Cabot Top Ten Trader Issue: May 12, 2025

Top-Down Evidence Continues to Improve; Leadership Hard to Spot

There’s no question that, from a top-down perspective, the evidence has continued to improve over the past few weeks: It started with true panic selling in early April that caused sentiment to tank (it’s still very bearish, which is a good thing); then we saw the Three Day Thrust signal on April 24; last week brought a green light from our intermediate-term trend model; and today saw the market surge as the U.S. and China slashed tariffs on each other. That said, even with today’s run in the indexes, leadership is hard to spot—many names that approach old highs are rejected, with the buying focused on beaten-down names for the most part. Again, that’s not bearish per se, but it does mean making (and keeping) money is more difficult, as stocks tend to rally only for a time before big investors rotate into something else. Don’t get us wrong: We’re encouraged and extending our line, but we’re doing so slowly until some real leadership develops. Our Market Monitor stands at a level 6.

This week’s list has a mix of names from different sectors and with some at different areas on their charts—some emerging from lows, others at new highs, and still others that are set up nicely. Our Top Pick is Insulet (PODD), which staged a classic gap to new highs after earnings last week. We’re fine starting small here or on dips.

Stock 1

APi Group (APG)

Why the Strength
Despite economic and tariff-related uncertainties, the domestic construction industry is expected to remain strong through 2025 (although at a slightly lower pace than previous years). Minnesota-based APi Group is a holding company with significant exposure to the overall sector, but with the added benefit of having multiple end markets through its ownership of independently managed life safety and specialty construction outfits. Its Safety Services division provides end-to-end services for occupied premises, including fire protection (alarms, sprinkler systems and the like), plus HVAC and entry systems, while the Specialty Services division provides a range of offerings to the energy industry, including pipeline infrastructure, access and road construction and other supporting facilities. On the fire protection front, APi enjoys a leadership position in a fragmented market, with a 5% share of the total U.S. market, and it’s also a top name in the broad commercial security and life safety spaces, with all three markets providing steady recurring revenue streams. (Government testing and inspection standards for many of APi’s installed products also provide a steady revenue stream across several markets.) The stock’s latest show of strength was all about earnings, with the recent Q1 report showing continued steady expansion. Revenue of $1.7 billion increased 7% from a year ago, and earnings of 37 cents a share increased 9% and came in a penny ahead of estimates. Significantly, APi continued to surpass expectations on the EBITDA front, reporting another quarterly record at $193 million (up 10%), while EBITDA margin increased to 11%. By segment, Safety Services revenue of $1.2 billion increased 13%, with inspection revenue in North America growing double digits for the 19th consecutive quarter. Specialty Services sales of $453 million was 7% lower, but a 7% organic pickup in backlog is expected to drive growth for this segment in the next quarter. Looking ahead, management guided for full-year EBITDA of around $1 billion (up 11% if realized), with a targeted margin of 13% at the midpoint. Wall Street sees 2025 top- and bottom-line growth of 7% and 13%, respectively.

Technical Analysis
An 18-month rally in APG hit a wall of resistance at 40 last April, which led to a long 13-month holding pattern. The stock spent the next year alternating within an eight-point range, with 32 serving as the floor. This level was tested several times over the last few months, holding up against multiple selling efforts—including most recently the market-wide plunge in early April (it nosed below that level but quickly snapped back). But that event proved to be the bottom for APG, which quickly turned the corner and zoomed higher, with shares later breaking out of the trading range following the strong earnings. We think a normal pullback would offer a worthwhile entry point.

