Search

Overall, the market’s action remains as close to pristine as you could hope for. Under the hood, there has been a touch of rotation, with some growth stocks chopping around while cyclical, construction and materials names perk up. All in all, we wouldn’t be surprised if growth continued to catch its breath, as the recent pullback was very brief, but that’s short-term nitpicking: While dips and potholes will come, the bottom line is that the vast majority of evidence is bullish, so you should be, too. We’ll bump our Market Monitor up to a level 8, and think adding exposure (ideally on dips) makes sense.

This week’s list reflects the broadening we’re seeing out there, with a few tech names but many others from other corners of the market. Our Top Pick is a long-term winner in the aerospace and defense field whose stock just broke out.

The evidence has improved during the past couple of weeks, with our Two-Second Indicator looking much better and, importantly, a Three Day Thrust signal (one of our Blastoff Indicators) flashing green last week, both of which prompted us to put a little money to work last week. Still, while that’s definitely a feather in the bulls’ cap, the primary evidence remains negative, so we’re continuing to hold plenty of cash while setting our sights on next week: If our Tides turn positive and many potential leaders gap on earnings (there are tons of names reporting next week), we’ll definitely be putting a good chunk of money to work ... but as always, we’ll take it as it comes, which today means going slow but staying flexible should the market’s recent good vibes accelerate.

It doesn’t take a proprietary timing system to know the trend is down—we’ve been cautious and defensive since late February when the market and leaders first went over the falls, and we remain so today. That said, we’re also students of the market, and there’s no question we’re in the midst of an outright panic, with some truly extreme readings (north of 1,000 new lows on the NYSE on Friday and today; 95% of the S&P 1500 below their 50-day lines, etc.) that have a history of showing up near some sort of market low. That’s not a reason to turn bullish—again, the trends are clearly down—but it’s best to keep your head up and stay alert should some actual “good news” hit the wires. We’ll leave our Market Monitor at a level 3.

This week’s list is chock-full of defensive growth stocks—firms that have steadier growth stories that shouldn’t be affected by the tariff or economic headwinds. Our Top Pick is showing great relative strength and has a huge runway of growth ahead.

The market encountered a little wave of selling last week, with a big reversal on Tuesday and some follow-through selling on Thursday. But leading stocks held up well, and in fact, we continue to see more and more stocks joining the party. Sure, it’s not a wild bull market, and yes, there’s always the chance that post-Labor Day some big investors will sell into the recent rally. But there’s also the chance that this under-the-radar advance (most investors still believe the market is languishing) will gather steam! As always, it’s best to go with the evidence, and today, that evidence is bullish.

The expanding leadership can best be seen in our recent Top Tens, including this week’s list, which has all kinds of stocks and sectors. Our favorite of the week is Teradata (TDC), a leading play on the “big data” trend. The stock has stormed back this month and looks ready to assault new-high ground soon.

Stock Name	Price	Buy Range	Loss Limit
Chico’s FAS (CHS)	0.00	17-18	-
The Hain Celestial Group, Inc. (HAIN)	0.00	66-69	-
IACI (IACI)	0.00	50-53	-
JAH (JAH)	0.00	47-49	-
Mellanox Technologies (MLNX)	92.00	109-116	-
NetSuite, Inc. (N)	0.00	54-56	-
Sherwin-Williams (SHW)	526.09	135-141	-
SolarWinds (SWI)	0.00	51.5-54	-
Teradata Corporation (TDC)	0.00	73-76	-
TFM (TFM)	0.00	58-61	-

This week’s Cabot Growth Investor issue is two days early, because the rest of the week is filled by the Cabot Wealth Summit, which brings all our analysts to Salem to meet subscribers face-to-face and fix all the world’s problems—or at least help them become better investors.

The market remains news driven, with some soothing U.S.-China trade news sending the major indexes back up. Even so, the intermediate-term trend remains unsupportive, so we’re still playing some defense—we’ve pruned our worst performers and losers, but are also holding our resilient performers. From here, we’re just taking it day to day, willing to buy some fresh leadership if the bulls retake control, but content to sit tight with some cash until that happens.
In tonight’s letter, we write a bit about the type of stocks we’re honing in on for the next sustained advance (early stage), touch on the bottom dropping out of investor sentiment (good for the longer-term outlook) and dive into all our stocks and plenty of new ideas as well.

Current Market Outlook


Major indexes, including the S&P 500, Dow Industrials and Nasdaq Composite remain range bound, chopping sideways in very tight ranges during the past five to seven weeks. But the broad market is looking better and better—most small- and mid-cap indexes hit new highs last week, and we’ve seen some improved action among growth stocks. All told, we remain positive on the market and believe the path of least resistance remains up. Individual stocks have been a bit trickier, but many are acting well. We think it’s best to remain heavily invested.


