Best Stocks To Buy And Watch Now: 5 Top Stocks For July
Purchasing a stock is simple, however purchasing the ideal stock without a tried and true technique is extremely difficult. So what are the very best stocks to purchase now or place on a watchlist? Google parent Alphabet (GOOGL), PayPal (PYPL), Applied Materials (AMAT), Tempur Sealy (TPX) and American Eagle Outfitters (AEO) are prime candidates.
Since the coronavirus bear market, stocks rebounded powerfully. The strong action reflects rising confidence that the economy will eventually recover from the coronavirus.
The coronavirus remains a concern, but cases have tumbled as vaccinations reach more and more Americans.
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The market pulled back after the latest Fed meeting, where policymakers signaled they expect to raise interest rates by late 2023. The selloff intensified after St. Louis Fed President James Bullard declared he sees the Fed starting to raise interest rates in late 2022.
But markets have been bouncing back once again, suggesting economic optimism remains. A strong jobs report on Friday added further fuel to the upside.
Best Stocks To Buy: The Crucial Ingredients
Remember, there are thousands of stocks trading on the NYSE and Nasdaq. But you want to find the very finest stocks right now to generate massive gains.
The CAN SLIM system offers clear guidelines on what you should be looking for. Invest in stocks with recent quarterly and annual earnings growth of at least 25%. Look for companies that have new, game-changing products and services. Also consider not-yet-profitable companies, often recent IPOs, that are generating tremendous revenue growth.
IBD’s CAN SLIM Investing System has a proven track record of significantly outperforming the S&P 500. Outdoing this industry benchmark is key to generating exceptional returns over the long term.
In addition, keep an eye on supply and demand for the stock itself, focus on leading stocks in top industry groups, and aim for stocks with strong institutional support.
Once you have found a stock that fits the criteria, it is then time to turn to stock charts to plot a good entry point. You should wait for a stock to form a base, and then purchase once it reaches a buy point, ideally in heavy volume. In many cases, a stock reaches a proper buy point when it breaks above the original high on the left side of the base. More information on what a base is, and how charts can be used to win big on the stock market, can be found here.
Don’t Forget The M When Buying Stocks
Never forget that the M in CAN SLIM stands for market. Most stocks, even the very best, will tend to follow the market direction. Invest when the stock market is in a confirmed uptrend and move to cash when the stock market goes into a correction.
The stock market pulled back following the latest news on interest rates, but has already rallied back. The broad S&P 500 and the tech-heavy Nasdaq both recently hit record highs. In addition, the Dow Jones Industrial is now well clear of the key 50-day moving average. A strong jobs report Friday helped stock soar higher.
The market has now moved back into a confirmed uptrend. Institutional selling has been modest, so investors should feel confident increasing their market exposure by purchasing top stocks. Do not forget to stay flexible, and maintain discipline in applying buying and selling rules however.
Now is a good time to be buying fundamentally strong stocks coming out of sound chart patterns. The stocks featured below are potential candidates.
But remember, as the past week showed, things can quickly change when it comes to the stock market. Make sure you keep a close eye on the market trend page here.
Best Stocks To Buy Or Watch
- Applied Materials
- Tempur Sealy
- American Eagle Outfitters
Now let’s look at Google stock, PayPal stock, Applied Materials stock, Tempur Sealy stock and American Eagle Outfitters stock in more detail. An important consideration is that these stocks all boast impressive relative strength.
Check out IBD Stock Lists and other IBD content to find dozens more of the best stocks to buy or watch.
Google moms and dad Alphabet is in a buy zone after passing a 2,431.41 flat base buy point. It is actionable as high as 2,553.05.
Shares have been trading just above or below the buy point for more than two weeks, usually tiny moves in below-average volume. But on Friday, GOOGL stock rose 2.3% to 2,505.15, clearly moving past its recent sideways action.
The relative strength line for GOOGL stock is around record highs. This gauges a stock’s performance compared to the S&P 500.
Google is on IBD Leaderboard and IBD Long-Term Leaders.
GOOGL stock has a perfect IBD Composite Rating of 99. That puts it in the top 1% of stocks tracked overall. Earnings outshine stock market performance, with its EPS Rating a top notch 94 out of 99.
Earnings have grown by an average of 50% over the past three quarters. This is double the 25% sought by CAN SLIM investors.
Analysts see strong growth ahead, with Google earnings per share expected to explode 66% in 2021, and then growing by a further 8% in 2022.