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Stock 2

Axon Enterprise (AXON)

Why the Strength
Most of the growth leaders of last year are still buried miles south of their old highs, even after the latest rally—but Axon Enterprise has been an exception as its long-term growth story continues to play out. The big idea here is that Axon’s ever-growing platform is the clear leader in helping law enforcement dramatically boost productivity and safety: Axon got its start with its Taser electrical weapons two decades ago, and those are still selling well today (revenue up 19% in Q1), but the big potential comes from the newer array of offerings, from body and dash cameras to Evidence and Records software modules (stores, analyzes and edits all the video captured; Axon’s clients upload more video each month than YouTube!) to operations help (Fleet and Dispatch cloud products) and even AI offerings, such as DraftOne (produces incident reports from recorded audio and video, saving tons of time; 30,000 users have signed up already, making it the fastest-adopted software product in the firm’s history) and Axon Assistant (launching later this year and integrated into body cameras, it will offer real-time translation and policy chat services for officers in the field). Even better, nearly everything (including Taser sales) is offered via subscription (96% of revenue is from some sort of subscription), creating a steadily increasing stream of business—and even among state and local enforcement, Axon thinks it’s penetrated just 15% of the market to this point, so the runway remains long. Growth here remains rapid and at scale: In Q1, not only did sales rise 31%, but annualized recurring revenue lifted 34% and same-customer revenue growth came in at 23% (as departments add more of Axon’s capabilities). Meanwhile, the bottom line is surging, with EBITDA up 42% (nearly a 26% margin), and there’s plenty of business already booked that is coming its way ($9.9 billion of future contracted revenue, up 41%). The top brass hiked its full-year outlook, too. While growth may slow a bit as Axon gets larger, there’s no reason the company’s offerings won’t see rising demand for a long time to come.

Technical Analysis
AXON built a tidy five-month base in the middle of last year before breaking out on earnings in August and embarking on an excellent run into early December (with the help of another huge earnings reaction in November). The 700 level rejected the stock twice, though, leading to a huge dip in February, though AXON started to find support right away and held its 40-week line, which was far better than most stocks—and now shares have raced back toward their old highs. Given that most stocks are backing off after testing resistance, we advise entering on dips.

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Stock 3

Comstock Resources (CRK)

Why the Strength
Comstock is a growing independent player in the exploration and production of natural gas, primarily in the prolific Haynesville shale formation in North Louisiana and East Texas, though it also operates in other basins across several Midwestern and Southwestern states, as well as offshore in the Gulf of Mexico. Gas accounts for the vast majority of Comstock’s production (around 99%), and with natural gas prices mostly holding well above the dry times of the past couple of years (around $3.65 today, compared to mid-$2 for most of 2023 and 2024), and with higher consumption and lower inventories, the company is well positioned to benefit as prices could easily rise further. Driving those trends are a combination of factors, including increased industrial demand and an accelerating shift from coal to natural gas for electricity generation. Gas price strength was a key reason for Comstock’s strong start to 2025, with Q1 featuring a 53% year-on-year increase in revenue, to $513 million, plus earnings of 18 cents a share that surprised by two cents. A highlight of the quarter was the completion of its key Olajuwon well in the highly productive Western Haynesville shale in Texas, with the well reaching an initial production rate of 41 million cubic feet per day (considered a significant achievement by industry standards). In the earnings call, the company noted that it owns 520,000 net acres in the Western Haynesville area, with “high potential” for thousands of future drilling locations, and with midstream development for these assets currently underway. Management believes a “golden age of natural gas” is underway, and it’s seeing continued demand growth for liquified natural gas (LNG) exports, along with gas to support utilities, data centers and industrial users, providing it with steady contracts to be a future supplier for several new customers. Moreover, the firm’s reserves near the Gulf Coast are expected to serve Comstock “well into the next decade.” Going forward, analysts expect the top line to jump 42% this year and 20% next, driven mainly by the firm’s Western Haynesville assets. A 2.1% dividend yield is an added attraction.

Technical Analysis
CRK went through the wringer with the entire group in 2023 and then spent months in a sloppy bottoming phase last year, but it broke out from a proper structure in November and had a great run, zooming to 22 in January before hacking sideways for the next three months. The action was wild, but the damage was limited, and CRK steadied itself in April and, last week, moved out to new highs. We’re OK starting a position here or (preferably) on dips.

