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It hasn’t been smooth, of course, but the market’s evidence has improved a bit during the past six or seven weeks. The way we look at this is that the market has put itself in a position to do something positive in the intermediate-term—but it still has to actually do it, meaning show enough strength to turn the trends up and see more stocks break out and follow through to higher prices. Right now we remain in watch and wait mode: We’re keeping our eyes open, but it’s best to remain defensive until the bulls show us more.



This week’s list is again heavy on biotech and Chinese names, though we’re also seeing some strength in a few new (but smaller and sometimes less liquid) growth names. Our Top Pick is a unique medical-related outfit whose stock is changing character for the better.

It doesn’t take a proprietary timing system to know the trend is down—we’ve been cautious and defensive since late February when the market and leaders first went over the falls, and we remain so today. That said, we’re also students of the market, and there’s no question we’re in the midst of an outright panic, with some truly extreme readings (north of 1,000 new lows on the NYSE on Friday and today; 95% of the S&P 1500 below their 50-day lines, etc.) that have a history of showing up near some sort of market low. That’s not a reason to turn bullish—again, the trends are clearly down—but it’s best to keep your head up and stay alert should some actual “good news” hit the wires. We’ll leave our Market Monitor at a level 3.

This week’s list is chock-full of defensive growth stocks—firms that have steadier growth stories that shouldn’t be affected by the tariff or economic headwinds. Our Top Pick is showing great relative strength and has a huge runway of growth ahead.

After a horrid start to the week, the market actually began finding support last Tuesday and has bounced a bit since. To us, it’s a baby step, and ideally the start of a near-term rally phase that will allow us to not just judge the strength of any recovery efforts, but to also see if any fresher growth stocks per up. However, for the here and now, the intermediate-term trend of the major indexes and vast majority of stocks is pointed down, so we’re remaining mostly in our bunker. If we do see some upside follow-through this week, we could become a bit more optimistic but we’ll wait to see if that happens.

This week’s list is another hodgepodge, with some zingers, some defensive titles and a name or two that are dancing to their own drummer. Our Top Pick has a unique story, and now perception is increasing as demand and pricing picks up.

First off, some housekeeping: This is our last Top Ten issue of the year, as next Monday is the second of two “off” weeks we have all year. We will, however, send out a full Movers & Shakers update next Monday (December 29) to keep you up to date. Most important, we wish you and your family a very Merry Christmas and Happy Holidays.

As for the market, the five-day dip into last Wednesday was a downer, but it looks like a year-end rally is underway, with the indexes and many stocks lifting nicely of late. Of course, looking ahead, early January is usually very tricky, though as always, we’ll just take it as it comes: Today, we continue to see more good than bad out there, though it does depend on where you look, with cyclical and financial areas doing well while growth areas are picking up steam but lagging. We’ll nudge our Market Monitor up to a level 7, respecting the action, but focusing on what’s working remains paramount.

This week’s list is again well balanced, with some strong names continuing their moves and other titles emerging after long rest periods. Our Top Pick has many industry-wide and company-specific tailwinds, and the stock looks to be changing character as it discounts a much brighter future.

The big-picture market outlook remains very bullish in our view, but there’s no question we’re seeing more potholes, with more stocks and sectors chopping sideways in recent weeks—and then, last week, we saw sellers step up. Of course, today’s bounce was encouraging, but the odds of a volatile rest period are growing given the prior extended run. Right here, we’ll leave our Market Monitor at a level 7, though we’re mostly taking things on a stock-by-stock basis.

The best news from the last week came from earnings season, where there were a large number of positive earnings reactions among names with solid stories and numbers. Our Top Pick is a well-run company, and now growth is strong as AI demand ramps.

Welcome to our 2025 TOP PICKS issue! Our Cabot analysts have kindly shared their top stock ideas for this year. And you’ll find that they include a variety of companies that should be attractive to investors of all styles—growth, value, dividend payers, and companies on the cusp of turning around—as well as small, mid, and large-cap stocks. I hope you’ll find one or more to your liking!

But first, let’s take a look at the economy and the markets and talk about what’s in store for this year.

As earnings season unfolds, I’ll be very interested to learn more about the broader capital expenditure landscape. Americans haven’t experienced such a strong economy in many years. And frankly, younger adults have never experienced a strong economy!

Current Market Outlook


It looks as if the first “test” of the nascent uptrend has arrived; the major indexes have barely been dented, but under the market’s hood, we’re seeing something of a rolling correction, with a couple of sectors getting hit every day, and with a few stocks breaking down. The next few days will probably be where this rally’s rubber will meet the road—to this point, the selling has been normal (even expected) given the month-long rally from the mid-October lows. Thus, we remain bullish, but we’re also keeping a close eye on the action, both to judge the market’s health and to identify stocks that are setting up new entry points.

