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Before we dive into this week’s idea, let’s clean up some of our January positions, with the headliner being things all worked out well.

In the November Issue of Cabot Early Opportunities, I take a quick look at some recent earnings reports and continue to spread things out among different industries with our new additions.

This month I cover a premium furniture retailer, a micro-cap biotech, an online finance specialist, an oil refiner and a somewhat speculative space economy stock. There should be something in this Issue for everybody.

The Dow is in a tailspin.

After Wednesday’s Fed-ignited selloff, the 118-year-old index has now fallen for 10 consecutive days – its longest string of down days since 1974. Prior to yesterday, the index hadn’t fallen much during the first nine days of this losing streak, down just 3.47%; but yesterday’s 2.58% decline stretched those losses to an even 6%. So what once was a modest pullback is now hurtling toward a correction.

Current Market Outlook


We have a few main thoughts when it comes to the market. First, of course, the intermediate-term trend remains up, and most stocks are acting well, thus we continue to advise a bullish stance. Second, though, divergent action is still in evidence, with small caps and growth stocks racing up the charts, while many sectors and indexes (the NYSE Composite is down 1% this year!) are stuck in the mud. And third, we’ve seen a bit of froth emerge, with some IPOs and other growth names going vertical, whether it’s on news or not. Like we said, we remain bullish—it’s hard not to be when the leading indexes (Nasdaq, S&P 600 SmallCap) and stocks are acting well. That said, given some of the froth we see out there, be sure to keep your feet on the ground, looking for decent entry points and taking some partial profits on the way up.

This week’s list is chock-full of rapidly growing companies with super-strong charts. Our Top Pick is Nutanix (NTNX), which blasted off in March and, after months of up-and-down action, looks to be resuming its uptrend here.

Stock Name	Price	Buy Range	Loss Limit
Canada Goose Holdings (GOOS)	46.21	60-64	53-56
Dropbox (DBX)	31.80	39-41	33-34
Etsy (ETSY)	112.97	40-43	35-36.5
Exact Sciences (EXAS)	116.91	65-69	58-61
HealthEquity, Inc. (HQY)	70.70	77-80	70-72
HubSpot (HUBS)	582.89	135-140	123-126
Inogen (INGN)	210.84	182-189	165-170
Nutanix (NTNX)	55.91	61-64	54.5-56.5
RH Inc. (RH)	252.93	148-156	123-130
Twilio (TWLO)	183.39	57-60	50-52

Current Market Outlook


From a top-down perspective, nothing has really changed with the key evidence; there remain a couple of divergences (number of new highs, lagging small-cap indexes), but the intermediate-term trends of the major indexes and most leading stocks (and even non-leading stocks) are pointed up. Under the surface, though, we’re seeing some ping pong action—the major indexes have been alternating up and down days for the past couple of weeks, while many sectors are whipping in and out of favor on a weekly basis. (Growth stocks have been alternating good and bad weeks for a month.) What does it mean? It’s fair to say the broad buying pressures have eased up, though to this point, the sellers haven’t done much damage at all. We’re going along with the back-and-forth action, nudging our Market Monitor down a notch—we remain overall bullish, but the current earnings season will have a lot to say about the intermediate-term outlook for the market and leading stocks.

In the meantime, we’re still seeing a good number of setups from a wide variety of stocks and sectors. We have a couple of favorites this week, but for our Top Pick we’ll go with Qualcomm (QCOM), which has shown extreme power after a game-changing deal with Apple last week. We’re OK buying here or (preferably) on dips.

Stock Name	Price	Buy Range	Loss Limit
Ctrip.com International Ltd. (CTRP)	34.94	42.5-44.5	39-40.5
D. R. Horton (DHI)	66.55	43-45.5	39.5-41.5
Fastenal (FAST)	37.08	67.5-69.5	62.5-64
First Solar (FSLR)	83.74	57-59	52.5-54
Five Below (FIVE)	134.58	136-142	124-127
Kansas City Southern (KSU)	176.54	121-124	112-113.5
ManpowerGroup (MAN)	90.84	93.5-95.5	84.5-86
Microchip Technology (MCHP)	79.12	95-97	88-89
QUALCOMM Incorporated (QCOM)	106.36	78-82	69-71
Redfin (RDFN)	40.40	21-22	19-19.5

We’re seeing lots of crosscurrents in the market right now, especially when it comes to the evidence -- the big-cap indexes are in good shape and we’ve seen a few more breakouts from growth stocks ... but the broad market is very iffy and most other indexes are stuck in the mud. We think it’s best to go with the flow--ditching stocks that break down but selectively adding stronger, fresher names, all while holding some cash for future buying power (if more breakouts come during earnings season) and for cushion (if the market weakens again). We’ve had a few changes in the past two weeks (including some in our special bulletin today), and we go over all the details in tonight’s issue.

Today’s addition is one of the world’s best engineering and construction firms in the highly specialized natural gas-fired power plant industry.

It’s a highly leveraged play on increasing U.S. energy loads and the expected, multi-year gas power plant buildout. If you want exposure to a picks and shovels play on AI, EVs and other electrification trends, this one is for you.

Enjoy!

