Purchasing a stock may seem simple, but finding the Best Stocks To Buy without a proven strategy can be extremely difficult. Therefore, which stocks should one consider buying currently or adding to a watchlist? Some top contenders include Advanced Micro Devices (AMD), SharkNinja (SN), Lennar (LEN), On Holding (ONON), and Weatherford (WFRD).
Investors were concerned about inflation and the Federal Reserve’s aggressive interest rate increases last year. However, the market surprised expectations and delivered an impressive performance in 2023. For 2024, more modest gains are predicted, but there is a growing belief that the Fed will successfully achieve a soft landing. The current conflict between Russia and Ukraine and the ongoing Israel-Hamas war continue to create uncertainty in the market, but investors should be prepared for potential stock advances.
Key Factors for Choosing the Top Stocks to Invest In
Keep in mind, there are numerous stocks being traded on both the NYSE and Nasdaq. However, your goal is to identify the top-performing stocks at present in order to generate significant profits.
According to the CAN SLIM system, there are specific criteria to follow while making investment decisions. It is recommended to invest in stocks that have shown a growth of at least 25% in their quarterly and annual earnings. Companies with innovative and revolutionary products and services should also be considered. Additionally, it may be beneficial to look into companies that are not yet profitable, such as recent IPOs, but have a significant increase in revenue.
The CAN SLIM method has a well-established history of surpassing the S&P 500 by a significant margin. This is crucial in achieving exceptional returns over an extended period of time.
Moreover, it is important to monitor the balance between supply and demand for the particular stock. It is also crucial to concentrate on prominent stocks within the leading industry sectors and to target stocks that have significant institutional backing.
After identifying a suitable stock that meets the set criteria, the next step is to refer to stock charts to determine a potential entry point for investment. It is advisable to wait for the stock to establish a base before making a purchase, and ideally, this should be accompanied by high trading volume. In most cases, the stock’s appropriate buy point is when it breaks above the previous high on the left side of the base. For more details on what constitutes a base and how charts can aid in achieving success in the stock market, please refer to this resource.
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Remember to Include the Letter M when Purchasing Stocks
CAN SLIM formula emphasizes the importance of M, which refers to market direction. The majority of stocks, even those with high potential, tend to follow the overall market trend. It is wise to invest in stocks when the market is in an confirmed uptrend and to hold cash when the market enters a correction phase.
In 2023, the stock market saw impressive profits and aims to continue its success. The Nasdaq and S&P 500 indexes remain robust, with both staying above the crucial 50-day moving average. The S&P 500 reached a new peak, marking its first record high in two years.
The confirmed uptrend in the stock market has returned, despite several instances of distribution days. This presents a favorable opportunity for investors to make stock purchases and to supplement their existing holdings with additional investments. According to IBD, the current recommendation is to have a market exposure of 60% to 80%.
It is advisable for investors to carefully choose high-quality stocks for investment. The following options are considered some of the top stocks to consider buying or monitoring at the moment. The IBD 50 is also a great source for potential stock picks.
Even though the market has entered a confirmed uptrend, it is still important to remain vigilant for any indicators to sell. If a stock drops by 7% or 8% from its purchase price, it should be sold. Additionally, be cautious of significant drops below the 50-day or 10-week moving average.
It should be kept in mind that there is still a considerable amount of headline risk. The potential for inflation to be a concern remains, and the unpredictable Russia-Ukraine conflict has shown its ability to disrupt the market. Furthermore, the ongoing issues in Israel only add to the existing level of uncertainty.
The stock market is known for its volatility, so it is important to closely monitor the market trend page to stay updated.
Top Stocks to Purchase or Monitor
- AMD
- SharkNinja
- Lennar
- On Holding
- Weatherford
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In this section, we will examine the performance of AMD, SharkNinja, Lennar, ONON, and Weatherford stocks in greater depth. It should be noted that these top stocks to invest in and monitor all demonstrate strong relative strength.
Stock Performance of AMD
The large computer processor company, AMD, is currently at a stage where it is recommended to buy as it has successfully surpassed a brief period of stagnation at 184.92, which serves as a key buying point according to the guidelines outlined in the article, “Chart Reading Basics: How a Buy Point Marks a Time of Opportunity”. The breakout occurred just before the formation of a new flat base, as described in the article “Chart Patterns: Flat Base – Dull Trade, Positive Action”.
The 21-day exponential moving average has functioned as a support level.
The recent bounce off the 10-week moving average presented an opportunity for buyers, as the stock rallied in response to impressive earnings from competitor Nvidia (NVDA).
The semiconductor giant’s overall performance is exceptional, as evidenced by its exceptional IBD Composite Rating of 99.
