Search

Centrus Energy (LEU) shares jumped almost 19% this past week and are up 70% in the last six months. Dutch Bros (BROS) shares gained 6.3% this week following weekly gains of 10.6% and 36%.

Tariffs took center stage this week as the incoming Trump administration indicated day-one 25% tariffs on Canada and Mexico and some more for China as well.

This month we’re jumping into a new IPO that’s following in the footsteps of Livongo and Teladoc, bringing an innovative digital health solution to the masses.

As with those firms, this company sells solutions to companies, but it is the end consumer that uses the products, which are aimed at improving engagement and health outcomes while reducing costs.



With limited history as a public company, an earnings report coming next week, and the recent news that Livongo and Teledoc will merge, I expect shares of this company will be somewhat volatile. Please be sure to average in. We are starting with BUY A HALF rating today.



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

We spend the vast majority of our time focused on U.S. stocks, and rightly so.

After all, although America has just 4% of the world’s population and generates 23% of the global GDP, 72% of worldwide investment capital is spent on U.S. stocks. That’s a stat our global investing expert, Carl Delfeld, relayed to me and my colleague Brad Simmerman on our latest Street Check podcast (click here to listen to the entire conversation). I knew the global investment axis tilted toward the U.S. – just maybe not that much.

Third-quarter earnings season gets underway next week, and expectations are high. Economists are expecting 8% earnings growth among S&P 500 companies, according to data compiled by FactSet. It would be the eighth consecutive quarter of at least 8% profit growth among U.S. companies – perhaps the biggest reason stocks have been on a tear the last two years.

I’m changing my recommendations on Dollar Tree (DLTR) to Hold; and on Big Lots (BIG), Kraft Heinz (KHC) and WellCare (WCG) to Buy.

After spending most of the summer making a series of new highs, it’s been more of the same so far this fall.

The drawback is that the market is high-priced. Technology stocks, driven by the AI catalyst, have driven stocks higher. But certain sectors have not had a great year. Despite the impressive performance of the overall market over the last few years, there are still bargains to be found.

The real estate sector struggled during inflation and rising interest rates and has been the worst-performing sector over the last five years. Healthcare has floundered all year because of uncertainty regarding tariffs and new pricing policies from Washington. It has been the second-worst-performing market sector over the last year.

But things are turning around in both beleaguered sectors. The Fed started cutting the fed funds rate again in September and two more cuts are expected this year. The long-anticipated issues in the healthcare industry have revealed themselves. And it doesn’t seem nearly as bad as feared. As a result, healthcare stocks had the strongest weekly rally in more than 20 years.

In this issue, I highlight a REIT that specializes in healthcare properties. It has a stellar track record of performance and has among the fastest earnings growth among REITs. It also pays a strong dividend yield and will likely benefit in the months ahead from a rally in either sector.

With a big Fed meeting on tap for this afternoon, we’re continuing to maintain a steady pace of adding new positions, selling off some weaker ones, and adding fresh names to our Watch List.

Details on all of the above are included in this September’s Issue. Enjoy!

Retail stocks are having a rough year.

The S&P SPDR Retail ETF (XRT) is down 3.8% year to date, and consumer discretionary as a whole has been the worst performing of the 11 major S&P sectors. It makes sense. Tariffs threaten to hit U.S. retailers hardest, including the many companies that sell products like toys, child car seats, and sports apparel (such as our own Dick’s Sporting Goods (DKS)), most of which are made in places like China, Indonesia, Japan and Thailand – the places with the highest potential tariff rates. Combine that with escalating fears of a U.S. recession – also brought on by tariffs – and it could be a double whammy for retailers who don’t sell the essential everyday items that consumers buy regardless of the economic environment.

The major indexes continue to march higher, but trouble is brewing under the surface. That’s been reflected by the number of earnings blowups of late, including in many stocks of companies that beat estimates. Our portfolio was not immune to that phenomenon last week, and as a result, we’re doing some late-summer housecleaning this week, selling four positions that have been lagging and got worse after reporting earnings. Meanwhile, with technology stocks becoming a bit overcooked, today we add to our portfolio a manufacturing name that makes essential real-world products that are always in high demand. It’s a stock whose shares have been building momentum – enough to attract the attention of Cabot Top Ten Trader Chief Analyst Mike Cintolo.

