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For the third time in less than a year, a portfolio stock has received a lucrative buyout offer. The board of directors of chemical company Chemtura (CHMT) unanimously agreed to accept a buyout offer from Lanxess AG in a deal valued at $2.5 billion.

The market’s intermediate-term trend briefly turned positive last week, but the quick rejection of the indexes on Thursday and today’s battering clearly tell you that sellers are still lurking. That said, we would avoid any big-picture predictions—the weakness of last Thursday and today might mean the downtrend is resuming ... but the market could also be in a bottoming process, which often has many ups and downs as investors place (or take off) their bets. Either way, for an investor in leading stocks, there’s not much to do here; while some stocks have perked up, few have made any real progress, and to this point, most names that poke into new-high ground are quickly swarmed with sellers. Thus, our Market Monitor will remain neutral; some new buying here or there remains fine, but keep cash on the sideline and don’t get aggressive until the market kicks into gear.

This week’s list is a potpourri of differing sectors and stories, though there is a retail bent to the list. Our favorite of the week is Coinstar (CSTR), a company with a solid history of growth that might now have (another) new concept to keep the bottom line humming. The stock has built a solid base during the market’s correction.

Stock Name	Price	Buy Range	Loss Limit
CSTR (CSTR)	0.00	64-66	-
eBay Inc. (EBAY)	0.00	41-43	-
HTWR (HTWR)	0.00	83-85	-
MDC (MDC)	0.00	28-29.5	-
Medivation (MDVN)	0.00	82-85	-
NetSuite, Inc. (N)	0.00	49-51	-
PetSmart (PETM)	0.00	64.5-66.5	-
SolarWinds (SWI)	0.00	42-44	-
VSI (VSI)	0.00	52-54	-
Zumiez (ZUMZ)	0.00	37-38.5	-

Heading into the last month of the year, the prospects for the market remain very good, with a plethora of technical indicators telling us the market will be higher in the years ahead, and thus I continue to recommend that you be heavily invested.

Forget tariffs, forget trade negotiations, forget politics, and forget all the “problems” of the outside world. Just hold a portfolio of carefully selected high-potential stocks, and all will be well.

Today’s recommendation is a fast-growing company that’s a major participant in the 5G communications revolution.

Details in the issue.

Comments on one of our stocks, one stock rejoins the Growth Portfolio, and one of our companies reported a fourth-quarter earnings beat.

Goosehead Insurance (GSHD) reported after the close yesterday that Q1 revenue rose by 53% to $31.2 million (beating by $2.5 million) and adjusted EPS rose to $0.03 from $0.01 in the year-ago quarter (missing by $0.03). That pace of revenue growth was up from 48% in the quarter ended December 31, and well above the 13% revenue growth rate reported in the year-ago quarter.

The market was hit hard last week, so all trends are down, and increased caution is advised.
In the portfolio this week, we’re selling four stocks, which will both reduce risk and raise cash.


As for the new recommendation, it’s one of the world’s leading uranium companies, which has a great growth story thanks to growing negative attitudes toward Russian energy and growing positive attitudes toward carbon-free energy.


Details inside.

Answers to readers’ questions from the Cabot Wealth Advisory survey.

One of the trends that’s making headlines this earnings season is the success of companies that are adopting cloud-based technologies. While reading The Wall Street Journal on Monday, I noticed that Oracle (ORCL) CEO Mark Hurd spoke at the Oracle OpenWorld conference in San Francisco. Among his headline-worthy comments was the statement that Oracle now has virtually 100% of its portfolio rewritten, rebuilt and modernized for the cloud. That’s a big endorsement from a company with a $162 billion market cap. And Oracle isn’t exactly an outlier.

First and foremost, this is our last issue of 2024—next Monday is one of our two weeks off all year—so we want to wish you and yours a very Merry Christmas, Happy Holidays and a healthy and prosperous New Year. We’ll be back at it with a fresh Top Ten issue on January 6.

As for the market, things finished up with a nice rally last Friday, but that doesn’t undo the action of the prior couple of weeks as a whole, which saw many leaders take hits and many major indexes crack their intermediate-term uptrends. To be clear, we remain flexible, and if the buyers pounce on the recent weakness for a few days, we think there will be lots of “resumption” patterns among individual stocks. Still, given the near- and intermediate-term selling we’ve seen, we want to see buyers show up in a meaningful way first before putting a bunch of money back to work. We’ll leave our Market Monitor at a level 5.

This week’s list is once again very growth-y, which we do find encouraging. Our Top Pick showed exceptional power in November and has now rested for three weeks, offering up a solid entry point, though we advise starting small given the environment.

Investor attention is rotating from the mega-cap growth stocks to the rest of the market which means other stocks, like these solid dividend payers, are set to outperform.

In good times, it pays to own the most popular stocks on the market. But you need a few contrarian stocks for when things sour for the big boys.

Here at Cabot, we have been successfully employing market timing disciplines for decades.

Two portfolio stocks report first quarter results.

Five portfolio stocks reported earnings and one moves to Strong Buy.

The market sold off broadly this morning, and it certainly needed it. The market has been too strong for too long! But the main trend remains up and thus I continue to recommend that you be heavily invested.

Today’s recommendation is a search technology company with fast growth and great growth prospects, first recommended by Mike Cintolo.



As for our current holdings, I have two sell recommendations today, B&G Foods (BGS) and Zoom Video (ZM).



Full details in the issue.

Current Market Outlook


After a relatively quiet week, the major indexes and most stocks remain in uptrends, and that’s why we’re keeping our Market Monitor in bullish territory. But there remain a growing list of yellow flags, and the fact is that the broad market is very split, with lots of crosscurrents pushing and pulling various stocks and sectors. So far, the gyrations are normal and, possibly, bullish, helping to shake the tree, as we wrote last week. But many stocks are now approaching support—the next few days will be telling, as buyers should arrive on the scene if the intermediate-term uptrend is intact. All told, we remain bullish, but we’re keeping a watchful eye on things.

This week’s list includes everything from big, old-world companies to high-flying new-age firms. Our Top Pick is AMAG Pharmaceuticals (AMAG). The firm has transformed itself thanks to a recent acquisition, and the stock has been acting great for the past few weeks.

Stock Name	Price	Buy Range	Loss Limit
Valeant Pharmaceuticals (VRX)	0.00	140-144	133-135
Packaging Corp (PKG)	0.00	76-77.5	70-72
Palo Alto Networks (PANW)	236.92	113-118	104-106
Old Dominion Freight Line Inc. (ODFL)	221.91	77-79	72-73
Infinera (INFN)	0.00	13.5-14.5	12.5-13
Celgene (CELG)	0.00	112-116	104-105
Brunswick Corporation (BC)	0.00	48-50	46-46.5
Applied Materials (AMAT)	0.00	23-24.5	22-22.5
AMAG Pharm. (AMAG)	0.00	39-41	35-36
Alliance Data Systems (ADS)	0.00	273-284	265-268

The news media continues to whip investors into a frenzy over the direction of interest rates. Depending on where you look, you can find knowledgeable financial pundits making the case for steady, unchanging interest rates or for the Fed to lower the fed funds rate in July.