AMD reported a 12% increase in EPS to 77 cents in the latest quarter, with a 10% rise in revenue to $6.17 billion. Their earnings met Wall Street’s predictions, while their sales exceeded expectations.
There is an expected increase of 17% in earnings in 2024, followed by a significant jump of 66% in 2025, which is quite remarkable for a company of this size.
In the realm of artificial intelligence (AI), AMD is putting in significant efforts to rival Nvidia. To keep up with the rising demand for AI processing in data centers, internet companies are upgrading and increasing production of their MI300 AI chip this year.
In spite of this, it is estimated by analysts that Nvidia continues to dominate approximately 80% of the AI chip market, according to a report from Investors.com.
According to a research note from Bank of America, the revenue from data center products is expected to make up 50% of AMD’s total revenue by the end of 2024, a significant increase from 10% to 15% five years ago.
According to AMD, the majority of their data center revenue is derived from replacing Intel equipment in server computers. They have informed financial analysts that their AI processors have the potential to generate $3.5 billion in sales by 2024.
AMD is currently in the process of developing chips that will be used for training AI models on powerful supercomputers. However, the potential for growth is predicted to be even greater in the “inferencing” market.
The process of inferencing can be described as the execution of AI tasks in both data centers and on various devices such as mobile phones and PCs. This involves utilizing real-time data to generate predictive outcomes that can be utilized for practical purposes.
Stock of SharkNinja
The stock of SharkNinja is currently within a suitable buying range as it has successfully surpassed a flat base and has an optimal entry point of 53.40.
This is an initial foundation, indicating a higher possibility of achieving significant profits. The relative strength line is on an upward trend.
The current trading of the stock is positioned higher than both its short-term and major moving averages, indicating an optimistic outlook.
SharkNinja, a relatively new stock, has gained a significant following among investors. Since its IPO, the stock has seen a surge of over 100% from its record low of 25.84 in August 2023.
With an IBD Composite Rating of 85 out of 99, the stock ranks in the top 13% of issues for its stock market performance in the last 12 months.
The overall outlook also appears positive. There has been a 51% increase in EPS in the last three quarters on average. Additionally, profits saw a boost in the most recent quarter.
SharkNinja is currently close to reaching the top of the Household-Appliances/Wares IBD industry group, making it an attractive quality for investors.
The company, based in Needham, Mass., is renowned for its range of products including air fryers, blenders, and vacuum cleaners.
In addition to this, the company is also looking into new markets and is considering expanding their reach in the outdoor cooking industry by introducing indoor/outdoor cooling systems and high-end coolers.
According to SharkNinja, the company considers $1 billion subcategories as a significant factor in their success. The introduction of new products is an essential element in the CAN SLIM formula.
Stock of Lennar
The stock of Lennar is currently within a buy zone, having surpassed the flat-base buy point of 156.01. It remains steady near the 10-week moving average, and this could potentially be seen as an opportunity to enter the market as it bounces back.
During the construction of the base, the relative strength line has been in a temporary pause. A sudden increase in this line could potentially lead to a breakout.
The overall performance of LEN stock is impressive, as indicated by its IBD Composite Rating of 93. The company’s strong fundamental performance is also evident in its EPS Rating, which is 81 out of 99.
One of the main strengths of LEN lies in its success in the stock market, which further cements its position as one of the top stocks to consider purchasing or monitoring. In fact, it is in the top 10% of all stocks in terms of price performance in the last year.
According to the National Association of Realtors, companies such as Lennar are experiencing growth opportunities as a result of a potential increase in demand for housing due to a shortage in supply. Currently, there is a deficit of approximately 5.5 million homes, as reported by the NAR. This gap is significant, with the NAR estimating that it would take over ten years to close, even with an increase in new-home construction.
A prominent investor, Warren Buffett, known for his successful investments, has a positive outlook on the long-term prospects of homebuilders. In the second quarter of 2023, his company Berkshire Hathaway (BRKB) made significant investments in the U.S. housing market, which is facing supply constraints.
Berkshire Hathaway has announced new investments in the homebuilding industry, specifically in Lennar, D.R. Horton, and NVR, all of which are part of the S&P 500. These investments, which are valued at over $800 million, were made in the fourth quarter, during which Buffett also revealed that he had sold his previous stake in D.R. Horton.
According to MarketSmith data, it is not just the Oracle of Omaha who is investing in Lennar stock. Fidelity Contrafund (FNCTX) is also among the funds holding 53% of LEN stock.
