Cabot Top Ten Trader Issue: June 23, 2025

Still Resilient

The Middle East uncertainties came to the forefront just over a week ago, and that uncertainty flared up further this weekend with the U.S. joining the fray on Saturday night—which clearly increases the odds there will be back and forth military srikes between Iran and the U.S. now, and it’s possible other countries will take action. Even so, stocks have remained resilient, with all of the indexes remaining in intermediate-term uptrends and not far from their recent highs, and there’s been very little abnormal action among individual stocks even after their big runs in May. That’s all to the good—but, at the same time, nothing has changed for the better, as very few stocks are reaching new high ground and there hasn’t been much net progress for the past month, even in many leaders. Long story short, the big-picture setup remains intact, and the recent resilience is certainly encouraging, but we still need to see more leadership emerge, and upside in the indexes, to cannonball into the pool. We’ll leave our Market Monitor at a level 7.

This week’s list has names from every nook and cranny in the market, which is a good sign. Our Top Pick is ATI (ATI), which has rested a bit during the past couple of weeks as the 25-day line has caught up. We’re OK entering here or (preferably) on dips.

Stock 1

ATI Inc (ATI) ★ Top Pick ★

Why the Strength
ATI (covered in the May 5 issue) produces high-performance titanium- and nickel-based alloys, stainless steel and other products for both the aerospace and defense markets, also being known for its composite fibers that reduce fuel use by replacing heavier metals. Energy, medical, and electronics applications account for 15% of revenue, but aerospace/defense consistently represents a strong portion of ATI’s sales (65% as of Q1) and is where most demand and contract growth is being seen right now. In particular, its specialty materials and components are helping to support this year’s increased levels of commercial and military jet production, with many of ATI’s aerospace customers reporting substantial backlogs. To support the higher demand, the company just opened a state-of-the-art facility in South Carolina to produce titanium alloy sheet, which is critical to airframe manufacturers. ATI also recently announced a multi-year agreement with Airbus for titanium plate, sheet and billet for narrow and widebody aircraft, which will be produced at the new facility. (The firm estimates that more than two-thirds of the plant’s capacity will be under long-term agreements with a variety of aerospace customers.) Also benefiting ATI is a global shift away from Russian titanium sources, which has enabled the outfit to secure several new contracts. Beyond titanium, the company is increasing its manufacturing capabilities in nickel and its alloys, which excel due to their strength and resistance to high temperatures and corrosion. In recent months, ATI has developed a patent-pending nickel melting process and has also introduced a new nickel alloy with improved lifespan, while announcing plans for its nickel melt capacity to increase by up to 10% next year. Not surprisingly, defense-related demand is expected to accelerate this year, with the top brass reporting that momentum is continuing to build across its portfolio; ATI recently qualified a new material for a long-term classified program, while the firm’s R&D pipeline “has strong backing” from the U.S. government and its allies. Wall Street sees mid-20% earnings growth this year and next, which could prove conservative.

Technical Analysis
We missed getting into ATI last month after the stock never dipped into our suggested buy range. Shares had stalled out last summer and then went over the falls with the market this spring, but the comeback from there—goosed by a strong Q1 report and reaction—saw the stock quickly return to new highs and then keep chugging higher without any pullback. Finally, ATI is resting just a bit with the market as the 25-day line has caught up. We’re fine starting small here or (preferably) on a bit more weakness.

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Stock 2

CF Industries (CF)

