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This note includes our review of earnings from Wells Fargo (WFC) and our ratings change from yesterday for Credit Suisse (CS) from Buy to Sell.

Next week, Mattel (MAT) and Nokia (NOK) report earnings, followed by the earnings deluge which starts the week of July 25^th when 13 companies report.

The Cabot Turnaround Letter is traveling this week, so we will not be including a podcast in this update.

Bombardier Transportation is one of the world’s largest manufacturers of rail equipment.

Last week I ran a quiz here, which was designed to give me a better picture of exactly who you are.

So on to the stock. To refresh your memory, Force Protection is a South Carolina company with $340 million in annual sales that makes trucks for the military ... trucks that resist the force of various explosive devices. The majority of these vehicles are bought by the U.S. government, and they’ve proven quite valuable in Iraq. Some have been sold to Canada. And last Monday the British government, which has already bought 100, ordered 140 more.

OK, by now you’re probably sick about hearing of New Year’s resolutions; heck, Paul Goodwin even wrote about a few pointers a couple of weeks ago and Elyse Andrews discussed some in last weekend’s digests. Even so, I like to write down some New Year’s investing resolutions every January, and I think you might get a valuable nugget or two out of them. So here are 10 to consider, in no particular order. Adopt one of them, adopt them all--whatever works for you. But I’m hoping to adhere to all of them (and more) in the months ahead.

Last Friday, while the Dow was dropping 250 points, I took a look at the new highs list. I found 34 stocks, many of them too illiquid and some too stodgy, but one in particular that interests me. It’s Dr. Reddy’s Laboratories (RDY), a major Indian pharmaceutical maker.

There’s not much to say when it comes to the market—the downturn that started in late August continues, with the major indexes back down to their May/June lows, keeping the intermediate- and longer-term trends pointed down. Moreover, after last week’s Fed meeting, the sellers finally came around for many resilient names, causing a bunch to crack support. Today, we’re staying cautious and continuing to hold plenty of cash, but we’re keeping an open mind as we see how this retest phase plays out. Our Market Monitor is down to a level 3.



This week’s list is mostly names that have taken on water (like everything else) but are still acting “normally.” Our Top Pick is a name that’s acting very unusually good, and it has a good story and excellent growth, too.

The market was steady this past week as the Federal Reserve completed its two-day meeting and announced plans to end its stimulus program but keep rates unchanged. Some highlights among Explorer stocks:

We have obviously lived through a very difficult period in the stock market recently, from which most of the portfolio stocks are recovering or have already recovered. Hopefully we will not see another similarly ugly stock market downturn for several years, but there are no guarantees.

Current Market Outlook


The market produced some very constructive action last week, with the Nasdaq bursting to new highs and most other indexes testing their March peaks. And possibly the best action of all came from leading stocks! In a variety of sectors, we’ve seen many resilient names (including a ton of Top Ten stocks) rip higher, often on earnings. With that said, we can’t conclude that the market is completely out of the woods—until most major indexes clearly lift to new highs, there’s still a chance that the post-March 1 consolidation has further to run. Still, all of the major indexes are back above their 50-day lines, most stocks are acting well and the odds favor the market’s March/April consolidation giving way to further upside. We’ll move our Market Monitor to a level 8, and look for new highs on the indexes in the days ahead.

This week’s list has a ton of strong stocks with great growth stories, including a few that recently gapped up on earnings. It’s hard to pick just one, but we’ll go with PayPal (PYPL) as our Top Pick because the stock decisively lifted out of a long IPO base thanks to a big earnings gap.

Stock Name	Price	Buy Range	Loss Limit
Exact Sciences (EXAS)	116.91	29-31	25-26.5
Graco Inc (GGG)	0.00	104-108	97-99
GrubHub (GRUB)	140.03	41-44	38-39.5
Lending Tree (TREE)	411.51	138-144	126-129
MKS Instruments (MKSI)	109.43	75-78	70-71
National Beverage Corp. (FIZZ)	0.00	85-90	78-80
PayPal (PYPL)	147.00	46-48	43.5-44.5
Tencent Holdings Limited (TCEHY)	0.00	29.5-31	27-28
Wabash National (WNC)	0.00	22-23.5	20-21
Yandex (YNDX)	0.00	25.5-27	23-24

Most growth leaders and even the Nasdaq itself has been churning since early February, with a lot of ups and downs but not much price progress—but this week has been more encouraging, as the selling pressures have been unable to persist and the major uptrend may be reasserting itself (basically the opposite situation that was seen repeatedly in 2022-2023). That doesn’t mean it’ll be smooth sailing from here, so we’re still being discerning on the buy side, but we’re holding our winners and remaining in an overall optimistic stance.

In the Model Portfolio, we cut bait on one half position earlier this week that was heading in the wrong direction, but we’re holding our strong performers and tonight are putting a chunk of money to work.

In tonight’s Cabot Growth Investor, we review all our stocks and highlight some names we’re watching, including one that’s set up very well ahead of earnings. We also dive into some details about how we run our ship—we’ve gotten a few questions about this lately, and we think this will clear up any questions you may have.

Last Friday on the Cabot Street Check podcast I co-host with my colleague Brad Simmerman, I predicted that a 5% market pullback was forthcoming after a month of stagnation. We’re more than halfway there already: the S&P 500 is 3% off its highs entering Thursday and narrowly halted a four-day losing streak on Wednesday.

My reason for thinking a mini-correction was imminent was simple: a strong fourth-quarter earnings season had been helping to counteract all the bad news (tariffs, escalating inflation, stagnant interest rates, etc.) that’s impacted the market over the past six weeks … and Q4 earnings season is now effectively over. Sprinkle in the fact that the S&P had actually poked its head above new all-time highs just over a week ago, and a pullback of some kind seemed almost inevitable.

Today’s note includes earnings updates on 11 companies and the podcast. On Thursday, we moved shares of Oaktree Specialty Lending Corporation (OCSL) from Buy to Sell.

There remains a lot of news-driven action and crosscurrents, but when looking at the major indexes, the market’s had its second straight constructive week. As we write this, both the S&P 500 and Nasdaq are looking at 1.8%-ish gains in the holiday-shortened week.