I’m adding a 31-year dividend payer to the Safe Income Tier, and cover all our stocks that have reported earnings so far. You’ll also find some important information on REITs at the end of the issue which you should find valuable if you bought last month’s High Yield Tier addition.

Current Market Outlook


The major indexes and (to a greater extent) leading stocks hit a pothole late last week, but while we see smatterings of abnormal action here and there, the vast majority of stocks are simply undergoing normal rests after what’s been a solid five weeks. Of course, this week has plenty of events on the schedule, including the Singapore Summit Tuesday and the Fed’s likely interest rate hike (and accompanying statement) on Wednesday, both of which could result in some news-driven moves. But we’re just going with the evidence today; the trends of the market and most stocks are up, so we advise sticking with a bullish stance.

As for this week’s list, it’s interesting in that we see a handful of turnaround-type plays that were left for dead until a few weeks ago. A good example is our Top Pick this week: Twitter (TWTR), which just emerged from its first proper launching pad since coming public.

Stock Name	Price	Buy Range	Loss Limit
Advanced Micro Devices (AMD)	82.24	14.2-15.5	12.5-13.2
Coupa Software (COUP)	262.20	57-60	51-53
G-III Apparel (GIII)	45.25	45.5-48.5	41.5-43.5
Kohl’s (KSS)	70.62	74-77.5	67-69.5
Momo Inc. (MOMO)	44.65	49-52	43-45
MongoDB (MDB)	156.56	49-52	43.5-46
Peabody Energy Corporation (BTU)	43.32	44.5-46	40.5-41.5
PTC Therapeutics (PTCT)	0.00	35-37.5	31-32.5
Twitter (TWTR)	40.37	39-41	35.5-36.5
Williams-Sonoma (WSM)	64.96	59-61.5	54.5-56

Contrary to all the doom and gloom, the U.S. economy is doing just fine, thanks. And Ally Financial stock is a perfect way to play its growth.

One portfolio stock had a earnings beat and there are two additional rating changes.

Yesterday I revealed 10 value stocks to help combat rising interest rates. Today I have 10 growth stocks for your consideration.

There are scores of companies itching to make money from the Big Data Revolution. Some have developed products that can compile reams of data from numerous servers and applications into manageable formats. Other services enable the complex number crunching that’s required to make sense of the data. Several companies help...

The action of the past few weeks looks like a solid bottoming attempt by the market, and we received a Cabot Tides buy signal late last week. But yesterday’s huge decline is a good indication that sellers are still lurking, which along with our still-bearish longer-term Cabot Trend Lines, is a reason to remain mostly defensive and go slow on new buying.

Current Market Outlook


After three weeks of rotation, where cyclical stocks took the reins and growth stocks rested (and some broad selling pressure showed up June 11-12), the reverse occurred last week, with the leaders again ramping up and cyclical stocks sagging. Still, while the endless rotation isn’t ideal, it hasn’t changed the big picture—most of the evidence remains bullish, so we’re still optimistic the path of least resistance is higher. That said, it’s important to keep your feet on the ground, too; looking for solid entry points and not hesitating to book some partial profits on the way up are still good ideas, as some selling pressure or another bout of rotation isn’t out of the question. We’re leaving our Market Monitor at a level 8.

This week’s list has a bit of a secondary feel to it, but many are showing solid setups; ideally some of these will be the next wave of names big investors focus on. Our Top Pick is Restoration Hardware (RH), which has a strong story and is resting nicely after a very strong run.

Stock Name	Price	Buy Range	Loss Limit
Big Lots (BIG)	43.12	32.5-35	27.5-28.5
Immunomedics (IMMU)	34.23	32.5-35	28-29
LGI Homes (LGIH)	86.04	84-87	74-75.5
MercadoLibre, Inc. (MELI)	980.83	910-940	810-830
Mersana Therapeutics (MRSN)	22.28	20-22	16-17.5
Nuance Communications, Inc. (NUAN)	25.35	23.5-25	21-22
PagSeguro Digital (PAGS)	35.09	33.5-35.5	29-30
RH Inc. (RH)	252.93	240-255	210-217
Teradyne (TER)	82.83	78-81	69-71
Yeti Holdings (YETI)	42.80	36-38	31.5-33

The election is changing things.

The difference is the expectation of stronger economic growth. As a result, new sectors have emerged as market leaders. Cyclical sectors have taken off. Financial, energy, and consumer discretionary sectors are leading the market. And this changing dynamic is likely just in the very early stages.

In this issue, I will focus on an opportunity in the financial sector.

Financial stocks, of which banks make up a big part, generally make profits from the spread between the cost of funds, mostly short-term rates, and what they charge for loans. Higher spreads mean more profits.

The Fed has begun a rate cutting cycle that will likely last for two years. Banks also need a good economy with strong loan demand. The better economic prognosis after the election is bullish. Plus, there is likely to be a much friendlier regulatory environment for banks and financial companies in the new administration.

In this issue, I highlight one of the highest-growth major financial companies that will surely benefit from the improving dynamic going forward. It is the leading all-digital bank in the country. Unlike many other industry-leading stocks, it is still well below the high because of a recent temporary stumble, and a price spike should be ahead.

Shares of TransMedics (TMDX) are indicated to open nicely higher this morning (+10% to 15%) after the company smashed Q1 expectations.