Search

In tonight’s issue we write about one stock that’s at the top of our Watch List, as well as the value of letting a stock make decisions for you. We also give you our latest thoughts on the market, our stocks and some new ideas.

In the January issue of Cabot Early Opportunities, we take heed of the improving market breadth and dig into five companies from different industries that look compelling now.

Our top pick this month is a small-cap oil and gas equipment company that’s a leader in the offshore market. I also feature an online retailer specializing in the luxury market, an emerging MedTech name, a customer experience specialist and an online learning marketplace that’s poised to recover nicely.

As always, there should be something for everyone in this month’s issue!

Repligen (RGEN) reported Q2 results before the bell today that surpassed expectations and has the stock up nicely (6% at mid-day) and bucking the broader market weakness. Revenue was up 86% to $163 million, beating by nearly $19 million, while adjusted EPS of $0.79 rose by 88% and beat by $0.27. Management raised full-year guidance to a range of $625 million to $645 million (up 71% to 76%), well above consensus estimates of $586 million. Adjusted EPS guidance goes to $2.71 - $2.78, way above consensus of $1.71. Gross margins are up a lot, from 57.9% in the year ago quarter to 62% in Q2.

Cannabis stocks are set to close out the year with a punishing 14% decline. Cannabis investors need help from anywhere they can get it.

It looks like it could come from an unusual place in 2025. The future of the cannabis industry is now in the hands of President-elect Donald Trump.

If anyone told me a few years ago this would be the case, I might have asked them what they are smoking.

However, the reality is that during his presidential campaign, Trump endorsed all three of the main reforms that would legitimize the industry and boost cannabis share prices: Rescheduling, bank reform known as SAFER banking, and legalization of recreational use. Trump endorsed the first two outright. He implicitly endorsed legal rec-use because he supported the Florida referendum which would have made this change. At the very least, he has openly endorsed decriminalization.

One year ago, soon after marijuana sales became legal in Canada, investors were throwing money at the sector, anxious to get a piece of the action. Today, the opposite is true—getting money for a cannabis business takes real work!

Three years ago this month, I went to see my first movie in a theater since Covid. The film was Top Gun: Maverick, a movie that tapped into my 1980s nostalgia and was more entertaining and coherent than your average sequel. I wasn’t alone – the film grossed nearly $1.5 billion worldwide, making it the highest-grossing movie of Tom Cruise’s career, which is really saying something. Steven Spielberg thanked Cruise for “saving movie theaters.” He may have been right: In the two previous Covid-tainted years, 2020 and 2021, U.S. movie theaters grossed just over $6.5 billion combined – barely more than half of the industry’s 2018 peak of $11.89 billion.

As an options trader, I’m biased to using options versus buying stock when putting on positions.

Today’s recommendation is a well-known pharmaceutical giant whose stock recently broke out above the high it hit in 2000, 22 years ago! But that’s not why it’s recommended today. Today’s story is all about new drugs and renewed growth.
As for the current portfolio, there are four stocks rated sell!


Details inside.

A few nights ago, as I found myself sitting at a dinner table with a group of strangers, by way of making conversation (and doing research) I asked, “What do you think will happen with the real estate market?” Their answers: “It’ll come back” and “We’ve been here before.” Not wanting to be a wet blanket, I didn’t disagree. But I think they’re wrong. I think there’s a lot more downside ahead, and that getting there will take much longer than most people imagine today.

In a raging bull market that has benefited virtually every one of the S&P’s 11 sectors, the conspicuous laggard among them has been the consumer staples.


The staples sector is down 2.4% year-to-date, compared to positive net returns on the other 10 sectors. Leadership in recent quarters, which is illustrated in the following chart, includes: info tech (up 13%), communications services (up 12%), consumer discretionary (up 10%) and utilities (up 8%).

[Note: Due to the Christmas holiday, there will be no Cabot Turnaround Letter weekly update next Friday. The next monthly issue of the newsletter will be published on December 31.]

The Fed has reversed a long-standing balance sheet tightening phase with its recent decision to expand its balance sheet—a move that has largely fallen under the news radar.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), Janus Henderson Group (JHG), Paramount Global (PARA), Starbucks (SBUX) and Teladoc Health (TDOC).

This month we’re looking past all the current uncertainty in the market at a profitable, young company that should hold its own during this rough patch then accelerate growth into the back half of 2020 (assuming the pandemic eases as we move into the summer months).