Why the Strength
Total U.S. corn acreage is expected to increase by 4.7 million acres this year, to over 95 million in total, which, if realized, would be the highest since 2013 and third highest since the 1940s. That’s a big reason why nitrogen fertilizers are in high demand right now, in turn driving sales prices higher and benefiting CF Industries. The company is the world’s largest nitrogen fertilizer producer, specializing in key crop nutrients like ammonia, urea, ammonium nitrate and urea ammonium nitrate (UAN), with corn production across the U.S. accounting for a significant percentage of its crop nutrient sales. But another reason for the strength is the latest proposal by the U.S. Environmental Protection Agency (EPA) to increase the amounts of biofuels that oil refiners must blend into gasoline and diesel over the next two years, which includes elevated biomass-based diesel mandates. When finalized, the rules would require total biofuel blending volumes at 24 billion gallons in 2026 and 24.5 billion gallons in 2027—a blending requirement increase of 8% and 10%, respectively, versus current requirements, which should boost demand for corn (and CF’s offerings) further. Moreover, a focus of CF in recent years has been on low-carbon ammonia production, which positions the firm to supply the rising demand for sustainable crop inputs in the ethanol industry. Also contributing to the strength is the Israel/Iran conflict, which threatens a critical shipping route for natural gas (a key input for ammonia), which could put pressure on high-cost producers in Europe and Asia, in turn providing CF with a cost advantage. Last month’s Q1 results highlighted CF’s already strong financial position, with revenue of $1.7 billion increasing 13% from a year ago, with earnings of $1.98 a share besting estimates by 34%. Management said channel inventories for nitrogen fertilizer are low (a good thing) due to high demand and industry production outages, while lower net imports of UAN and urea also position CF well for the rest of 2025. The company believes global demand for low-carbon ammonia (including for new applications like power generation) will further tighten the supply/demand balance in CF’s favor. Analysts see full-year top- and bottom-line growth of 9% and 14%, respectively.

Technical Analysis
A stellar second-half run in 2024 saw CF touch multi-year highs in mid-January of this year, but it quickly gave up the ghost after that, falling back to its 2024 lows by the market bottom in April. But the change in character since then has been stunning, with CF rising 10 weeks in a row, with big volume coming in the past couple of weeks as shares hit their highest level since late 2022 before shaking out the past couple of days. You could start small here or on further dips, with a stop near the 50-day line.

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Stock 3

Coinbase (COIN)

Why the Strength
While Coinbase is usually thought of as “just” another way to play Bitcoin, its story is really more about being the Schwab of crypto—obviously, transaction-based revenues are a huge factor here, and those swing based on the popularity and activity of Bitcoin (mostly) and other coins. But the firm also has a much broader business than it did a few years ago, with subscription services and so-called stablecoins bringing in big (and relatively steadily growing ) revenue, too. The latter business should get a big shot in the arm in the years ahead: Stablecoins are digital crypto that are tied to another, stable financial instrument, usually something like T-bills, the U.S. dollar or something similar; in fact, the second biggest stablecoin the USD Coin (USDC for short), which has a market cap of $60 billion or so, and Coinbase shares in the revenue generated by it (and it also owns a minority stake in Circle, the newly public outfit that is the sole issuer of USDC). Whether it’s USDC or something else, the stablecoin sector could be approaching boom times, as the U.S. Senate passed legislation allowing private stablecoins to be issued (following strict regulations), which opens up many possibilities for payments and other digital activities using the asset. (Some are predicting total stablecoin revenue leaping into the trillions of dollars in the years ahead.) Back to the overall business, it’s in fine shape, with Q1 transaction (trading) revenue up 17%, while stablecoin revenue was up more than 50% and other service and subscription (like its Coinbase One offering no trading fees, boosted USDC rewards and more) revenue rising north of 30%. Of course, the path of Bitcoin and crypto as a whole will still be key and result in plenty of near-term ups and downs, but the likely stablecoin boom and other business lines means Coinbase should get a lot bigger over time.

Technical Analysis
To say COIN has been wild during the past year would be an understatement: After shares hit 280 last March, they dipped 48% by September, then zoomed back to new highs by December before again going over the falls with the market, falling from 350 to 140! However, that action likely wore out most weak hands, and shares have shown very intriguing strength of late, including a massive-volume move in mid-May followed by some tightness (a change of character) for the next month. And now COIN has enjoyed another bump on big volume after the stablecoin news. We’re OK with a small buy on modest weakness, but use a loose leash if you enter.