The tech giant has a Relative Strength Rating of 86. That means it has outperformed 86% of stocks tracked over the past 12 months in terms of price performance. Recent performance is strong, with Google stock rising more than 44% so far in 2021. This far outstrips the S&P 500’s gain of around 16%.
Big money has been snapping up Alphabet stock of late. This is reflected in its Accumulation/Distribution Rating of B. This reflects moderate buying over the past 13 weeks.
Google stock was boosted after the firm posted first-quarter earnings and revenue that crushed analyst estimates. YouTube advertising revenue topped expectations, while the company also authorized additional GOOGL stock buybacks.
In the March quarter, Alphabet repurchased $11.39 billion of its GOOGL stock, up from $8.5 billion in the year-earlier period. Alphabet had roughly $4 billion left in a share repurchase program. The new buyback authorization brings that to about $54 billion.
The internet giant’s core search advertising business also continued to rebound, though the coronavirus pandemic still pressures sectors such as travel.
While Google has expanded into cloud computing and consumer hardware, digital advertising still makes up the lion’s share of revenue. Google announced in early March that it will stop employing web browser-tracking technology for the purpose of selling advertising. Earlier, Google said it would phase out third-party cookies.
Google plans to utilize “contextual” technology that enables advertisers to target aggregated groups of consumers with similar interests, such as travel, sports or fashion.
PayPal stock has cleared the top of a buy zone from a smaller cup within a consolidation. However PYPL stock has also formed a new handle entry on daily chart, which means the larger consolidation can be seen as a cup with handle. The buy point here is 296.11, and it is actionable as high as 310.92.
The relative strength line had been improving, but it took a bit of a breather as it formed its new handle. Going forward, investors will want to see it power above the all-time high it reached in mid-February.
The payments stock has a long history of outperforming the broader market, a key reason why it is on the IBD Long-Term Leaders list. It’s also on Leaderboard.
PayPal stock has seen its Composite Rating come back strongly, and it now sits at a very strong 96. Stock market performance is improving, and PYPL stock is now up around 27% so far this year.
Earnings are the stock’s key strength, with its EPS Rating coming in at 98 out of 99. EPS has grown by an average of 52% over the past three quarters. This reflects the current trend towards cashless transactions amid the Covid-19 pandemic.
When PayPal reported March-quarter earnings, revenue and total payment volume topping analyst estimates. EPS popped by 85% to $1.22 as e-commerce continued to boom amid the coronavirus pandemic. Revenue vaulted 31% to $6.03 billion. The strong results have been helping the stock advance.
Total payment volume processed from merchant customers jumped 50% to $285 billion. This was better than the $264.9 billion projected by analysts.
The company also said it added 14.5 million net new active accounts worldwide in the December quarter. Well known for its online checkout button, PayPal had 392 million active accounts worldwide as of March 31.
Meanwhile PayPal is looking into new growth avenues. It is now fighting it out with payments rival Square (SQ) in the cryptocurrency space. The two payment companies are marketing apps that let shoppers get discounts, make installments and buy cryptocurrencies.
PayPal‘s Venmo and the Square Cash App started off as person-to-person money-transfer services for family members and friends. Now they’ve evolved into broad consumer financial services apps fueling growth for these leaders in the burgeoning field of digital payments.
In late November, PayPal launched a cryptocurrency trading service, allowing clients to buy and sell Bitcoin.
In addition, PayPal customers will also be able to use cryptocurrencies to shop at the 28 million merchants on its network starting in early 2021, the company said.
PayPal also announced cryptocurrency trading on Venmo. The new feature allows customers to use these three types of cryptocurrency, plus Bitcoin Cash, to view crypto trends and make transactions. The rollout has already started, and will be available for all customers directly in the Venmo app within the next few weeks.
Two Top Chinese Stocks Flashing Buy Signals
Applied Products Stock
Applied Materials is below its entry point after trying to break out of a new cup with handle. The ideal entry here is 142.22, and it will be actionable up to 149.33.
The current base is second stage, which is positive. IBD research shows such early stage patters are more likely to lead to big price gains. Investors will want to see the relative strength line pick up going forward, however.
AMAT stock has a near-perfect Composite Rating of 97. It boasts a formidable combination of stock market and earnings performance. Its strong performance as won it a spot on the prestigious IBD Leaderboard.
Big money has been getting behind the stock of late, a key consideration for the CAN SLIM cognoscenti. It boasts a Accumulation/Distribution Rating of C+. This represents more buying than selling among institutions over the past 13 weeks.
Back in May the chip equipment posted its best sales and earnings growth in four years.