Details inside.

In the January Issue of Cabot Early Opportunities I highlight five standout growth stocks that should have meaningful upside from current levels. Recognizing that the current risk-off environment has these types of stocks acting erratically (probably an understatement) I’ve focused first and foremost on companies I like rather than getting hung up on their recent share price performance. In terms of buying, we’ll start very, very slow. The three smaller companies I feature go straight to the Watch List as we’ll try to be opportunistic buyers when things feel more secure. Even with the two larger companies we start with half positions.



Enjoy!

It seems like nearly every October gives the market something to worry about, and this year it’s (again) the politicians in Washington, D.C.—statements and rumors from various leaders have been pushing and pulling the market in recent days, and there’s no reason to expect anything less in the near-term. That said, despite day-to-day (sometimes hour-to-hour) volatility, the market’s overall stance hasn’t changed much; the indexes are in good-not-great shape, but most leading stocks have taken it all in stride. Thus, we’re sticking with our lean bullish advice, and think buying during weakness can pay off.

This week’s list is encouraging in that many names are new to Top Ten; while the market hits some potholes, money is still finding a home in more and more stocks. Our favorite of the week is U.S. Silica (SLCA), another play on the rebounding oil sector; we like its reasonable valuation, recent breakout and big increase in sponsorship in recent quarters.

Stock Name	Price	Buy Range	Loss Limit
YY Inc. (YY)	0.00	46-48	43-44
Yelp (YELP)	41.30	67-70	59-61
Synaptics (SYNA)	0.00	45-47	39-40
Sanchez Energy (SN)	0.00	26-28	24.5-25
US Silica Holdings, Inc. (SLCA)	0.00	27-29	24-24.5
Sina Corp. (SINA)	0.00	86-88	78-80
Canadian Solar (CSIQ)	0.00	17.5-19	15-16
Centene (CNC)	0.00	62-64	58-59
Chicago Bridge & Iron (CBI)	0.00	67-69	60-61
Buffalo Wild Wings (BWLD)	0.00	112-116	106-107

After two and a half months of a choppy-to-down environment, the bulls have done enough good things to turn the intermediate-term trend back up. And that means our Market Monitor is back in bullish territory and you should adopt a more positive market outlook. You shouldn’t buy hand over fist, though—it’s best to pick up shares of some strong, resilient stocks (preferably newer names most investors haven’t heard of) … and then watch closely to see if the market can hold (and build on) its gains in the days and weeks ahead. If it does, you can look to extend your line.

This week’s list again contains an array of stocks from a variety of industries. Our Top Pick is Cavium (CAVM), which looks like a new leader in the still-strong chip sector. It’s very volatile, so handle it with care, but we think you can start a position around here.

Stock Name	Price	Buy Range	Loss Limit
TripAdvisor (TRIP)	55.14	94-97	88-89
T-Mobile US (TMUS)	0.00	33.5-35	31-31.5
Synaptics (SYNA)	0.00	65-68	60-61
Sanchez Energy (SN)	0.00	32-34	30-31
Palo Alto Networks (PANW)	236.92	71.5-75.5	65-67
Nabors Industries (NBR)	0.00	25.5-26.5	24.5-25
Molina Healthcare (MOH)	0.00	41.5-43	39.5-40
Cavium (CAVM)	0.00	46.5-49	43.5-44.5
Baker Hughes (BHI)	0.00	69-71.5	66-67
Air Lease (AL)	0.00	39.5-41	36-36.5

It’s been nearly four weeks since the market’s correction and consolidation began, and overall, the damage hasn’t been that great—interest rate-sensitive names have been hammered, but many growth stocks remain in good shape. Now the question is whether buying power will return; holding up is all well and good, but we want to see evidence that institutional investors are adding shares of resilient stocks, even buying them as they reach new high ground. If we see that, we’ll switch the Market Monitor back into the green. But right now, we advise holding some cash and keeping new positions small.

Once again, we’re pleased to see many enticing names in this week’s list. Our favorite is one of the first stocks to hit new-high ground—Oasis Petroleum (OAS) is emerging from a gigantic base, and if the market gets going on the upside, it looks like a new leader.