This week’s list includes many smaller, rapidly growing companies, reinforcing the view that money is flowing toward growth ideas. Our Top Pick is Shopify (SHOP), which has enormous potential as e-commerce expands. Try to buy on dips.

Stock Name	Price	Buy Range	Loss Limit
Wix.com (WIX)	302.53	39.5-41.5	35-36
Ubiquiti Networks (UBNT)	170.11	50-52	47-48
Shopify (SHOP)	585.00	40.5-42.5	36-37
Ingevity Corp. (NGVT)	99.98	42-44.5	39-40
Microsemi (MSCC)	0.00	38.5-40	36-37
LGI Homes (LGIH)	86.04	37.5-38.5	33-34
Green Plains Energy (GPRE)	0.00	23.5-24.5	21.5-22
Finisar (FNSR)	0.00	21.5-22.5	19.5-20
Exact Sciences (EXAS)	116.91	18-19	15.5-16
Autodesk (ADSK)	229.00	66-68	60-61

Current Market Outlook


The market’s rebound since its sharp one-day selloff on Wednesday, May 17, has been impressive and encouraging—the Nasdaq and leading growth stocks spiked to higher highs, and even the S&P 500 nosed out above its March 1 peak. It’s certainly a good sign and pretty much brings us back to where we stood two weeks ago. On the positive side, most growth-oriented stocks are in good shape and most indexes are either at, or just a couple of percent off, all-time highs. But much of the broad market (and many indexes) is just marking time and the number of stocks hitting new lows is at unhealthy levels. Even so, the long-term trend and leading stocks are the most important pieces of evidence, and they’re both bullish. Thus, you should be, too.

This week’s list has another crop of very strong names from many strong sectors. For our Top Pick, we’re going with a big-cap turnaround play—Best Buy (BBY) has surprisingly strong earnings figures, a big share buyback program and the stock just gapped up after its quarterly report.

Stock Name	Price	Buy Range	Loss Limit
Alibaba (BABA)	254.81	120-124	111-112
Best Buy (BBY)	0.00	57-60	52-54
Domino’s Pizza (DPZ)	339.47	200-205	187-190
FMC Corp. (FMC)	0.00	73.5-76	69-71
MercadoLibre, Inc. (MELI)	980.83	272-282	248-254
MuleSoft (MULE)	0.00	25.5-28	22.5-24.5
Regeneron Pharmaceuticals (REGN)	512.96	435-455	400-410
Wayfair (W)	167.03	60-64	57-58
West Pharmaceutical (WST)	210.25	94-97	88-90
Wynn Resorts (WYNN)	121.08	123-127	114-117

In preparation for today’s Cabot Wealth Advisory, I went back and read our in-house recap of a recent survey we sent you. While it was expressed a few different ways, the most common response was some form of “Help me make money by helping me know when to buy, sell, be in and out of the market ... " and so on. Today I want to give you 10 nuggets to put in your investing toolkit.

First off, some housekeeping: This is our last Top Ten issue of the year, as next Monday is the second of two “off” weeks we have all year. We will, however, send out a full Movers & Shakers update next Monday (December 29) to keep you up to date. Most important, we wish you and your family a very Merry Christmas and Happy Holidays.

As for the market, the five-day dip into last Wednesday was a downer, but it looks like a year-end rally is underway, with the indexes and many stocks lifting nicely of late. Of course, looking ahead, early January is usually very tricky, though as always, we’ll just take it as it comes: Today, we continue to see more good than bad out there, though it does depend on where you look, with cyclical and financial areas doing well while growth areas are picking up steam but lagging. We’ll nudge our Market Monitor up to a level 7, respecting the action, but focusing on what’s working remains paramount.

This week’s list is again well balanced, with some strong names continuing their moves and other titles emerging after long rest periods. Our Top Pick has many industry-wide and company-specific tailwinds, and the stock looks to be changing character as it discounts a much brighter future.

Early Tuesday morning Biopharmaceutical giant AbbVie (ABBV) announced plans to acquire Ireland-based Allergan plc (AGN) for $63 billion. The market hates the deal and AbbVie stock plummeted over 16% on the day. Let’s take a look at the deal and see what’s going on.

As expected, the market lost a little steam during the past few days, with buyers showing little interest after stocks ramped higher in previous weeks. Of course, the sellers aren’t showing much muscle, either, resulting in a short-term rotational, choppy environment. What about the long-term? Could the rally have already run its course? Sure, it’s always possible, especially given the stop-start environment since early 2011. But the evidence points to an intermediate-term (and longer-term) uptrend in the indexes and most stocks, so you should remain bullish. That doesn’t mean you can’t book a few partial profits on the way up, but you should also hold on to most of your best performers.