This week’s list has a nice array of stocks of varying sizes and from different sectors. We like many of them, but we’re going to go with Sierra Wireless (SWIR) as our Top Pick—it’s a bit speculative, but has a powerful chart and huge numbers, and any shakeout could create a nice buying opportunity.

Stock Name	Price	Buy Range	Loss Limit
Taser (TASR)	0.00	19-20	16-17
Sierra Wireless (SWIR)	0.00	34.5-36.5	29.5-30.5
NetSuite, Inc. (N)	0.00	105-108	96-98
Leggett & Platt, Incorporated (LEG)	49.79	39-41	35-37
Health Net (HNT)	0.00	48-50	44-46
Electronic Arts (EA)	0.00	40-42	37-38
Dexcom (DXCM)	421.36	50-53	45-46
CyberArk (CYBR)	111.74	39-43	33-34
Ambarella (AMBA)	52.79	47.5-48	43-44
Apple (AAPL)	248.94	108-114	100-103

Current Market Outlook


First and foremost, with the virus now affecting most everyone, all of us here at Cabot are hoping you stay safe (and if you’re home with your kids, sane!). As for the market, there’s not much to say except the obvious: We remain in a very steep selloff, with bounces limited to a couple of hours, though we’re seeing such crazy extremes (price and sentiment) that a near-term low is possible at any time. Our advice really hasn’t changed despite the once-in-a-lifetime action of the past couple of weeks: You should remain cautious, holding plenty of cash and keeping any new buying on the small side. Eventually, there will be huge opportunities, but we need to see the market and potential leading stocks find support before thinking a workable low could be in.

In the meantime, we’re mostly focused on eying stocks that are showing some resilience—if something can hold up in this disaster, it’s definitely worth at least keeping a close eye on. Our Top Pick is Masimo (MASI), which could be a port in the virus storm.

Stock Name	Price	Buy Range	Loss Limit
Acceleron Pharma (XLRN)	75.11	71-75	64-66
Apple (AAPL)	248.94	238-248	217-223
Bilibili (BILI)	28.71	23.5-25	21-21.5
DocuSign (DOCU)	107.98	70-74	63-65
Equinix, Inc. (EQIX)	547.73	538-550	505-510
FTI Consulting (FCN)	120.09	112-116	103-105
Inphi (IPHI)	120.16	62.5-66	56.5-58.5
Masimo (MASI)	159.56	172-177	157-160
Repligen (RGEN)	91.34	83-86	75-77
TAL Education (TAL)	50.49	47-50	42-43.5

The overall market remains in an uptrend, as do most leading stocks, and that’s why we remain mostly bullish. But while we’re positive, we’re not pounding the table, partly because of some secondary measures (most broader indexes haven’t hit new highs in a month) but mostly because individual stocks aren’t offering up many great entry points. Tonight, then, we’re again standing pat, happy to ride our winners but monitoring earnings season closely, both for stocks we own and for those we want to buy.

In tonight’s issue, we go over a few new ideas, including a couple of IPOs from last year that were nailed but are now coming back from the dead; they could be morphing into leaders. And as usual we go over all of our current holdings and our updated watch list.

There remain a ton of crosscurrents and news-driven action out there, but after a vicious rotation a week and a half ago, growth stocks have firmed up and the overall market is in good shape. Thus, we’re starting to put some money to work, averaging up in one of our stocks and starting a half-sized position in another. And if the good vibes continue, it shouldn’t take us long to get heavily invested.
In tonight’s issue, we review all of our stocks, talk about a couple of rare, blastoff-type measures that flashed that bode well for the major indexes and highlight a couple of smaller names in one growth sector that have great stories, numbers and charts.

In February’s Issue of Cabot Early Opportunities we dig into the red hot IPO market.

We take a closer look at five recent IPOs that have been on my shopping list. It is not an Issue for the faint of heart. Several of these stocks have made significant moves in their short history as public companies.



There are strategies to mitigate the risks, however. And as we scan the universe of attractive stories today it is not hard to envision several of these stocks trading significantly higher a year from now.



Sit back and enjoy.

The market showed some promise in the past couple of weeks, but our indicators never could turn up and now the sellers are back at it, driving the broad market back down. All in all, then, the correction that started in earnest in early August remains in place, so we’re remaining relatively cautious. To be fair, there are some positives, not the least of which is growth stocks, many of which reacted well to earnings last week and a bunch have been resilient of late. That’s not enough to start a buying spree, but it’s another sign that there should be fresh leadership to sink our teeth into whenever the correction finishes up.

In tonight’s issue, we talk about one fundamental transition that three potential leaders are in the midst of, review our Growth Tides and go over a bunch of enticing candidates, be them cyclical or growth stocks.