The company offers intelligent identity solutions for global enterprises. These solutions are strategic imperatives because they help workers do their job from anywhere and help companies streamline customer experiences.



It’s not the type of stock that’s likely to surge on expectations of an immediate surge in demand, like Zoom Video (ZM) or Teladoc (TDOC). But with 115% net revenue retention the company should grow with current clients in the near-term, then grab its fair share of new business once economic activity picks up again.



We start today with a half position given the market conditions. All the details are inside.

Wall Street analysts expect stocks to be flat for the rest of the year. That’s according to a new Reuters poll, which surveyed 51 strategists, analysts, brokers and portfolio managers. Among them, the average year-end target for the S&P 500 was 5,900 – roughly in line with the current price, and essentially unmoved since the start of the year.

That’s not exactly exciting news, even if 5,900 would have felt like a win in early April, when the benchmark index dipped below 5,000 after President Trump’s now-infamous “Liberation Day” reciprocal tariff announcement. The rally since then has been impressive, but analysts aren’t confident we’ll get much more movement through the final seven months of the year.

The sellers have dug in their heels during the past two weeks, and with the major indexes near their late-January lows, our Market Monitor above has moved back into bear territory. Growth stocks are still a mess, as they have been for weeks, and even some commodity stocks are now taking it on the chin. Still, the overall inflation theme is intact, and we believe putting a little money to work in the leading sectors (gold, oil, natural gas, coal) during this pullback could work out well. Just be sure not to go overboard; keep plenty of cash on the sideline until a real bull market begins, and keep commitments relatively small. This week’s Top Ten contains some familiar names, but also a couple of newer ones that have good potential. Our favorite of the week is Arch Coal (ACI), a well-positioned coal firm that’s pulled back to its 50-day line in recent days. Usually, the first 50-day test after a powerful breakout (like coal stocks have experienced) is successful, so you could buy a little right around here, and keep a stop in the low 40s.

Stock Name	Price	Buy Range	Loss Limit
ACI (ACI)	0.00	44-47	-
APA (APA)	0.00	112-120	-
AUY (AUY)	0.00	16-18	-
BUCY (BUCY)	0.00	95-102	-
EAC (EAC)	0.00	36-38	-
LKQX (LKQX)	0.00	21 1/2 - 23	-
MMR (MMR)	0.00	15 1/2 - 17	-
PGI (PGI)	0.00	14 - 15 1/2	-
SLW (SLW)	0.00	15-17	-
WMS (WMS)	0.00	35-39	-

There remain a few hundred leading stocks that are in great shape – they’ve reacted well to earnings, are in powerful sectors and find buying support just a couple of weeks after beginning normal corrections. However, there are also plenty of stocks that are languishing, or have been taken out and shot during earnings season, leaving investors scratching their heads. The bottom line is that stock selection is very important in this environment, as the leaders are putting on outstanding displays … but there are still plenty of potholes. Thus, holding a little cash as earnings season continues isn’t a bad idea; this week’s Top Ten, for instance, contains a couple of big earnings winners that look ripe for buying. Our favorite of the week is Nasdaq Stock Market (NDAQ), a pure “Bull Market stock” that’s going to benefit from both the strong equity markets and consolidation in the industry. Look to buy on a pullback of a couple of points.

Stock Name	Price	Buy Range	Loss Limit
CNX (CNX)	0.00	54-58	-
CYBS (CYBS)	0.00	15 1/4 - 16	-
DECK (DECK)	0.00	125-135	-
DV (DV)	0.00	50-55	-
IBN (IBN)	0.00	60-64	-
NDAQ (NDAQ)	0.00	40-45	-
NUVA (NUVA)	0.00	37-42	-
SGR (SGR)	0.00	70-74	-
STLD (STLD)	0.00	49-53	-
STP (STP)	0.00	52-56	-

The market has handled itself well during the past couple of weeks, consolidating normally, with our intermediate-term indicators still positive, which is all to the good. Still, leadership remains somewhat lacking and, while coming close, our Cabot Trend Lines are still negative, so we’re content to take things step by step while waiting for more institutional-quality names to get going. Tonight, we are extending our line a bit more, but will hold onto a 36% cash position and want to see added upside confirmation before we put too much more money to work.