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Stock 4

Curtiss-Wright (CW)

Why the Strength
Curtiss-Wright was at one time famous for its military airplanes, playing a major role in aviation as America’s largest aircraft maker during World War II. While it no longer makes aircraft, the century-old North Carolina-based outfit still provides related components (like actuators, controls and valves) for aerospace, while also supplying equipment to industrial, commercial power, defense and energy markets worldwide. It now operates through three segments: Aerospace & Industrial (specialty vehicle products and power management), Defense Electronics (processing equipment and instrumentation) and Naval & Power (motors, generators, steam turbines, valves and secondary propulsion systems), with the latter segment the biggest one by revenue (41% as of Q1). Indeed, military customers are a major contributor to Curtiss-Wright’s recent strength, as it consistently secures large contracts from the U.S. Department of Defense, as illustrated by the firm just being awarded an $80 million contract from the U.S. Air Force to provide its high-speed data acquisition system hardware and associated repair services. Beyond the aerospace/defense sector, Curtiss-Wright also serves the booming nuclear market for both commercial and military customers, including the provision of steam turbines, pumps, valves and coolant pump technology for existing and next-generation reactors; it also provides a wide range of highly engineered, critical function products and services for the U.S. Navy’s nuclear fleet. With the nuclear industry likely entering a strong growth phase, the company has been growing its footprint in this space—its acquisition of U.K.-based Ultra Energy looks important, which specializes in neutron/radiation and temperature monitoring. What’s more, through Curtiss-Wright’s partnership with X-energy to advance and deploy the Xe-100 advanced Small Modular Reactors, it has exposure to the lucrative AI data center market. (Curtiss-Wright estimates each reactor could generate between $20 million and $120 million in revenue.) In Q1, revenue of $806 million increased 13% year-on-year, driven by record orders of $1 billion, while EPS of $2.82 beat estimates by 19%. For 2025, Wall Street sees earnings up 17%, though that’s likely to prove conservative given the size of the Q1 beat.

Technical Analysis
A multi-year uptrend for CW peaked out last November when the stock encountered strong resistance at 390. It initially resisted the correction that followed, grinding lower by fits and starts into March, but the intensified selling from the March-April tariff panic sent shares knifing below the 200-day line, which served to induce capitulation. By early April, the selloff was over, and CW turned the corner with a powerful show of momentum (10 weeks up in a row, six of which on above-average volume!) and relative strength into June, with a little rest of late. We’ll look to enter on a dip from here, though we’re not expecting a big retreat.

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Stock 5

Dave (DAVE)

Why the Strength
Dave is a so-called neobank, a term for digital-first banks that seek to capture younger consumers through a combination of ease of use and marketing that stands in contrast to stodgy old-time banks—hence the quirky name. The business doesn’t have physical branches, which helps keep costs low and acknowledges the reality that younger adults tend to transact most of their financial lives digitally. For those who need to deal with cash or paper checks, Dave offers fee-free withdrawals at ATMs in the 40,000-plus MoneyPass network and use of CVS and Walgreens locations to make deposits. In the latest quarter, ended March, Dave rang up $108 million in revenue, up 47% year over year, with $2.48 in earnings per share, up hugely from a year ago when taking out one-time items. Basic banking services get customers in the door—it has 2.5 million monthly users today—but it’s the firm’s additional services that get the cash spigot flowing. One big feature is ExtraCash, which provides a cash advance of up to $500 with no credit check or interest charge; given the digital basis of bank structure, Dave can be nimble on such offerings. Last quarter it dropped ExtraCash transfer fees and the option to add a tip, which users found annoying, settling on a simple, low fee structure with a $5 minimum to $15 maximum. The new structure boosted the average loan size a little to about $200, while reducing delinquency to near 1.5% and increasing originations. Management says its machine learning Cash AI system should help better identify good credit risks for the program, too. Dave is still largely a second-choice bank with consumers: Less than 10% use Dave as their primary savings or checking account, but ExtraCash appears to be grabbing customers for small credit products from mainstream lenders. This quarter, look for revenue growth over 40% to about $113 million, with EPS of $1.46, nearly 50% higher than 2024’s Q2. It’s an intriguing story with some real business momentum.

