 4

GeneDx (WGS)

Why the Strength
For years there has been excitement about genetic testing, but the reality has usually fallen fairly flat, as the benefits have been more indirect (firms selling equipment to big genetic research outfits) rather than benefiting the everyday person. But GeneDx may finally be changing that: While it has some legacy testing businesses, the excitement surrounds its steadily growing genome and exome (protein-coded regions of DNA) testing business, which offers huge benefits for many people (mainly kids) with rare diseases, which often go hand in hand with months of misdiagnoses and unnecessary tests. The firm has a database of hundreds of thousands of genomes and exomes, as well as hundreds of gene-disease relationships (every test it does boosts the database, too), that help better identify things like epilepsy, autism and other intellectual developmental delays. It’s making a move further into neonatal intensive care units (NICU), too, where it thinks patients are massively under-tested for genetic diseases (by a five-to-one ratio). NICU represents less than 5% of the firm’s current testing volume, so there should be big potential here. GeneDx looks like the clear leader in the field—it says 80% of clinicians that order testing of its kind choose its solutions—and with acceptance on the rise, it should mostly be a matter of the top brass pulling the right levers to keep the business growing. One of those levers it recently pulled was on the technology side: GeneDX has bought Fabric Genomics, which offers and AI-driven “interpretation-as-a-service,” allowing clients to have access to all of GeneDx’s dataset even if they’re already doing sequencing in-house, while boosting the firm’s newborn screening program, along with many other benefits. Growth has already been rapid thanks to the geome and exome testing (38% of revenue, up from 27% a year ago and headed much higher), and while Wall Street sees the top line slowing this year (up 17% or so), earnings are expected to soar—and, really, the company has been crushing estimates, so the figures could prove to be much larger. The next update will come April 30, when Q1 results are announced.

Technical Analysis
WGS soared to new highs after earnings in February, and impressively, dipped reasonably (holding its 50-day line) during the market’s initial sharp spill into early March. But the market’s second, tariff-induced leg down finally got it, knocking us out of our recommendation as this very volatile name slid 38% from its high. But the rebound has been very solid, coming on higher volume and driving WGS back above its 50-day line on improved volume while testing resistance near the century mark. We’ll set our buy range above that level, thinking upside follow-through from here would tell you buyers are beginning to flex.

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Stock 5

LandBridge (LB)

Why the Strength
LandBridge’s strategy is to acquire land throughout the Permian Basin in Texas and New Mexico and actively manage it to generate revenue from other companies using its resources. It collects royalties from oil and gas drawn from its land, resells brackish water from those operations to other oil and gas producers through its extensive pipeline network, sells sand from its land for fracking and rents the surface area for any number of uses, include oil and gas derricks, pipeline infrastructure, solar farms and other commercial developments. The Houston-based company went public last summer and has used its capital to go on a land buying binge that has expanded its surface acreage to 273,000—triple the amount it held at its IPO. The Permian Basin is the most active area in the U.S. for fossil fuel exploration, so royalties form the core of the outfit’s strategy, but management has plans to diversify the business in view of the volatility of oil and gas income (which heavily depend on market prices for the underlying commodities). Diversification is realistic, since most oil and gas operations use only a small portion of an acre, while some, such as fracking, may not have a surface presence at all. In particular, the flat, open expanse of the Permian makes for a good location for solar farms, which is a business LandBridge has just entered as a landlord and is expected to contribute notably to revenue this year. The company also expects the growth of AI data centers will both increase the demand for energy overall, underpinning the business model, and lead to opportunities for constructing data centers on its holdings. The business is still on the smaller side, generating $110 million in revenue in 2024 and per-share earnings of 89 cents, but for 2025, Wall Street expects sales of almost $200 million and EPS of $1.80—up 82% and 100%, if realized. While oil and gas prices have taken a hit under the recent trade war escalation, management says it would take a dramatic drop to really hurt its profit targets this year, based on contracted business aside from fossil fuel royalties and the ability to expand uses to its landholdings. We like it.

