Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. So what are the best stocks to buy now or put on a watchlist? General Electric (GE), SLB (SLB), Airbnb (ABNB), Uber Technologies (UBER) and Marsh & McLennan (MMC) are prime candidates.
Despite inflation worries and the Federal Reserve tightening rates aggressively, the market has confounded expectations for difficulties in 2023 and has turned in a strong performance so far in 2023. The Russian invasion of Ukraine continues to cast a shadow over markets.
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 best 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 buy 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
A key part of the CAN SLIM formula is the M, which stands for market. Most stocks, even the very best, 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.
While a stock market rally that kicked off 2022 soon fell on its face, it has turned in stunning gains so far this year. Indexes are currently at a potential turning point, with the Nasdaq and the S&P 500 both trading below the key 50-day moving average.
The stock market uptrend is under pressure. should stop buying stocks, aside from exceptional breakouts in exceptional stocks. Investors should be looking of exceptional stocks, such as those in the IBD 50. The stocks below are near buy points and are possible candidates, at least for your watchlist.
It remains crucial to stay on top of sell signals. Any stock that falls 7% or 8% from your purchase price should be jettisoned. Also beware of sharp breaks below the 50-day or 10-week moving averages.
Remember, there is still significant headline risk. Inflation remains a key issue while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market.
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
- Marsh & McLennan
Now let’s look at GE stock, SLB stock, Visa stock, Uber stock and Marsh & McLennan stock in more detail. An important consideration is that these stocks all boast impressive relative strength.
GE stock is forming a flat base with an ideal buy point of 117.96, MarketSmith analysis shows. This is the first base to emerge for the strong market performer since January. Investors could use 115.85 as an early entry.
Shares bounced last week from their 50-day moving average. In addition, the relative strength line has move to new heights, a bullish sign.
The latest pattern is a second-stage base. This counts as early stage, which means it is more likely to net big gains for investors.
General Electric stock is currently in the top 4% of stocks in terms of price performance over the past 12 months. It has gained more nearly 71% in 2023, recently reaching a five-year-plus high in the process. In contrast, the S&P 500 is up less than 17%.
GE stock has been on a tear since breaking out from a cup-with-handle base in late January. Analysts have called GE one of the better defensive moves for investors amid an uncertain macroeconomic environment.
Overall excellent performance is reflected in its IBD Composite Rating of 94 out of 99. At the moment earnings are the Achille’s heel, with its EPS Rating coming in at 76 out of 99.
Analysts forecast EPS growing 104% in Q3 to 55 cents per share. Full year earnings are seen rising 20% in 2023 and 83% in 2024.
The aerospace segment — sometimes called GE’s “crown jewel” — makes jet engines and aviation systems for plane makers including Dow Jones giant Boeing (BA). GE Aerospace also runs a lucrative aftermarket business for engine repair and maintenance.
The stock has been soaring amid moves to narrow the focus of the sprawling conglomerate.
Earlier this year the firm spun off, GE HealthCare Technologies (GEHC). It is part of a three-way breakup for General Electric.
It is splitting into independent energy, health care and aviation companies, aiming to be a pure-play aerospace company in early 2024. Prior to that, it shed a series of assets, from lighting to locomotives.
SLB, formerly Schlumberger, is trading above a cup-with-handle base buy point of 58.70. Investors could also choose to use 60.12 as a new handle, a level which it has also cleared. The benefit here is it offers a higher buy zone.
The stock rebounded recently from the 21-day exponential moving average.
Overall performance is top notch, netting it a perfect IBD Composite Rating of 99. Earnings performance is particularly impressive, with EPS growing an average 68% over the past three quarters.
The stock is also in the top 6% of issues in terms of price performance over the past 12 months.
SLB is one of the world’s largest providers of on- and offshore drilling services. It also provides technology for well drilling, production, and oil and gas processing.
Energy has been rallying of late, which has fueled upward momentum for oil stocks. Oil field services giant SLB is actionable after spiking, as U.S. oil prices hit fresh heights for 2023.
On July 21, SLB narrowly topped Q2 profit expectations but missed on revenue. Despite this SLB Chief Executive Officer Olivier Le Peuch told analysts he remains optimistic about the long-term outlook.
“We continue to see positive upstream investment momentum in the international and offshore markets,” he said. “These markets are being driven by resilient long-cycle offshore developments, production capacity expansions, the return of global exploration and appraisal, and the recognition of gas as a critical fuel source for energy security and the energy transition.”
Analysts see third-quarter earnings growing 22% to 77 cents per share with sales increasing 12% to $8.34 billion.
In addition, Wall Street is expecting SLB profit to grow 37% to $2.98 per share in 2023 while it is seen jumping a further 23% in 2024.
