The recent take down of market leadership wasn’t what we were looking for – and my trading list now has more of a variety of names given the selloff in growth areas. Our Top Pick is Arcutis Biotherapeutics Inc. (ARQT), says Mike Cintolo, editor of Cabot Momentum Trader.
Arcutis sports great growth and big potential — and the stock is actually attempting to break out on good volume. The company makes topical treatments for skin conditions, including for plaque psoriasis (itchy, scaly patches on skin), seborrheic dermatitis (a chronic inflammatory skin condition called SD for short), and atopic dermatitis (the most common type of eczema, known as AD).
Historically, all these conditions have been treated with success by steroids. But steroids are safe when used only for a short amount of time. Arcutis fills the need for long-term treatments with steroid-free offerings.
Earnings leapt into the black in the second quarter and should grow from here. Analysts are seeing $1.26 per share in profits next year, which is likely to prove too low.
From a technical standpoint, ARQT had been on a positive run since 2024 – with a nice rally to reach 32 toward the end of last year. This year, though, has seen a big base-building effort. We saw a persistent dip to 19 in May, then a nice run to 30 in July, followed by a three-month rest.
Some buyers are now showing up despite a poor growth stock environment. Volatility is high. But the recent big-volume breakout attempt is intriguing.