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Stock 4

Coupang (CPNG)

Why the Strength
Known as the “Amazon of South Korea,“ Coupang is one of that nation’s leading e-commerce platforms, featuring same-day (or next-day) delivery for millions of items, including apparel, fashion and beauty products, electronics and fresh groceries. It’s also popular in other Asian markets like China and Hong Kong, with recent expansions into Singapore, Malaysia and Japan (where it’s focused mainly on food delivery through its Coupang Eats service). The company impressed across a number of key metrics in Q1, led by revenue of almost $8 billion that grew 21% on a currency-neutral basis, while gross profit was up 31% and EBITDA boomed 36% (margins are surging here), while accounting earnings (which recently turned positive) lifted 20% and easily topped estimates. The Seattle-based company (it relocated its headquarters to the U.S. in 2022) reported solid results across all its business segments, with Product Commerce sales rising 16%, and Developing Offerings (including Eats, Play, Fintech, and Farfetch) soaring 78% to $1 billion. During last week’s earnings call, the company also highlighted its generation of $1.5 billion in adjusted EBITDA and over $1 billion in free cash flow over the trailing 12 months; it also announced a $1 billion share repurchase program as part of its broader capital allocation strategy. The top brass further noted that it’s focused on expanding Coupang’s signature Rocket Delivery service to provide more customers with hyper-fast delivery across a greater product selection, which it said creates a “virtuous cycle” of increasing customer loyalty and spending, while also expanding partnerships with major global suppliers (including most recently Coke, Pepsi and P&G). Looking ahead, the company projects 20% currency-neutral revenue growth for 2025, based on “stable consumer behavior” and macroeconomic conditions, and it sees its investments in the Taiwan market as being a key long-term growth driver. Wall Street expects earnings to grow 36% this year and boom further in 2026.

Technical Analysis
CPNG had a nice run from major support near 13 in early 2024 to 27 or so last fall before stalling out; it commenced a multi-month slide that took the stock just under the 40-week line in January, and, after a rally phase, a nosedive to 19 as the market cratered. But CPNG snapped back on higher volume initially, which is a good sign, and last week’s Q1 report brought shares back to their old highs. We’re OK buying some here with a stop under 23.

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Stock 5

Insulet (PODD) ★ Top Pick ★

Why the Strength
Insulet has been a great growth company for years (it’s posted 20%-plus sales growth eight straight years) thanks to its Omnipod line of insulin pumps (or, as the company calls them, automated insulin delivery systems); it has north of half a million active customers, including 365,000 or so for its latest device (Omnipod 5) that’s the first and only U.S. pump that’s tubless and waterproof, allows for a variety of sensor integrations, can be controlled from your phone—and, of course, drastically improves the amount of time a patient’s insulin levels are in the proper range. Most important, though, is that Omnipod 5 is the first pump approved in the U.S. for both Type 1 and Type 2 diabetics (Type 2 is basically unpenetrated), and the firm sees an addressable market of around 14 million patients, so the upside here is huge even as it’s already the #1 player in the market. (In fact, a whopping 85% of new customers in Q1 came from those that didn’t have a pump beforehand, so there’s huge amounts of whitespace out there.) The stock has been resilient for months and just hit new highs after the Q1 report topped expectations: Currency-neutral sales rose 30% with U.S. (up 26%) and international (up 36%) Omnipod sales both doing well, while operating margins surged 3.5 percentage points and earnings of $1.02 per share were up 67% and topped estimates by a huge 23 cents per share. Helping the cause is a rash of international launches (nine so far this year in Europe and Canada) and the fact that it’s quickly gaining traction in the rarer Type 2 market (30% of new customer starts in the quarter were Type 2). Management hiked guidance across the board (21% or so revenue growth for the full year, which is likely conservative) and sees margins heading higher, too. It’s a great medical story.