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
Shares have formed a cup base with a 154.95 buy point on a daily chart, but a handle could develop soon. On a weekly chart, ABNB stock has a 151.16 handle buy point. This is a first stage pattern, a positive.
ABNB stock has surged clear of the 50-day moving average, doing so on news that it would join the S&P 500 before the open on Sept. 18. The relative strength line is also at highs.
Overall exceptional performance is reflected in its perfect IBD Composite Rating of 99. It has gained more than 68% so far in 2023.
There are few things more exciting for a young stock than joining a big index. And this is certainly the case for Airbnb, which is eying its new entry as it gets ready to join the S&P 500.
It comes just a few years after the firm’s initial public offering in December 2020. Airbnb is getting set to join the benchmark index before the market opens on Sept. 18.
The San Francisco-based firm allows home and building owners to turn their properties into short-term rentals.
Earnings are lagging price performance, but getting better. In the most recent quarter, EPS surged 75% to 98 cents, crushing analyst expectations for 80 cents. Revenue was also better than expected.
The average daily rate customers pay for a stay — an important metric for investors — climbed 1% year over year to $166. Airbnb had previously said it could decrease.
Evercore ISI analyst Mark Mahaney rates the stock as outperform with a price target of 168 due to its “premium growth and profitability outlook.”
“We also view ABNB as the most innovative asset in Online Travel, based on its consistently successful product development rollouts adapting to market trends,” he said in a research note.
Wall Street certainly seems taken with the stock. It currently boasts an excellent Accumulation/Distribution Rating of A-, reflecting strong recent buying among institutions. In total, 45% of its stock is held by funds.
Uber has formed a new cup base with an ideal buy point of 49.49. It could be working on a handle to offer a slightly lower entry.
The stock is rebounding nicely after a pullback to the 50-day line while the relative strength line is also bending higher.
Overall performance is strong, with its IBD Composite Rating coming in at 86 out of 99. It is in the top 4% of stocks in terms of price performance over the past 12 months.
Big Money have been net buyers of the stock of late, with its Accumulation/Distribution Rating coming in at a strong B
The company benefited during the pandemic from the firm’s range of transportation and delivery services. This helped offset a sharp decline in the ride-sharing business during this period.
Now the ride-sharing business is back in the driver’s seat. Sales soared 38% for the division during the quarter to $4.89 billion. Delivery revenue jumped 14% year over year to $3.05 billion.
In 2021, the company launched Uber One, a membership program that offers discounts on food delivery. There also are perks for use of its ride-sharing business.
Uber has been lowering spending this year with measures such as layoffs in its recruiting and freight divisions.
Uber recently reached a milestone by turning in its first profitable quarter.
Uber’s gross bookings grew 16% to $33.6 billion, ahead of analyst views for $33.49 billion.
Analysts expect the firm to post a profit of $1.02 per share in 2023 before surging 59% to $1.62 in 2024.
Evercore ISI analyst Mark Mahaney recently named Uber its top internet large-cap pick. He has a price target of 75 on the stock.
“UBER was forced very early on in the Covid crisis to take drastic cost actions — actions which helped it attain the FCF (free cash flow) inflection it reached in Q2:22 and the record FCF results of the last four quarters,” he said in a note to clients.
He also believes the company’s Mobility segment is likely to be “relatively recession-resistant from a demand perspective.”
What To Do Amid Latest Market Shift
Marsh & McLennan Stock
MMC stock is just above a flat base buy point of 194.16. The RS line is also gathering momentum.
The stock has been moving higher after finding support at the 21-day exponential moving average, as well as its 50-day line. These are bullish indicators.
Overall strong performance has netted the insurance play a very strong IBD Composite Rating of 94.
Big Money has been standing pat on the stock of late, with its Accumulation/Distribution Rating coming in at C-.
The New York City-based firm operates in 130 countries across the globe, offering risk management, insurance and consulting services.
Marsh & McLennan completed 20 acquisitions last year as it chases growth. In 2022, MMC’s risk and insurance services business segment generated around 61% of the company’s $20.72 billion total revenue in 2022.
On July 20, the company posted better-than-expected second-quarter earnings and revenue. Earnings have accelerated for the past two quarters.
The insurance broker has averaged around average EPS growth of 12% over the past three quarters.
Analysts expect further growth going forward. Wall Street predict earnings growing 18% to $1.39 per share in Q3 with revenue increasing 9% to $5.21 billion. For the full year, Wall Street forecasts 13% EPS growth and a sales increase of 6%.
So far in 2023, Marsh & McLennan has announced a slew of new acquisitions, including Israel-based reinsurance broker Re Solutions and the Philadelphia-based risk management firm Graham Company.
The broader IBD-tracked Insurance-Brokers industry group, including MMC stock, has narrowly outperformed the S&P 500 this year
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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