Technical Analysis
DAVE went public by SPAC merger in January 2022, and after a couple of years of horrific action and bottoming out, shares finally got going early last year. Shares are still gaining sponsorship (224 funds owned shares at the end of March, up from 127 six months before) and have had many wild moves, including the 48% top-to-bottom correction during the market’s plunge this year. But DAVE held the 40-week line, rebounded nicely initially and then gapped up massively on earnings in May … and kept running as high as 240 (nearly twice the prior high!) two weeks ago. Now the stock is finally pulling back—we’ll set our buy range down, looking for a deeper pullback to enter.

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Stock 6

EQT Corp (EQT)

Why the Strength
We continue to think that natural gas stocks have a chance to loosely follow in the footsteps of their oil-heavy peers, which had a great run years ago as they limited CapEx and focused on producing mounds of free cash flow, resulting in huge (and far more reliable) dividends and share buybacks, usually with pristine balance sheets, too. Leading gas players these days are in a similar position, having slashed costs and boosted efficiencies while waiting for natural gas prices to get out of the doldrums—and this year they have, with prospects for much greater gas demand (mainly from booming electricity needs) bolstering investor perception of the firms. EQT is one of the big dogs of the sector, with around one million net acres in Appalacia and northeast Pennsylvania that have some of the best economics out there (free cash flow breakeven under $2 natural gas) while also possessing a seemingly never-ending runway of expansion (30 years of de-risked inventory!) while being able to cut or boost production in fairly short order based on pricing. There are some other company-specific factors here (declining costs as a percent of output should give a big free cash flow lift in the years ahead on its own), but of course natural gas prices are a huge driver—EQT believes it can bring in an average of $2.75 of free cash flow per share annually for the next few years even at $3.50 gas, with that figure spiking to nearly $4 per share annually at $4.25 gas (current prices around $3.90), and the way these things go, even that should prove conservative as the firm outpaces efficiency targets. We would say the one negative here is debt ($8.1 billion of net debt, though that’s falling rapidly), which is eating up a lot of that free cash flow for now—but big picture, the company looks like a cash cow even in the current environment, with huge upside should natural gas prices rise and stay up, likely leading to bigger payouts (current dividend 1.1%) and share buybacks down the road.

Technical Analysis
Like its natural gas peers, EQT topped in 2022 and spent most of the next couple of years meandering sideways-to-down before a fresh uptrend emerged after the market bottom last August; in fact, the stock made it all the way back to multi-year highs in January. Things got hectic after that, but overall, EQT held up well given the market maelstrom, and after a few weeks of very tight action, shares popped to new highs last week. Short-term volatility is obviously possible, but we’re OK taking a swing at it around here or on dips, with a stop in the low 50s.

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Stock 7

Insmed (INSM)

Why the Strength
Insmed is focused on the development and commercialization of therapies for patients with serious and rare diseases, primarily related to the lungs. Its main commercial offering, the inhaled antibiotic Arikayce, treats two types of lung disease—mycobacterium avium complex (MAC) and non-tuberculous mycobacteria (NTM)—in adults with limited or no treatment options, and it’s also developing therapies for other serious lung conditions, including pulmonary hypertension and bronchiectasis. Earlier this month, Insmed announced that TPIP, its experimental therapy for pulmonary arterial hypertension (PAH), reached the primary endpoint and all secondary efficacy endpoints in its Phase II study. The company plans to meet with the FDA to decide on a design for a Phase III trial, which it expects to begin in early 2026 for patients with PAH. Meanwhile, the company’s Phase III trial for pulmonary hypertension linked to interstitial lung disease (PH-ILD) is anticipated to start later this year (with the enthusiasm over both studies the source of the latest strength). Meanwhile, Insmed has already submitted a new drug application for Brensocatib, its lead pipeline candidate for non-cystic fibrosis bronchiectasis, with a target action date for review of this drug expected by August 12—and with international regulatory reviews for the drug progressing, with potential approvals in Europe, the U.K. and Japan in 2026. In Q1, the firm saw estimate-beating revenue of $93 million that increased 23% year over year, led by Arikayce achieving double-digit growth across all regions, including an impressive 50% growth in Japan and Europe. (U.S. revenues grew by 14% compared to the prior year.) Meanwhile, the per-share loss of $1.42 missed estimates by eight cents, but the market overlooked it due to the strength of Arikayace revenues, plus the progress in its mid-to-late-stage clinical programs. Going forward, Insmed is preparing for Brensocatib’s launch, and with current cash holdings amounting to $1.2 billion, it has plenty of dry powder to get the treatment off to a good start. Analysts expect 30%-ish top-line growth this year, with revenue expected to more than double in 2026 to nearly $1 billion.