Technical Analysis
LB debuted at 17 last June and has never looked back, rallying more than 300% into November even as oil prices were largely stagnant. After meeting with resistance at 80 that month, the stock slowed down and has spent the last several months tightening up, oscillating within a lateral range. And while it hasn’t made any net progress since late last year, its firmness in view of the weaker market backdrop is noteworthy. If you want to take a swing, we’re fine starting small here or on further minor weakness.

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Stock 6

Murphy USA (MUSA)

Why the Strength
Arkansas-based Murphy operates a chain of low-cost retail gas stations and convenience stores across 27 states, with Murphy’s outlets typically being adjacent to Walmart stores. In recent years, however, Walmart has developed its own gas station program, ending its long-term partnership with Murphy. But Murphy is now focused on its own independent growth with the development of standalone Murphy Express stations, while also continuing existing operations (over 1,100 of its 1,700+ gas stations to be exact) near Walmart locations. Murphy enjoys a competitive edge over its peers since it offers lower cost-per-gallon fuel that few competitors can match, an advantage that’s especially attractive with cost-conscious customers in the present inflationary environment. (Indeed, its gallons sold have increased 14% annually over the last decade.) Additionally, nicotine products consistently rank among Murphy’s top-selling merchandise, accounting for around 45% of its convenience store sales (with the added benefit that c-store sales are considered to be relatively recession proof). As part of an accelerated two-year strategic growth initiative, the company plans to expand its store count by opening up to 50 new stores in 2025 and 30 “raze-and-rebuilds” in an effort to strengthen its market presence and enhance customer offerings. Additionally, the firm has embarked on an aggressive capital returns program in recent years, allocating nearly 50% of cash flow to buybacks and cutting share count by nearly 60% since 2013. In Q4, Murphy reported mixed results with a 7% year-on-year revenue decline, to $4.7 billion, while earnings of $7.50 a share beat estimates by 12%. And while total retail gallons sold decreased 1% in the quarter, retail fuel margins were up 1% and total merchandise margin dollars increased 4% (despite challenges in its Northeast market for food retailers), with nicotine categories driving “significant value.” Additionally, Murphy accelerated its new-store activity in 2024, completing 32 new-to-industry (NTI) stores and 47 raze-and-rebuilds, which it said increased its growth trajectory heading into 2025. Looking ahead, Wall Street expects only modest single-digit sales and earnings this year, but sees the firm’s growth initiatives blossoming next year, with EPS expected to jump 13% in 2026 and 10%-ish in each of the next three years. Earnings are due out May 7 (post-market).

Technical Analysis
The bull market in MUSA took a breather in late 2022, pulling back 20% between November and mid-May 2023, but this paved the way for the powerful re-launch that followed. Shares zoomed steadily higher over the ensuing 21 months with only a few minor pullbacks along the way and hit an all-time high at 560 last November. Another 20% correction followed, with the stock establishing a low last month and rallying sharply into April, putting it back above its key trend lines. We’re OK nibbling here or on minor weakness.

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Stock 7

Nutrien (NTR)

Why the Strength
It’s not unusual for investors to focus their attention on natural resource assets during periods of economic uncertainty—particularly when those stocks serve as safe havens for inflationary environments. One segment of the natural resources sector that has lately been in demand involves producers of some of the world’s most essential nutrients; specifically, potassium- and nitrogen-containing compounds used to fertilize food crops the world over. Additionally, with food security taking on an outsized role today—thanks largely to rapid population growth in many parts of the globe—the agriculture sector is receiving more attention than ever from investors and policymakers alike. This is just one reason why Nutrien is showing strength: the outfit is the world’s top potash producer, operating six low-cost mines in Canada. It’s also the third-largest nitrogen fertilizer maker—mainly in the form of anhydrous ammonia—as well as a major provider of pesticides. Another reason for the stock’s strength is that potash prices have been on the move in the last few months (up 20% since November), with increases driven by ongoing supply chain disruptions and uncertainty concerning the potential impact of recent tariffs. The latter factor is particularly the case for Canada, a world-leading potash producer and exporter which supplies 85% of the United States’ potash consumption (and which, as an aside, makes the nutrient a potential economic weapon for that country). On that score, the company said it expects tariffs to put more upward pressure on potash prices, and while it believes the overall market impact is unclear, it said the higher costs would mostly impact downstream distributors. At a recent investor conference, the company’s top brass further stated that it’s seeing “improved fundamentals” in the potash market as well as market-wide tightening. It also guided for top line growth in its crop protection business and said it feels “optimistic” about its nitrogen business for 2025 in light of the spring planting season. In 2024, Nutrien saw fertilizer sales volumes increase by nearly a million tons compared to 2023, led by record potash volumes, with retail adjusted EBITDA of $1.7 billion jumping 16%. Analysts expect 10% earnings growth for Nutrient this year, which could prove too conservative in view of the bullish potash market backdrop. Earnings are due out May 7 (post-market).