Stock Name	Price	Buy Range	Loss Limit
Tenneco (TEN)	0.00	44-47	38-40
Shutterfly (SFLY)	94.71	50-52	44-46
Oasis Petroleum (OAS)	12.57	39-42	36-37
Northrop Grumman (NOC)	0.00	81-83	77-78
Morgan Stanley (MS)	0.00	25-26	22.5-23.5
3D Systems (DDD)	0.00	45-46	41-42
Delta Air Lines (DAL)	54.28	18-19	16.5-17
Carter’s (CRI)	0.00	70-72	66-67
Celldex Therapeutics (CLDX)	0.00	14.5-15.5	12-13
CBOE Holdings (CBOE)	0.00	41-42	37-38

Current Market Outlook


Nothing much changed with the market’s evidence last week: The trends of the major indexes and most leading stocks remain strongly up, and there’s been very little in the way of intermediate-term abnormal selling action out there. On the other hand, many indexes have yet to hit new post-virus highs, fewer stocks are hitting new highs and the leading big-cap indexes are extended to the upside. As always, we put most of our emphasis on the primary evidence, which is why we remain mostly bullish; in fact, we’re nudging our Market Monitor up to a level 7 this week. But, while we still favor holding your strong, resilient performers, we also think it’s best to be choosy on the buy side, looking for names that have shown some recent power on earnings or have been running for a few months but have dipped to support.

Happily, this week’s list features many of names that have one of those two chart characteristics. Our Top Pick is Redfin (RDFN), which has been mostly a bust since coming public two years ago but showed overwhelming buying after earnings last week. As with most names, try to enter on some weakness.

Stock Name	Price	Buy Range	Loss Limit
Acceleron Pharma (XLRN)	75.11	88-92	78-80
Alteryx (AYX)	132.78	149-155	135-138
Amazon.com (AMZN)	2.00	2100-2150	1940-1970
Appian (APPN)	46.48	56-59	50-52
Envestnet (ENV)	77.12	81-84	74.5-76
Invitae (NVTA)	32.06	25-27	21.5-23
iRhythm Technologies (IRTC)	51.15	87-90	78-80
Redfin (RDFN)	40.40	28.5-30.5	24.5-25.5
Sunrun (RUN)	38.40	19.8-20.8	17.8-18.4
Survey Monkey (SVMK)	19.97	20.7-21.4	18.3-18.7

Last week’s post-holiday action was suspicious and a bit abnormal; many stocks gave up two or three weeks of gains in just a day or two, and on big volume to boot. That said, very few stocks actually broke down (many fell down to their 50-day moving averages before bouncing), and the major indexes are in good shape, so we remain bullish. But our main thought is that, if last week was just a typical bull market shakeout (possibly some pre-earnings season jitters), most stocks should hold last week’s lows and resume their major uptrends. But in case the selling intensifies, you should have some stops in place for your weaker holdings.



The good news is we’re still seeing many good looking charts, including most of this week’s list. Our Top Pick is Adobe (ADBE), a software giant that’s enjoying new growth from its new focus on the cloud.

Stock Name	Price	Buy Range	Loss Limit
Zebra Technologies (ZBRA)	154.94	81-83	76-77.5
Synaptics (SYNA)	0.00	86.5-88	79-80
SunEdison (SUNE)	0.00	22-23.5	20-21
KLA Corp. (KLAC)	158.80	73-75	69-70
Health Net (HNT)	0.00	42-43	39-40
Barrick Gold (GOLD)	27.20	84-88	81-82
Freeport-McMoRan Inc. (FCX)	13.78	38-39	35-36
Concho Resources (CXO)	0.00	142-145	135-136
Bitauto Holdings (BITA)	0.00	50-52	43-44
Adobe Inc. (ADBE)	315.23	69-72	66-67

Current Market Outlook


From a top-down perspective (looking at the major indexes and overall trends), last week wasn’t a big deal—most indexes remain in their three-month trading ranges, and all of them are above their longer-term moving averages. But there’s no question that the sellers pulled out the bazooka on many high relative performance stocks, cracking many uptrends in the process. So, combined with the tedious trading during the past few weeks, we’re pulling in our horns a bit more by moving our Market Monitor down two notches to a level 4 out of 10. It’s still best to hold your resilient stocks, especially those that have reacted well to earnings (of which there are many). But you should also limit new buying and be holding plenty of cash until the market firms up.
This week’s list has another batch of earnings winners from last week; if the market can find its footing, many should do well going forward. If you’re looking to nibble on something, our Top Pick is ServiceNow (NOW), an emerging blue chip in the cloud software sector that has a huge runway of growth ahead of it.