Technical Analysis
After spending more than two years in a narrow base between 18 and 30, INSM broke out last May after the company reported that Brensocatib had reached the main goal of its Phase III trial. Shares rallied further before meeting resistance at 80 later that summer, then spent the better part of a year moving sideways with support at 60. Now, INSM is ripping ahead again after the latest trial data for its hypertension drug. If you want to take a swing, we suggest aiming for a pullback.

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Stock 8

Jabil (JBL)

Why the Strength
Contract electronics manufacturer Jabil is a leading provider of engineering, manufacturing, supply chain and product management services to a wide range of industries. Its best-known customer is Apple, for which Jabil has historically made key components used in Apple’s iPhones, MacBooks and other popular products, providing the enclosures, casings and precision mechanical assemblies. More recently, however, Jabil has been reducing concentration of major customers like Apple (the top five of which have historically accounted for over 40% of annual sales) in order to diversify its reliance and revenue streams. A big part of this shift is the firm’s expansion into AI data center-related offerings through its Intelligent Infrastructure segment (which was created last year and implemented in fiscal 2025 as part of a strategic reorganization). The new business is focused on areas that support the AI revolution, such as cloud and hyperscale data center infrastructure, AI server and networking hardware, power and thermal management systems and high-performance computing. That pivot has paid off handsomely for Jabil, as shown by last week’s fiscal Q3 (ended May) report, which featured eye-opening top- and bottom-line beats that contributed to the latest strength. Revenue of $7.8 billion jumped 16% from a year ago, a huge turnaround from recent quarters, with earnings of $2.55 a share beating estimates by 24 cents. The bullish results were led by “significant upside” in Intelligent Infrastructure—particularly the segment’s AI-related revenue, along with cloud infrastructure sales—contributing to a 51% improvement from last year’s Q3 and “well ahead” of the company’s expectations. The firm said capital equipment was also strong in the quarter as the need for testing gear remains “robust,” with additional contributions from the connected living end market. But AI remains the driver of investor perception here as management emphasized that demand for AI hardware is not slowing down but, “if anything, it’s accelerating,” prompting Jabil to announce plans for a new site to support AI data center infrastructure demand in the Southeastern U.S. (expected to be operational by mid-2026). Analysts see earnings growth picking up steam in fiscal 2026 (which starts in September), up 14%, though most see that as conservative.

Technical Analysis
JBL had a long base-building effort from March into December of last year, when a breakout led to a solid run of a few weeks. But the market implosion earlier this year pulled shares down sharply, with the stock falling as much as 38% into the April low. The snapback into mid-May was impressive, though, and JBL actually nosed to new price highs—and then last week saw the stock mushroom on a few days of big volume. We’re not chasing it here, but a normal exhale should be buyable.