Technical Analysis
After going through the wringer in 2023, PODD built a nice eight-month base and broke out on the upside in August of last year, leading to a solid push to the 280 area in November. While shares nosed higher a bit later, they never really got going, leading to a 21% dip with the market earlier this year. Still, the stock was clearly showing relative strength by holding its 40-week line, and while the action off the lows was a bit sluggish, it looks like last week’s earnings move was decisive, with a move to new highs on the heaviest daily volume since late 2023. We’re OK taking a swing at it here or (preferably) on dips.

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Stock 6

Royal Gold (RGLD)

Why the Strength
Precious metals royalty and streaming giant Royal Gold (covered in the March 10 issue) got off to an excellent start in 2025, helped in no small part by rising gold prices, but also thanks to an expansion of its streaming portfolio in the first quarter. The outfit acquired an incremental streaming interest in the Xavantina underground gold mine in Brazil from Ero Copper in Q1, which increased Royal Gold’s exposure to the asset. Additionally, Royal achieved full repayment of the advance stream deposit (initiated in 2015) from the New Gold-owned Rainy River mine in Canada. Royal Gold also impressed on both the top and bottom lines in Q1, reporting a 30% year-over-year revenue increase, to $193 million, driven by higher metal prices and “consistent portfolio performance,” with sales volume of 670,000 gold equivalent ounces. (Gold contributed approximately 75% of total revenue, with 53% of revenue coming from the U.S., Canada and Australia.) Earnings of $1.51 per share increased 66% and beat estimates by 12 cents, with EBITDA of $159 million jumping 36% (with a ridiculous margin of 82%). Additionally, the company just reiterated its strong dividend policy after its first payout (a 1% yield) for 2025, marking its 24th consecutive annual increase and making it the only precious metals company in the S&P High Yield Dividend Aristocrats Index. For the rest of 2025, the company expects that its expansion efforts for the Canadian gold/copper Mount Milligan mine stream (35% of gold production and 19% of copper) may yield a 10% increase in mill capacity, with pre-feasibility results anticipated in Q3. Meanwhile, for its Andacollo (Chile) and Pueblo Viejo (Dominican Republic) streams, improved production and recovery rates are expected later in the year. Management further reiterated that liquidity remains strong, with $1.3 billion currently available for strategic initiatives, including acquiring new stream and royalty interests. Analysts expect 20%-ish top-line growth this year and next with surging earnings, which should prove too conservative if gold prices (particularly those above $3,000 an ounce) remain elevated.

Technical Analysis
We booked a small profit in RGLD in late March, exiting the trade based on the stock’s relative underperformance versus some of its gold mining peers. But the stock handled the market’s April implosion very nicely, and then volume came out of nowhere, with the stock zooming to a new high near 190 on some of the biggest weekly volume since 2020! Moreover, shares rested normally since, testing and holding the 25-day line, though today’s action (after good news on the trade front) was weak. Even so, we like the setup—we’ll set our buy range up from here, thinking a snapback after today’s dip will lead to another run.

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Stock 7

Rubrik (RBRK)

Why the Strength
Rubrik is a data security company focusing on defending an enterprise’s information against cyberattacks, but it’s also a leader for business continuity and data recovery if such attacks are successful—the combination of the two is dubbed cyber resilience and is a big driver of spending in the sector today. Not surprisingly, there’s big demand for Rubrik’s offerings—even though spending on protection continues to go up, cyberattacks are more frequent and costly than ever, so businesses need to assume they will suffer a breach from an attack and have to design systems to contain them, in addition to having the first walls of defense. That demand is being sped up by the quickening embrace of the cloud and AI, which can sweep up reams of unstructured data, potentially exposing sensitive information that was safely siloed before. Rubrik also says it assists businesses in recovering from cyberattacks up to 98% faster than in-house tools, recovering and walling off data swiftly, sometimes within a few hours. Management says because they are still a relatively young company—12 years old and public for just over a year—its systems aren’t burdened with legacy structures that need extensive tech workarounds for security, making Rubrik a contender to replace more established providers. The end result is rapid growth: In its Q4 (ending January), Rubrik’s annual recurring revenue, its preferred metric given contracts are multiyear, hit $1.09 billion, up 39% year over year, with the number of enterprises paying the firm $100,000 or more annually touching 2,247, with 162 of those $1 million-plus ARR customers, the latter group up 64%. For the current fiscal year, management says ARR should come in around $1.355 billion, up 24%, with traditional revenue around $1.55 billion, though that will probably prove conservative. The bottom line is the in red, but like a lot of subscription-heavy outfits, that understates the bottom line; free cash flow has been in the black in recent quarters and should total something like 29 cents per share this year, though again, we’d guess the figure ends up much higher than that. The decelerating growth estimates are worth monitoring, but we think the underlying story here is terrific.