Technical Analysis
April 2022 was the highwater mark for NTR, with the stock topping out at 115 and commencing a multi-year decline that took it to a low at 44 last December. This proved to be a turning point, however, and the stock has lately established a higher low as part of a much bigger base, with the RP line ripping to higher highs. If you want in, you could start small here or (preferably) wait for a dip to enter.

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Stock 8

ServiceTitan (TTAN)

Why the Strength
California-based ServiceTitan offers a field service management system (FSM) for home and commercial service contractors (think plumbing, HVAC and electrical service specialists). It’s essentially a cloud-based customer relationship management software platform with applications focused on sales, customer service, marketing automation, e-commerce and analytics, all of which aid its customers in optimizing their operations and growth. Among the features of the platform is dispatching, which helps businesses send the right technician to the right job, ensuring efficient resource allocation. The platform further allows businesses to view customer history, track equipment and manage invoices all in one place, while providing real-time insights into job expenses and profit margins (or so-called “job costing”). Last month, ServiceTitan reported its second set of quarterly results since coming public in December, with revenue of $210 million increasing 30% from a year ago and per-share earnings of 12 cents beating the consensus by nine cents in fiscal Q4 (ended January). Total platform revenue of $740 million for the full fiscal year increased 27%, led by a 28% improvement in subscription sales growth. Management said its core residential trades continue to perform well, while its investments in expanding the platform to support roofing businesses and commercial service providers “continue to deliver.” Tellingly, the company retained its customer base and saw them increasing spending by 10% compared to a year ago on upgrades and additional purchases, underscoring client satisfaction with ServiceTitan’s offerings. During the earnings call, ServiceTitan emphasized that it’s one of the few companies that provide vertical software, which is tailored to meet the specific needs of a particular industry or market, and the firm estimates its market opportunity at a massive $1.5 trillion globally. Additionally, analysts see a $30 billion opportunity from subscription sales alone, which implies only a 3% revenue penetration currently, in turn providing a massive runway for the company as it seeks to become the primary operating system for the trades. Wall Street sees 30%-ish earnings growth this fiscal year and in each of the next two years.

Technical Analysis
TTAN came public last December at 101 and experienced the typical post-IPO droop, eventually bottoming at 80 in mid-March. An initial rebound attempt from there fell short of reclaiming the century mark, with general market weakness not helping, and the stock fell back to support earlier this month. But the rebound over the last two weeks has been superb, with shares soaring to a new high at 120 and the RP line confirming it. Dips of a point or two would be tempting.

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Stock 9

Soleno Therapeutics (SLNO)