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Stock 9

Shake Shack (SHAK)

Why the Strength
For a firm with a great underyling cookie-cutter story, Shake Shack had trouble making consistent progress for many years—but a management shakeout two years ago (hiring the former Papa John’s CEO) with a renewed focus on efficiency (not just rolling out new stores at any cost) has bolstered earnings and investor perception. Of course, the core offerings haven’t changed: Shake Shack is known for essentially being a roadside burger shack, with tasty burgers, chicken sandwiches, fries, shakes and more, with a cult-like following from its launch many years ago that encouraged a very rapid store expansion plan that continues to this day—in Q1, the firm ended with 589 locations (generally company-operated stores in the U.S. and licensed locations overseas), up 12.2% from a year ago, though that includes 79 new openings as well as 15 closures as the top brass raises its profit standards. Frankly, same-store sales have always been hit or miss, and Q1’s weather and macro pressures contributed to a mundane performance (up just 0.2% from a year ago), but the focus has been on the firm’s improving margins and bottom line, and those positives continued in the quarter: EBITDA grew faster than total revenue, while restaurant-level profit margins of 20.7% were up nicely from 19.5% a year ago as input and labor costs fell as a percent of revenue. And the thinking is there should be a lot more where that comes from—while not identical businesses, a successful outfit like Chipotle has pre-tax margins in the 15% to 20% range, compared to Shake Shack’s 3% to 5%, which means there should be lots of room for improvement if management continues to pull the right levers. Analysts see earnings up more than 40% this year and another 25% in 2026.

Technical Analysis
SHAK had been having a stair-step-type advance for a while, often with big earnings gaps higher accounting for most of the upmove, with some multi-month rest periods along the way. But after hitting 140, the stock’s dip during the market’s plunge this year was very sharp (48% deep), sending the stock to its lowest level since February 2024. Frankly, the bounce initially was just OK, but the Q1 report kicked off a persistent run back into the 130 area, and now SHAK has traded in a tight-ish range for three weeks before today’s pop. You can enter here, though we’d prefer to see a shakeout of a few points as recent breakouts have tended to run into some near-term selling.

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Stock 10

TransMedics (TMDX)

Why the Strength
In the five decades since organ transplants were pioneered, the method of transporting organs from donor to recipient was very low-tech, involving some version of putting the organ in a ziplock bag and putting it in a cooler on ice. That meant organs depended on speed of transit—before the ice melts and suffered tissue damage, along with general difficulty in getting the organs to work again because they have effectively been dead since donation. TransMedics has revised how donor organs are transported, preserving the organs’ functionality by infusing them with a special circulating blood-based cocktail, essentially keeping the organs alive—hearts beat, lungs breathe and livers and kidneys produce bile and urine, respectively. The innovation means TransMedics can utilize 85% of organs that would be rejected under traditional methods, dramatically increasing the availability of donations, with data showing roughly a halving of post-surgery complications among recipients. Today the company is north of 20% U.S. market share, which should produce 2025 revenue of $580 million, with earnings per share of $1.84. Management thinks getting to the 10,000-organ level is possible within a few years (possibly capturing more than 50% market share in the U.S.), with further growth here and overseas after that. Key to that is second-generation technology TransMedics is developing for hearts and lungs, which it believes will raise acceptance levels of those organs to close to the 98% level it has achieved with livers. It’s in agreement with the FDA on conducting trials for the technology. A recent short-seller report attacking TransMedics’ technology didn’t convince customers—revenue and profits handily rose in the first quarter (earnings of 70 cents doubled from a year ago and beat expectations by 44 cents!) and management says it can double flights of its 21 aircraft to meet rising demand. Earnings should continue to power ahead for many quarters to come.

Technical Analysis
TMDX has made progress over time but with some horrific dips along the way, including a plunge from 177 last fall to 55 in January. But the stock did show relative strength during the market’s waterfall decline, and the stock got going after the market bottom in April, with earnings in May adding juice to the rally. That said, TMDX hit another pothole last week as some legal uncertainties flared up, with the stock dipping sharply. But coming after the big rally in recent weeks, the dip looks normal—we’ll look to enter on a resumption of the upmove.

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Previously Recommended Stocks

The next Cabot Top Ten Trader issue will be published on June 30, 2025.

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