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While the overall market looks pretty good, growth stocks are looking terrific. Here’s a look at 5 growth stocks and how to handle them.

We all prefer rising markets to declining markets, but there is a silver lining to a weak tape – when most stocks are heading south, it becomes easy to spot abnormal strength. That’s what OptiMo, our proprietary stock screening system, has been doing in recent weeks; if big investors aren’t selling shares in this market, they’re likely to buy with abandon during the next bull move. Of course, with the bears in control of most stocks, you should stick with a defensive stance for now – no use investing a ton of money when the odds are against you. But nibbling on a couple of leaders and readying your watch list should pay off when the bulls return. This week’s Top Ten contains another batch of commodity, solar and emerging market stocks. Our favorite of the week is ICICI Bank (IBN), an Indian bank that’s directly leveraged to that country’s tremendous growth. The stock broke out last week, and Indian stocks are acting well.

Stock Name	Price	Buy Range	Loss Limit
ABX (ABX)	0.00	48-53	-
ASTI (ASTI)	0.00	17-23	-
CF (CF)	0.00	100-110	-
CHU (CHU)	0.00	20-23	-
HOLX (HOLX)	0.00	66 - 68 1/2	-
IBN (IBN)	0.00	66-72	-
ILMN (ILMN)	0.00	64-72	-
JASO (JASO)	0.00	65-70	-
KGC (KGC)	0.00	21-24	-
SWN (SWN)	0.00	56-58	-

In today’s note, we discuss pertinent developments and institutional ratings changes for some of the stocks in the portfolio, including Alcoa (AA), Duluth Holdings (DLTH), SLB Ltd. (SLB) and the SPDR S&P Retail ETF (XRT).

The fabled “Santa Claus Rally” failed to appear this season, prompting concern for the early part of 2025 among many investors. We discuss what it entails for our investment approach.

In American football, most quarterbacks are right-handed. So, when they drop back to pass, they typically turn their backs to the left side of the line of scrimmage. They are essentially blind to what happens behind them. If the offensive line is weak, the quarterback is vulnerable to a potentially devastating hit, risking not only that particular play but also possession of the ball and possibly serious injury.

There have been plenty of market meltdowns over the years. Few have matched what’s happened since last Wednesday evening – so-called “Liberation Day” – when President Trump announced plans to place high tariffs on … the rest of the world. In the week that followed, stocks nose-dived by 13%, with both the Nasdaq and Russell 2000 swinging to a bear market last Thursday and Friday and the S&P 500 nearly following suit.

Until yesterday.

It’s been a pretty ugly stretch lately, with numerous crashes in a number of growthy names. I’m far from confident that the selling is over, however, history has shown that a little buying when things seem bleak can pay off.

It looks like the president’s tariffs are beginning to show some effect on inflation. The latest CPI report showed that the inflation rate—while lower than the 2.5% economists had expected—crept up to 2.4% from April’s 2.3% rate. Core inflation—excluding food and energy—rose 2.8%, the same as April’s increase.

The number was helped by drops in apparel and automobile prices.

The unemployment rate remained stable at 4.2%. The ADP employment number was just 37,000, the lowest level since March 2023, and less than the 111,000 anticipated.

This Halloween, there’s nothing to fear. At least not for investors.

OK, nothing is a bit of an exaggeration. Today’s anticipated meetup between President Trump and Chinese President Xi Jinping could go sideways, putting high tariffs between the two mega-powers back on the menu. There could be some key earnings blowups ahead as we remain in the thick of third-quarter reporting season. And the government shutdown is more than a month old at this point, which could take a toll on the market.

Let’s talk about bubbles.

There’s been a whole lot of investor speculation of late over whether we’re near an artificial intelligence bubble, akin to what we saw from the dot-com bubble at the turn of the century or the housing bubble that led to the 2008-09 Great Recession. Indeed, with AI spending (an estimated $300 to $400 billion this year) outpacing revenue (an estimated $60 billion this year) by roughly a 6-to-1 ratio – about double the capital expenditures-to-revenue ratio just before the dot-com bubble burst – the angst over an AI bubble is understandable, and perhaps warranted.

Thank you for subscribing to the Cabot Undervalued Stocks Advisor. We hope you enjoy reading the December 2021 issue.

The emergence of the Covid Omicron variant has temporarily upended the market’s emerging post-Covid view of the economy. We share our thoughts on this, as well as on Fed Chair Powell’s testimony this week about accelerating the bond-buying taper. We also comment on how artificial selling pressure as the calendar year-end approaches can drive already-weak stocks to steeply undervalued levels.

Nokia (NOK) missed on revenue but beat on earnings yesterday, reporting EPS of $0.10/share, which exceeded estimates by over 50%. CEO Pekka Lundmark noted that 2024 will probably remain a weak year for the mobile RAN (radio access network) market, but reiterated expectations that it will likely pick up over the final two quarters. Declining demand for 5G equipment in the U.S./Canada, and a significant slowdown in China (also notably affecting AAPL) are the root cause, but economic data has only recently started to inflect.

Earnings season is over, so there were no companies that reported earnings this past week. However, the next earnings season is just around the corner, starting with Mattel (MAT) on July 23^rd.

Put simply, the market’s snapback from the selloff two weeks ago has been extremely impressive, and while it doesn’t erase all of the yellow flags, it’s certainly a positive sign. Because we didn’t drastically change our stance during the weakness (a little trimming), we’re not doing anything drastic during the rebound — at least not yet. We filled out our position in CrowdStrike last week and are placing Pinterest and Twilio back on Buy.

If all goes well, we could have a new addition or two soon, with our top choices written about in tonight’s issue. But tonight, we’ll stand pat and see how the market acts as earnings season continues.

Today’s selection is one of the big, fast-growing Chinese companies (you might call it the Google of China), which has just pulled back to offer us a lower-risk entry point.

The market rebound over the past few weeks has been very impressive; it’s now turned our intermediate-term timing indicator back to positive. But buying after such a spike is risky, so today’s recommendation is a beaten-down stock that has nowhere to go but up.

As we march toward the end of Q4 and the beginning of 2018, most investors are, rightly, turning their attention to what’s likely to happen in the year ahead. Returns this year have been nothing short of outstanding. While we’ve had bouts of volatility, especially in individual stocks, there’s been astounding breadth of strength across almost all sectors.

This month we’re adding a small company that specializes in the opaque and inefficient market for selling surplus and salvaged goods.

The company has a market cap of just $580 million and is growing revenue and EPS by double digits. It’s an interesting setup, especially as government agencies and corporations increasingly look to save money and achieve sustainability goals.

All the details are inside this month’s Issue.

Facing the first sustained market downturn in their lifetimes, millennial investors have pulled back from investing and stopped “buying the dip.”

After a volatile week, the major market indices all closed out with losses. The S&P 500 fell 0.97%, the Dow lost 0.52%, and the Nasdaq declined by 1.87%. And the bearish sentiment continued on Monday as the S&P 500 lost another 1.6%. Which leads to a question I’ve been receiving from a few Profit Booster subscribers: “Will you keep recommending trades if the market gets ugly?” The answer is yes. In times of rocky market action, I will continue to make trades for two reasons:

This month we’re jumping back into the pure-play software space with an up and coming SaaS company that has remained under the radar since going public in December, just a few months before the market tanked.

It specializes in social media management solutions, which are increasingly important as the trend toward digital transformation strategies gets stronger. Organizations increasingly recognize they must market to consumers through social networks.



Revenue growth is hovering around 30% and first profits are still a couple years away, meaning we’re still early to the table.



All the details are inside this month’s Issue. Enjoy!