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The market continued its strong rebound from its early-April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.

Today’s addition is a small-cap networking company on the cusp of a potential multi-year growth cycle.

The big-picture growth catalyst? Emerging AI and cloud computing technologies that place new strategic importance on network infrastructure and security for data centers, hyperscalers and global enterprises.

All the details are inside this month’s Issue.

Enjoy!

The big developments over the last week have been the situation with the potential failure of Evergrande (Chinese property developer) and interest rates. As of mid-morning Thursday, we appear to be moving past these potential issues.

Years from now, I wonder how historians will label this new decade. Will it be the “Terrific Twenties” or the “Turbulent Twenties”? It’s obviously too soon to tell, but we remain optimistic about the future today with a new idea at the fringe of the powerful clean energy trend that has moved past an inflection point. Meanwhile, the Explorer’s group of stocks had another good week as Virgin Galactic (SPCE) launched into space. I wonder if its take-off might be wrapped up in the Reddit revolution?

The markets saw mostly sideways action in the past month—the soothsayers are still debating when the Fed will begin reducing interest rates. Growth stocks held on to their leadership position, although value stocks are beginning to show life in 2024.

Small caps paused this week to digest a few wild weeks. The S&P 600 Small Cap Index is essentially unchanged since I last wrote, which I think is a victory at this point.

Growth stocks remain mostly hit or miss, but the evidence has improved somewhat during the past couple of weeks. We’re not flooring the accelerator, but we are doing a little new buying tonight, though still keeping about one-quarter of the Model Portfolio in cash.

Elsewhere in tonight’s issue, we talk about the thinning out of the advance and dive into all our stocks (a couple of which have earnings coming up), as well as talk about our new recommendations and game plan going forward.

With the often-tricky September-October period behind us, and all trends positive, I’m happy to continue recommending that you be heavily invested in a diversified group of stocks that meet your investing needs.

Today’s recommendation is not a familiar name—it serves global businesses, not individuals—but it’s part of the solution to one of the globe’s biggest problems these days.



As for selling, something’s got to go, and it’s not an easy choice; most of our stocks look great. But rules are rules, so we’ll say farewell to long-time friend (and solid winner), NextEra Energy (NEE).



Details inside.

The action of high-growth stocks continues to be sloppy despite the strong performance of most underlying businesses.

To help ease our portfolio thorough this period I’ve been evaluating companies with exposure to the reopening economy, and I think I’ve nailed it.



Today’s stock is an online retailer serving younger generations. These consumers should be among the most active spenders as the world opens up again. And this up-and-coming retailer should be a major beneficiary.



Enjoy!

Is the worst of this late-winter selloff over? Or are there lower depths still to plumb? A lot may depend on what the Fed says this week. Or the next bit of tariff news. Or who knows what. There’s a lot of uncertainty out there. And the market hates uncertainty. But after a month of almost nothing but selling, there are some encouraging signs of life.

Still, the wise move is to stick to safety, so this week we add a safe dividend stock that’s in about as reliable a business as there is: trash collection. It’s a new recommendation from Cabot Dividend Investor Chief Analyst Tom Hutchinson.

Details inside.

This week’s Friday Update includes our comments on earnings from eight companies. Also, Toshiba (TOSYY) reported earnings this morning, along with its plan to split into three companies.

The market is in a tough place right now, closing last week at new post-summer lows. At some point – perhaps sooner than we expect – the next rally will arrive. And there are a lot of indicators (overly bearish investor sentiment, a history of October bottoms, etc.) that suggest the next big move is up. But we have to see it to believe it. So, for now, we’ll maintain a relatively cautious stance, trimming an underperforming position today and downgrading another to Hold.

And yet, there are enough glimmers of hope out there (remember: it’s still technically a new bull market!) that today we’re adding a mid-cap software company with tons of growth potential, recently recommended by Tyler Laundon in Cabot Early Opportunities.

Details inside.

Is it better to buy stock when it’s low? There may be a better question to ask yourself about stock prices.

While the financial news obsesses over what the Fed might have vaguely implied in the latest statement, the world is morphing into a different place. The demographic of humanity is rapidly transforming in a way that will massively affect the flow of money for the rest of our lives. The world is currently undergoing a technological revolution that is transforming society and everyday life.

The aging population and the technological revolution are megatrends that will dominate the investment landscape for years to come regardless of what the Fed does, or GDP in the next few quarters, or whoever gets elected president. It’s not an accident that the best performing stocks in the Cabot Dividend Investor portfolio are in healthcare and technology. Nor will it be an accident that these same stocks continue to dominate from this point forward.

In this issue, I highlight the massive opportunity to position yourself in front of a tsunami that could provide the best investments of your lifetime.

After a weekend that many feared would sink the market as the Middle East situation was flaring up, to the surprise of many, the market didn’t sell off and, in fact, by week’s end the S&P 500 had gained 3.4%, the Dow had rallied 3.8% and the Nasdaq added 4.2%.

The broad market strengthened over the past week, led by a rebound in tech stocks. Other leading sectors included real estate, energy and, for a second week, materials. Utilities also rebounded, as interest rates pulled back. The only industry group that hasn’t advanced over the past five days are the financial stocks.

Welcome to 2026! The new year promises more good returns and a broadening rally.

The S&P 500 was up over 16% in 2025 after back-to-back 20%-plus return years in 2023 and 2024. It’s been the best three-year run of the century so far. But the future is what matters now. And the market seems pricey after all these good years.

Two years after the yield curve inverted, there’s still no U.S. recession in sight. As a result, financials – beaten to a pulp during the double whammy of the 2022 bear market and the March 2023 bank collapse – have become the fastest-growing non-tech sector of the market. It’s also one of the most undervalued. So in this month’s issue, we add a very recognizable big bank that does a little bit of everything – and seems to be everywhere. It’s growing at a healthy clip and yet is cheaper than even the average financial at the moment.

Details inside.