Why the Strength
Soleno is a clinical-stage biopharmaceutical company focused on developing new treatments for rare diseases, with a primary focus on Prader-Willi syndrome (PWS), a genetic disorder that affects many parts of the body and can lead to cognitive impairment. In March, the U.S. FDA approved Soleno’s first commercial drug, Vykat XR (extended-release diazoxid choline), a once-daily oral treatment for hyperphagia in adults and children four years of age and older with PWS. (Hyperphagia is a PWS symptom that involves a feeling of extreme hunger, with Vykat serving as an appetite suppressant for victims of this disease.) The news sent the share price soaring, as analysts believe that peak annual revenue in the U.S. from Vykat could reach as high as $2 billion, with some projecting even higher sales once the drug is approved in Europe. On that score, several major Wall Street institutions raised their price targets for the stock in the wake of the drug’s approval (the first prescriptions of which were delivered on April 14). It’s worth noting that while there are other similar drugs in various stages of development among the firm’s competitors, Vykat is currently the only commercially available treatment for hyperphagia in PWS. The company hasn’t generated any revenue yet, but now that Vykat has launched, Solena is expected to change that dynamic starting in the current fiscal quarter. The launch should also enable the firm to enjoy its commercial advantage for Vykat for at least the next couple of years (as well as allowing it to have a pricing premium for the drug). Last year, Soleno used $69 million of its available cash for operating activities and ended 2024 with $319 million in cash, which industry analysts estimate will provide a runway of around four years at current burn rates, and which should prove sufficient for the successful commercialization of Vykat. Moreover, management expects revenue of around $2.8 million starting in Q2, with growth accelerating into 2026. Wall Street agrees and sees revenue increasing to around $23 million by Q4, with earnings expected to reach the black by 2026.

Technical Analysis
SLNO spent the last few years grinding out a base, an effort that paid off enormously in October 2023 when it broke out on news that the firm’s prime treatment candidate showed promise. Over the next 13 months the stock continued to trend higher, eventually doubling before meeting with strong resistance at 60 last November. A pullback to 42 followed over the next several weeks, with shares turning the corner shortly after the calendar flip and, after a brief bottoming formation, SLNO took flight again on last month’s FDA approval announcement. If you want a token position, we suggest aiming for dips of a point or two.

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Stock 10

Uber (UBER)

Why the Strength
Uber is a blue chip in the ride sharing and delivery businesses around the globe, with a top position in the former and clearly one of the big players in the latter, as well as some other burgeoning businesses (like advertising on its app). There’s also a decent freight business ($5 billion in sales, though it’s losing a little money) it has been looking to unload for the right price. After surviving the pandemic and tightening its belt, the firm has been cranking out fantastic top- and bottom-line numbers, which is a big reason it was one of the early growth leaders (see below) a year and a half ago—however, investor perception took a hit on fears that the firm was falling behind in autonomous rides, which many see as being the future of the industry. (Tesla’s Robotaxi has made plenty of headlines on that front and there are many startups vying for the business.) However, Uber has been able to soothe Wall Street’s worries, as the firm has invested heavily in the technology and a former competitor (Waymo, owned by Alphabet) is now a partner, with clients able to use Uber to book that firm’s AUV taxis in Austin, San Francisco, LA and Phoenix. Moreover, many are figuring out that, while it will eventually take hold, the next decade is still going to be human-based, so it’s not like Uber’s business is going out of style anytime soon. That’s likely a reason why hedge fund billionaire Bill Ackman has taken a stake, with the focus going back on the buoyant numbers Uber is cranking out quarter after quarter: In Q4, active users were up 14%, total trips grew 18% from a year ago and currency-neutral bookings were up 21% (24% for Rides, 18% for Delivery), all of which drove total EBITDA up a big 44%, with free cash flow coming in at $1.7 billion, or about 80 cents per share (up 122% from a year ago). (Additionally, the firm bought $1.5 billion of stock in January as part of an overall $7 billion buyback program). The good times should continue in 2025, too, with Q1 showing 19% bookings growth and EBITDA up in the 34% range. It’s a long-term, international growth story that should spin off huge free cash flow for many years to come. Earnings are due May 7.

Technical Analysis
UBER has been base-building for the better part of a year—it was a leader coming out the November 2023 market bottom, but essentially topped in February and has since traded up and down in a wide range. But there has definitely been a change in character in recent months: Shares spiked on the heaviest weekly volume of the entire rest period in early February on reports of Ackman’s ownership, and while it dipped from there with the market (a) UBER held above its December low, and (b) volume was light. And lately the stock rallied back on higher volume, too. We’ll set our buy range up from here.

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Previously Recommended Stocks

The next Cabot Top Ten Trader issue will be published on April 28, 2025.

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