The Santa Clara, California-based company’s EPS rose 83% to $1.63 a share per share, while revenue popped 41% to $5.58 billion. This beat analyst expectations on both counts.
For the current quarter, Applied Materials forecast adjusted earnings of $1.76 a share on sales of $5.92 billion. Wall Street had been predicting earnings of $1.56 a share on sales of $5.53 billion. In the year-earlier period, it earned $1.06 a share on sales of $4.40 billion.
“We are confident in our ability to outperform our markets as large, secular trends create sustainable demand for semiconductors and our leadership in materials engineering becomes increasingly critical to deliver new chip technologies.
Applied Materials provides some of the critical engineering for chip development. The company says its technology is used to produce nearly every new chip and advanced display in the world.
Tempur Sealy Stock
Bed giant Tempur Sealy managed to bounce above a new flat-base buy point of 41.14, but is currently sitting below it. Its latest base is second-stage, which is a positive.
The relative strength line is bending upward, which is a bullish indicator. The stock boasts an impressive balance of earnings and stock market performance.
The bullish move and strong profile of Tempur Sealy stock saw it added Friday to the prestigious Leaderboard list of leading growth stocks.
TPX stock currently has a perfect Composite Rating of 99, and boasts balanced earnings and stock market performance.
Tempur Sealy gapped up on May 27 after the bedding manufacturer cited improving sales trends.
The company also announced plans to buy U.K.-based bed and mattress retailer Dreams for just under $500 million. Dreams did about $400 million in sales in 2020. Tempur Sealy said it expects Dreams to generate about $450 million in the first year after the acquisition. The deal is expected to close in the third quarter.
When Tempur Sealy reported Q1 results in late April, revenue growth accelerated sequentially from Q4, rising 27% to $1.04 billion. Adjusted profit jumped 88% to 64 cents a share.
In North America, sales increased 28% to $883.3 million. Operating margin rose to 19.6% from 14.7% in the year-ago period.
International sales rose 23% to $160.5 million. Operating margin improved to 28.8% from 20.3%.
Tempur Sealy also increased its share repurchase program to $400 million. In Q1, the company repurchased 8.9 million shares for $313.1 million.
TPX stock is winning the backing of big money, which is reflected in its Accumulation/Distribution Rating of B+. This shows moderate to heavy buying among institutions over the past 13 weeks.
At the end of March, 678 funds owned shares of TPX stock, up from 543 a year earlier. The highly regarded Lord Abbett Developing Growth Fund (LAGWX), a member of the IBD Mutual Fund Index, had a 1.4% stake, according to Q1 data.
American Eagle Outfitters Stock
AEO stock is close to a a 38.38 consolidation pattern buy point after briefly clearing the entry on June 25. The stock is currently looking for support at its 50-day line. Finding it will be be key going forward.
The relative strength line is slipping somewhat after coming close to its consolidation peak. This also need to improve. If it does, there is ample room to run before it hits an all-time high.
Investors could use 38.38 as the buy point or treat the June 25 peak as the start of a high handle, offering a 39.09 entry.
AEO stock owns a strong RS Rating of 95. The stock has ran as much as 485% above its coronavirus crash lows, underlining just how strong sentiment has been.
The clear fly in the ointment is the lackluster EPS Rating of 56. The caveat here is analysts see a strong recovery ahead.
On a per-share basis, analysts expect American Eagle earnings to rebound to $2.12 in the current fiscal year, from a 13-cent loss last year. The improvement is seen continuing in 2023, where full year EPS is seen increasing by 9%.
During the firm’s most recent earnings call, the firm’s Chief Creative Officer Jennifer Foyle said the firm are looking to increase their share of the denim market, which is trending upwards.
“As I think about denim and the future of denim, look, it’s our job to maintain our market share in denim. We talk about this daily,” she said.
We want to be the go-to denim destination, not only in this country, however in the world. [There is ] Lots of opportunity out there.”
Foyle said the trust they have actually built as a destination for denim will help as they “deliver new fits and new categories in denim.”
“Talking back to just the outfitting opportunity with this denim business on the rise and we’re seeing this acceleration, certainly there is opportunity in tops in both genders,” she said.
Meanwhile COO Michael Rempell touted the firm’s e-commerce performance, which resulted in fewer shipments per order and faster delivery. He also said the firm’s supply chain team had anticipated and successfully managed through shipping delays.
American Eagle is one of several young-adult apparel retailers at or near buy points.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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Jobber Wiki author Frank Long included to this report.