Technical Analysis
RBRK originally changed character in October, breaking free from a big post-IPO base and galloping up to 75 after a big December earnings gap. Shares have been very up and down during the market’s downturn, with a big drop from 80 to 51, then a surge back to 76 after the March quarterly report—but that was followed by a retest of the prior low before the latest persistent advance back toward its highs. Overall, we like the relative strength, but most stocks have been backing off when testing resistance, so we’ll set our entry range down a bit from here.

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Stock 8

Toast (TOST)

Why the Strength
Timing is everything in the market, and after three years of correcting, consolidating and setting up from its IPO, we think the time may finally be right for Toast, which has all of the characteristics of a leader. As we wrote recently, Toast is the cloud payments leader for the gigantic restaurant sector (860,000 locations in the U.S. and of course millions more overseas), but it’s really much more than that, as its platform is essentially a one-stop shop for a restaurant to operate its business, manage its staff, attract and retain customers, get financing and much more; based on the numbers (see below) and the fact that 20% of subscribers come in on word of mouth alone, it’s obvious that its offerings are top notch. Encouragingly, while small and mid-sized U.S. restaurants are the core business, the firm is branching out into food and beverage retail, international and enterprise customers (it won deals with Applebee’s and TopGolf in Q1)—it serves 140,000 locations overall, but expects 10,000 locations in these newer verticals by year-end. Business has been great for a while, and the Q1 report continued that trend: While sales were up “only” 24%, annualized recurring revenue lifted 31% from a year ago (both payments and subscription recurring revenue rose in the low 30% range), while location growth was 25% and it sees a record number of new additions in the current second quarter. (Overall, Toast thinks it has just 10% of its current addressable market of about 1.4 million locations.) And the bottom line is booming, with EBITDA up 133% and free cash flow of around 12 cents per share (this metric is low in Q1 and should grow nicely from here). Just as important, the top brass said it’s not seeing any signs of customer degradation due to the economic uncertainty. While there is some competition, at this point we think it’s mainly about execution—if management makes the right moves, there’s no reason why Toast can’t continue to post rapid and reliable growth for years to come.

Technical Analysis
TOST looked it was ready for great things last September, when it started to break out from an endless consolidation and then shares zoomed higher after earnings, with three straight big-volume buying weeks. However, the stock topped out near Thanksgiving and then was walloped with the market into April, falling 36% in total. However, TOST began to snap back immediately from the low, and last week’s bullish earnings reaction brought the stock back to its prior highs. We’re OK with a nibble here or on dips, and possibly averaging up if it gets off to a good start.