The big-picture outlook with the market hasn’t changed, with all of our key market timing indicators bullish, many studies pointing to higher prices down the road and leaders--even those that have taken hits--showing little abnormal action. That said, near-term, the odds are growing we may see more choppy trading, if not a pullback of some sort, so we’re not pushing the envelope here and are ditching names that crack. Earlier this week, that meant selling one position, and today, we’re selling another, leaving us with 28% in cash.

To be clear, the odds still favor the next big move being up, so we’re aiming to put some money to work in new leadership that emerges on earnings, or current leadership that pulls in to support. For now, though, we’ll hold the cash and see how earnings season progresses.

Elsewhere in tonight’s issue, we go over a few new ideas, with the biggest write-up being what could be the #1 AI platform play (not picks and shovels, but actual platform) out there. It’s on our watch list.

The market continues to show many small positives, but we’re really looking for a BIG positive to change the market’s character and kick individual growth stocks (many of which are set up well) higher. Until then, many names are subject to potholes, as we saw this week; we trimmed our Shift4 position further and are placing Allegro on Hold.

That said, our general outlook is unchanged--the odds favor the next big move is likely up, but until that happens, we’re playing things cautiously, holding some resilient names, small positions and plenty of cash. Tonight’s issue goes into detail into all our stocks, discusses one reason why the market is so choppy and talks about the hugely negative sentiment out there that could propel the market down the road.

We continue to keep things simple, and when you do that, you see that the overall market remains mixed (strong big-cap indexes, weak broad market, etc.) and individual stocks are extremely tricky ... though there remain many setups and it’s not hard to fill up our watch list. Still, we remain cautious overall, holding lots of cash and a few small positions, while waiting patiently for the next big move to start. We are encouraged by the action of the past two days, but it’s far too soon to tell if it’s the real McCoy.

In the Model Portfolio, we’ve sold two small positions since the last issue, though we’re adding one new one tonight (a familiar name that we think is finally ready to perk up). We’ll remain flexible going ahead, willing to jump in or stay mostly on the sideline (68% cash) depending what comes.

Elsewhere in tonight’s issue, we write about a bunch of new ideas, a sector that’s reasserting itself after a two-month rest and remind you to think big -- yes, right now, the news is bad and the market is tedious, but when things get going, there should be big profits to be had.

The market has taken a turn for the worse during the past week—the February/March rally attempt is over, and now we’re even seeing the sellers come around for growth stocks, which had been resilient. It’s not a time for panic, but we’re taking action, having sold three stocks during the past couple of weeks and, tonight, half of another, leaving the Model Portfolio with around 44% in cash.

We’re adding a 100-year dividend payer to the Safe Income Tier, and saying sayonara to a perpetual underperformer. We also take a look at the incredible power of dividend reinvestment.

Current Market Outlook


Stocks had another great week, with the major indexes posting solid gains, many potential leaders approaching new highs and market breadth being so positive that it flashed a rare “blastoff” green light. Thus, our confidence is growing that the worst has passed—though that doesn’t mean the market doesn’t face many weeks of bottom building, either. Long story short, the evidence has improved, though it’s worth remembering that the intermediate-term trend of the indexes and most stocks remains down. All in all, we’re OK extending your line a bit, doing some new buying in high-potential stocks, but we’re also still keeping a good chunk of cash on the sideline and waiting for more strength to develop (maybe after a retrenchment) before turning bullish. Our Market Monitor moves to a level 5 this week.

As for the list, today is another batch of good-looking stocks from a variety of sectors, albeit with a heavier emphasis on medical. Our Top Pick is old favorite Dexcom (DXCM)—start small and build if the recent strength continues.

Stock Name	Price	Buy Range	Loss Limit
Array Biopharma (ARRY)	46.35	16.5-17.5	15-15.5
Cree, Inc. (CREE)	67.96	44.5-46.5	41-42
Dexcom (DXCM)	421.36	137-144	122-126
Everbridge (EVBG)	107.90	53-56	49-50.5
Five Below (FIVE)	134.58	112-117	100-103
Ionis Pharmaceuticals (IONS)	73.34	55.5-57.5	51-52
Keysight Technologies, Inc. (KEYS)	97.20	64-66.5	58.5-60.5
LGI Homes (LGIH)	86.04	54-57	49-51
Tandem Diabetes (TNDM)	74.77	39.5-42.5	33.5-35.5
Vertex Pharmaceuticals (VRTX)	230.36	180-187	165-169

The market advanced nicely today, continuing the bounce it’s enjoyed during the past week and a half. It’s encouraging action, and we’re not opposed to doing a little buying here or there given our large (76%) cash position.

That said, our trend-following indicators are still negative, telling us that, despite the nice rally, we need to see continued positive action before starting a major new buying spree. Right now, we’re mostly focused on fine-tuning our watch list, which we’re not having trouble doing given the many strong earnings gaps seen recently.

In tonight’s issue, we talk a bit about how markets usually bottom after a big decline, something that’s good to keep in the back of your mind. And we spend a lot of space discussing potential leaders of the next advance.