This week’s list has some different names, including a few that have recently strengthened after many months of idling. Our favorite of the week is Jazz Pharmaceuticals (JAZZ), a former small-cap leader of 2010 and 2011 that consolidated for the better part of a year before breaking out last week.

Stock Name	Price	Buy Range	Loss Limit
Computer Sciences (CSC)	0.00	31.5-33	-
Concur Technologies (CNQR)	0.00	72-74.5	-
Google Inc. (GOOG)	0.00	710-730	-
HCA Healthcare (HCA)	137.60	31-32	-
Jazz Pharmaceuticals (JAZZ)	0.00	54-58	-
Mellanox Technologies (MLNX)	92.00	104-108	-
MCO (MCO)	0.00	44-45	-
Phillips 66 (PSX)	0.00	45-47	-
Barrick Gold (GOLD)	27.20	114-119	-
Royal Gold, Inc. (RGLD)	129.66	90-95	-

Welcome to our 2026 TOP PICKS issue! This is one of my favorite issues each year as our Cabot analysts take a deep look at their portfolios and share their top stock ideas for 2026.

You’ll find a well-diversified selection of stocks—growth, value, dividend payers, metals, technology, healthcare, retail, manufacturing, and much more!

I hope you’ll find one or more to your liking!

It’s been an encouraging week in the market—both the S&P 500 and Nasdaq are up in the 2% range, while broader indexes and growth-heavy measures are up more.


For much of 2022 and 2023, buying pressures weren’t able to persist—yes, there were rallies, but they usually went just three to five weeks before the bulls pulled in their horns, leading to renewed downside.

Current Market Outlook


The market has turned mostly neutral, with the intermediate-term trend slightly negative, the longer-term trend slightly positive, and individual stocks a mixed bag. In the big picture, the pullback in the major indexes during the past month is reasonable given the February-April gains, and we’re encouraged by both the broad market’s resilience (few stocks or sectors are in disarray) and the dearth of bullish sentiment. Even so, it’s best to go with the market’s action first and foremost, and right now, it’s a mixed bag. Thus, we’re knocking our Market Monitor down another notch and will keep an open mind—a big-volume selloff from here would raise the odds of a deeper correction, but a surge back above the 50-day lines for the major indexes would likely signal the resumption of the post-February advance. Stay tuned.

This week’s list again has a solid growth feel to it, including a few stocks that recently reacted well to earnings. Our Top Pick is Fidelity Information Services (FIS), a steady fundamental performer that gapped up on earnings three weeks ago and has held firm since.

Stock Name	Price	Buy Range	Loss Limit
Weibo (WB)	98.16	22-23	20-21
Ultimate Software (ULTI)	0.00	193-199	183-185
TransUnion (TRU)	83.09	30-31	28-28.5
Tallgrass Energy Partners (TEP)	0.00	46-49	42.5-44
NetEase, Inc. (NTES)	0.00	158-163	145-147
Fidelity National Information Services (FIS)	0.00	70-73	65-66
Emergent BioSolutions, Inc. (EBS)	0.00	41-43	38-39
Salesforce.com (CRM)	0.00	79-82	74-75
Becton Dickinson (BDX)	0.00	162-166	157-158
Applied Materials (AMAT)	0.00	21.5-22.5	20-20.5

Current Market Outlook


There are a still a couple of flies in the market’s ointment, but the past week or two has seen the market broaden out—the Nasdaq and growth stocks are still leading the way, but the S&P 500 and NYSE Composite have joined them in new high ground, and even the lagging small- and mid-cap indexes have perked up. Market-wise, then, the evidence has improved, so we’re nudging up our Market Monitor to a level 9. Just as important, though, is handling your stocks correctly—right now, many are extended to the upside, though some are just emerging while others look like great buys on any dips. Long story short, you should remain bullish, but honor your stops and continue to pick your spots on the buy side.

This week’s list has another batch of strong growth stocks. Our Top Pick is JD.com (JD), which catapulted to all-time highs a month ago on earnings and has calmly consolidated since.

Stock Name	Price	Buy Range	Loss Limit
Autodesk (ADSK)	229.00	107-112	99-102
Bob Evans Farms (BOBE)	0.00	67-70	62-63.5
Broadcom Limited (AVGO)	266.26	245-255	227-232
Graco Inc (GGG)	0.00	109-113	101-103
JD.com (JD)	39.58	38-40	35-36.5
Lumentum (LITE)	87.00	56-58	51-52.5
Marriott Vacations (VAC)	0.00	116-120	105-108
Marvell Technology Group (MRVL)	36.88	16.8-17.5	15.8-16.2
ServiceNow (NOW)	341.86	102-105.5	95.5-97.5
Weibo (WB)	98.16	73-76	66-68

Some of the strongest performers in the small-cap health care space are small-cap medical device stocks. And these three are soaring after earnings.