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Stock 9

Trane Technologies (TT)

Why the Strength
Robust demand in North and South America for commercial heating, ventilation and air-conditioning (HVAC) is setting new records across multiple performance metrics for Trane. The global interior climate and refrigeration business leader is benefiting from continued strength across multiple commercial sectors, but mainly from data centers, high-tech industrial and healthcare, which is boosting the company’s backlog and laying the foundation for “sustained momentum throughout 2025.” The elevated bookings in Trane’s commercial HVAC business set a new record in Q1, further increasing the backlog (up $400 million from Q4), with enterprise-wide backlog of $7.3 billion increasing by around $500 million from year-end and with a book-to-bill ratio of 1 or more across all segments and businesses (translation: it’s getting orders faster than it can fill them). Total revenue of $4.7 billion increased 11% from a year ago, with per-share earnings of $2.45 beating estimates by 25 cents and continuing a trend of what Trane called “industry-leading EPS growth.” Aside from the strength in the commercial business, the company reported solid growth in its U.S. Residential segment in Q1, with bookings and revenue both up by mid-teens percent, while Transport refrigeration revenue was up mid-single digits and “significantly” outperforming end markets. Elsewhere, the firm’s Asia Pacific business showed “resilience” with balanced results between China and the rest of Asia, while other Asian markets were up by double digits in both revenue and bookings. For 2025, Trane expects to deliver revenue growth of 10% or higher, continuing a years-long trend of solid results (U.S. business up 50% in three years, including this year’s projection). Wall Street sees mid-teens growth in the bottom line both this year and next.

Technical Analysis
TT had a big, mostly persistent run higher from late 2023 into November of last year before the buying pressures dried up; shares dipped below their 10-week line in December and below their 40-week line in February, on their way to a low near 300 (off about 29% from the highs) with the market in April. The initial bounce was just OK, but the earnings reaction two weeks ago was great, with TT rising further since then as it tests its old highs. We’ll set our buy range down from here, thinking a normal exhale could be coming.

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Stock 10

TransMedics (TMDX)

Why the Strength
TransMedics is a medical organ transportation business that’s claim to fame is its cutting edge technology for preserving liver, heart and lungs in transport. Traditional donor organ harvesting flushes organs with a pharmaceutical solution, then puts the organ into a plastic bag on ice and moves it into a cooler, causing a lot of damage to the organ; the end result is that most donated organs end up being unusable. TransMedics has a better way, with its OCS system keeping lungs, hearts and livers alive during transportation through special components that infuse the organs with blood and provide circulation in a way that nearly mimics the body. In January, a short seller hammered the company after claiming OCS was meritless and that the business was trafficking unusable organs. Quarterly results announced last week resoundingly showed the medical community doesn’t believe the accusations, with TransMedics’ revenue rising 48% in the period to $144 million, while also positing a net profit of $0.70 per share, double the year-ago period, with no weakness under the hood around pricing. Greater demand for organ transplant services led sales growth, while greater utilization of TransMedics’ own fleet of 21 aircraft helped margins—the business covered 78% of its organ transports and management intends to start flying the aircraft twice a day as much as possible to maximize usage before adding more planes to its fleet. Management says it’s in agreement with the FDA on trials for the next generation of its heart and lung OCS, which both bodes well for future revenue and also will provide revenue during trials as well. To be fair, growth is expected to slow here despite the good vibes, with full-year revenues seen up 30%, with growth supposedly slowing to 23% by Q4—but the company often trashes estimates, so we’re not reading too much into that. Indeed, while organ donation can be volatile on a quarterly basis, management is confident enough in the full-year outlook that it raised its guidance by 6% last week, and its operations still account for a small fraction of the total market, so there should be lots of long-term growth potential.

Technical Analysis
TMDX can be wild, with huge drops in the second half of 2023 (down more than 60%!) and then this year’s short seller attack saw the stock plummet nearly 70%. But after the implosion, the stock started to find support in the 60 area near the turn of the year, resulting in a solid bottoming formation—and TMDX broke out from that just days after the market’s low in early April, which is certainly a bullish clue. Even better, last week we saw the stock catapult back over the 200-day line and the century mark on earnings. It’s not a typical Top Ten chart, but we think modest dips from here would be tempting, with a loose stop in the low 90s.

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Previously Recommended Stocks

The next Cabot Top Ten Trader issue will be published on May 19, 2025.

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