Stock Name	Price	Buy Range	Loss Limit
Arch Coal (ARCH)	82.27	74-70	63-61
Cirrus Logic Inc. (CRUS)	0.00	54.5-52.5	50.5-49.5
Ellie Mae (ELLI)	0.00	105-102	98-97
Expedia Group (EXPE)	0.00	130-125	116-115
Mastercard Incorporated (MA)	0.00	107-105	101-100
New Oriental Education (EDU)	113.97	50-48	46-45
ServiceNow (NOW)	341.86	86.5-83.5	79-77.5
Tesaro (TSRO)	0.00	120-116	108-106
US Silica Holdings, Inc. (SLCA)	0.00	46-44	41-40
Western Digital Corporation (WDC)	0.00	59-56.5	52-51

Current Market Outlook


There’s no shortage of things to worry about today, with everything from the Presidential election to Syria to Russia to interest rates seemingly hanging in the balance. And as all good investors know, bull markets climb a wall of worry! So it’s no surprise that the market continues to lean bullish. Leading the group in the U.S. are small-cap stocks (while the major indexes lag), and leading the way internationally are the Chinese stocks, a couple of which appear in this issue—and not for the first time.

The Chinese stocks, however, may be due for a correction, so our Top Pick is Yelp (YELP), which combines a great growth story with a chart that’s in a good buying range.

Stock Name	Price	Buy Range	Loss Limit
MercadoLibre, Inc. (MELI)	980.83	191-185	175-174
NetEase, Inc. (NTES)	0.00	255-245	235-234
Nintendo Co., Ltd. (NTDOY)	0.00	34-32	30-29
Parsley Energy (PE)	0.00	35.5-34	32-31
TD Ameritrade (AMTD)	0.00	35.5-35	32.5-32
Twilio (TWLO)	183.39	60-55	53-50
US Silica Holdings, Inc. (SLCA)	0.00	47-44	40-37.5
Weibo (WB)	98.16	53-49	46-45
Williams Companies (WMB)	0.00	31-29	27.5-27
Yelp (YELP)	41.30	41-39	37-36

Current Market Outlook


The market has made a little upside push during the past week or two, but net-net, most indexes are up just a smidgen during the past seven weeks. That sideways trading has contained most stocks and sectors, too, as they chop around with a slight upward bias. Even so, the intermediate- and longer-term trends are up, so the odds continue to favor the next major move being up. And we’re encouraged by both the number of positive earnings reactions we’ve seen, as well as the action of those stocks after they gap up—most have traded constructively post-earnings with no selling pressures coming in even after they ramp. All told, we’re still mostly positive, but we’ll keep our Market Monitor at a level 7 (out of 10) until we see more than just the Nasdaq decisively push out of their recent trading ranges.

This week’s list has another batch of strong stocks, including many that have recently reacted well to earnings. Our Top Pick is a tough call, but we’ll go with Ally Financial (ALLY), which just exploded higher on earnings after years in the market’s doghouse. It looks to be just starting its run.

Stock Name	Price	Buy Range	Loss Limit
Ally Financial (ALLY)	30.44	21.5-23	20-21
Century Aluminum Co. (CENX)	17.24	14-15	12.5-13
Essent Group (ESNT)	0.00	34-36	31.5-32.5
Exelixis (EXEL)	27.35	18.5-19.5	17-17.5
Olin Corp. (OLN)	0.00	28.5-30	26-27
Symantec Corporation (SYMC)	0.00	26.5-28	25-25.5
Teradyne (TER)	82.83	27-28.5	25-26
Tesla, Inc. (TSLA)	818.87	247-256	225-229
Texas Capital Bancshares (TCBI)	0.00	82-86	76-78
Yandex (YNDX)	0.00	22-23	20-21