The year 2023 saw a stable market for new-home prices and a consistent demand, as homeowners with existing properties were hesitant to sell and upgrade due to the high mortgage rates. Throughout the previous year, mortgage rates significantly increased in correlation with Treasury yields.
The mortgage rates have significantly decreased from their previous highs, but there has been a recent increase in the rates.
Despite inflation being difficult to change and the Federal Reserve indicating that interest rate decreases will not be immediate, the central bank is still shifting towards implementing policies to alleviate economic strain.
Stock of ONON
The stock of On Holding is currently positioned near the upper point of the buy zone, with a handle entry point of 33.24. The high point on the left side of its cup-shaped base, which is at 37.08, could potentially be used as a higher buy point.
The stock’s relative strength line has increased as it forms the right side of its base, indicating positive momentum. This is considered a first-stage pattern, which is an added benefit.
After a highly publicized IPO, the value of On Holding dropped significantly, but it has managed to recover from its low point. As of 2024, the stock has seen a growth of almost 30%, surpassing the S&P 500’s increase of approximately 7%.
The company’s line of running, hiking, and sports footwear has gained popularity for its lightweight and comfortable designs. These shoes feature superfoam soles that are known to provide both comfort and enhance performance.
The company known for their running shoes from Switzerland created a stir by entering into a contract with retired tennis legend Roger Federer, who aided in the release of environmentally-friendly sneakers made with vegan leather.
The company expanded its team by enlisting Iga Swiatek, a female tennis champion who currently holds the top spot in the Women’s Tennis Association rankings and is also the reigning champion of the French Open.
On offers a range of products, including the On Cloud, Cloud X, Cloudnova, and The Roger Pro, which was created in partnership with Federer. Along with footwear, the brand also manufactures training apparel like shorts, pants, and jackets.
The stock’s performance is solid, as evidenced by its IBD Composite Rating of 95. The current weakness of the stock lies in its earnings.
Holding saw a rebound in growth in the latest quarter, with a significant increase of 208% in EPS. Furthermore, there has been an average growth of 120% in earnings over the last three quarters.
On’s sales are primarily derived from North America, with the region contributing to over 50% of the total sales. Apart from North America, significant markets for On also include Germany and the United Kingdom.
On Holding is expected to announce its Q4 earnings in approximately two weeks. Historically, ONON stock experiences significant fluctuations during earnings season, often resulting in unexpected sharp declines.
Experts predict a rapid increase in earnings, projecting a 53% growth in EPS for 2024 followed by a 49% surge in 2025.
The ONON stock is held by two notable holders, Fidelity Contrafund and the Allspring Growth Fund Class A. Funds hold a total of 41% of the shares.
At present, On Holding is included in the highly esteemed IBD Leaderboard Watchlist of leading stocks.
The market has reached a new milestone with its recent rally, but there is a risk that has resurfaced, according to a report by Investors.com. The Dow Jones futures and Nasdaq have both hit new highs, while Taiwan Semiconductor has experienced a significant increase.
Stock of Weatherford
According to MarketSmith analysis, Weatherford is in close proximity to the buy zone for a consolidation-pattern entry at an undefined price of 102.64.
At the moment, the energy stock is trading higher than its significant and immediate moving averages, giving off a clear indication of a bullish trend.
In February, the RS line for WFRD stock is rebounding after a period of lower performance from early November. Compared to its energy counterparts, the stock is demonstrating stronger performance.
On January 30th, the stock of Weatherford experienced a significant decrease, similar to other companies in the drilling, services, and machinery industry. This was due to news that Saudi Aramco had decided to put a hold on their expansion plans.
The stock of WFRD has recovered since finding support at the 200-day line. Its earnings have contributed to its rise, along with the rebound of crude prices.
In the fourth quarter, Weatherford reported a 70% increase in earnings per share, reaching $1.90, which exceeded expectations on Wall Street. Additionally, the company saw a strong growth in revenue, with a 13% rise to $1.362 billion.
As part of its strategy, the corporation has recently revealed several acquisitions, which are crucial in distinguishing its capabilities from those of its competitors. The most recent additions consist of a top provider in well-decommissioning technology and two well-known brands in the wireline or cabling technology sector.
Weatherford predicts a rise in revenue of 10% to the “low teens” for the entire year of 2024, primarily driven by growth in the Middle East. The company also anticipates that its adjusted EBITDA margins will approach its target of 25%. In the fourth quarter, Weatherford recorded an adjusted EBITDA margin of 23.6%, and for the whole year, it was at 23.1%, an increase from 2022’s 18.9%.
The price target for WFRD stock has been increased from 120 to 123 by Bank of America. Despite this change, the buy rating has been maintained and Weatherford is still considered the top oilfield services midcap pick.