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? Netflix (NFLX), Repligen (RGEN), Qualcomm (QCOM), JD.com (JD) and DocuSign (DOCU) are prime candidates.
Since the coronavirus bear market, stocks rebounded powerfully. The strong action reflects a rising confidence that the economy will eventually recover from the coronavirus.
The broader stock market got a shot in the arm after Pfizer (PFE) and BioNTech (BNTX), then rival Moderna (MRNA), announced positive coronavirus vaccine test results. Both the Pfizer and Moderna vaccines have received FDA emergency use approval, with U.S. vaccinations ramping up.
The pandemic remains a concern, though new coronavirus cases, hospitalizations and even deaths are declining, though remain very high.
The major stock indexes are at record highs, though the Nasdaq does look somewhat extended.
But with stocks moving powerfully and the market in an uptrend, it is still a time to be looking for stocks near buy zones showing strength compared to the rest of the market.
So why do the stocks chosen stand out? Before turning to that question, it is important to consider how one goes about choosing a stock in the first place. Superior fundamentals and technical action, and buying at the right time, are all part of a shrewd investing formula.
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
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 Dow Jones Industrial Average, Nasdaq and the S&P 500 are all around all-time highs. In addition they are all well clear of their 50-day moving averages. The whole market is back in an uptrend, and it is a good time to be considering opening new positions.
As you identify stocks, on a technical basis look for stocks with rising relative strength lines. Stocks that hold up amid tough conditions often bound to new highs once a market stabilizes.
Remember, things can quickly change, when it comes to the stock market. Make sure you don’t miss out on a rally by keeping a close eye on the market trend page here.
Best Stocks To Buy Or Watch
Now let’s look at Netflix stock, Repligen stock, Qualcomm stock, JD.com stock and DocuSign stock in more detail. An important consideration is that these stocks all boast impressive relative strength.
Netflix stock is near a buy zone after breaking out of a long consolidation pattern, according to MarketSmith analysis. The ideal buy point is 575.47.
Netflix stock was boosted by its latest earnings report, even though actual earnings per share fell short. Its relative strength line also spiked. This gauge’s a stock’s performance compared to the S&P 500.
Its latest quarterly report showed strong subscription growth. It added 860,000 new subscribers in the U.S. and Canada in the December quarter, despite implementing a price hike. The firm ended 2020 with 203.7 million subscribers worldwide, including 73.9 million in the U.S. and Canada.
For the current quarter, Netflix expects to add 6 million new subscribers worldwide. That was below Wall Street’s consensus estimate of 8.6 million.
Netflix’s leadership position is allowing it to grow, despite heightened competitions.
Rivals include Amazon Prime Video from Amazon.com (AMZN), Disney+ from Walt Disney (DIS) and HBO Max from AT&T’s (T) WarnerMedia. Even Apple (AAPL) has entered the fray with its Apple TV+ service.
Finances are also improving. The Los Gatos, Calif.-based company anticipates 2021 free cash flow at break-even, an improvement from its earlier forecast, which was minus $1 billion to break-even.
At least 20 Wall Street analysts raised their price targets on Netflix stock following the earnings report. Two investment banks turned positive on Netflix stock. UBS and Wells Fargo upgraded their ratings on Netflix to buy from neutral.
“We’ve gone from a historical bear on NFLX to a card-carrying bull,” Wells Fargo analyst Steven Cahall said in a note to clients. In addition to upgrading Netflix stock to buy, he raised his price target to 700 from 510.
Repligen stock is in buy zone after breaking out of a cup base with a buy point of 212.65.
Aggressive investors could have used 200.29 as an early entry as RGEN stock cleared a handle that was too low in the base.
The RS line for RGEN stock is currently spiking. It comes after the stock jumped more than 107% during 2020, outperforming the broader sector.
Repligen makes materials used in the manufacturing of biological drugs. It has been boosted by increased demand for its recombinant proteins and other consumables due to the global effort to find treatments and vaccines to fight the Covid-19 pandemic.
The recent Stock Of The Day makes a key substance needed to purify coronavirus vaccines under a partnership with Navigo Protein GmbH. Repligen expects that product to be commercially available in 2021.
It currently has a strong Composite Rating of 98, putting it in the top 2% of stocks tracked. Earnings have grown by an average of 34% over the past three quarters, and by 31% over the past three years. This tops CAN SLIM requirements for 25% growth in both metrics. The pace of earnings increases have also accelerated for the past three quarters.
The Stock Checkup shows its strong performance is attracting institutional backing, which is a key consideration for the CAN SLIM cognoscenti.
A number of top funds hold the stock, including Invesco Discovery Fund Class A fund (OPOCX) and Lord Abbett Developing Growth Fund (LADRX). These are both rated as being among highly regarded funds by IBD Research.
KeyBanc Capital Markets analyst Paul Knight is rating Repligen stock as overweight with a 241 target.
“As the only publicly traded bioprocess pure play, we believe Repligen stands to benefit the most from building industry tailwinds,” Knight said in a research note. “These tailwinds include: record high FDA approvals and increasing share from biotechnology. … (Operating) margins could be significant and arguably the highest in the industry.”
The analyst said he is not assuming “any material impact from Covid-19 driven demand,” and that any revenue tied to the coronavirus is potential upside to his current estimates.
Qualcomm stock is in a buy zone after breaking out of a six-week flat base. The ideal buy point is 161.17, MarketSmith analysis shows. The 5% buy zone extends up to 169.23.
The RS line for QCOM stock is rallying. It has been making progress since early December. The fact it is above its 50-day moving average is also encouraging.
The Apple iPhone and 5G wireless chip play reports earnings on Feb. 3. An approach highlighted by Investor’s Business Daily is to use options as a strategy to reduce risk around earnings. It’s a way to capitalize on the upside potential of a stock’s move around earnings, while reducing the downside risk.
Apple earnings late on Jan. 27 could move Qualcomm.
Qualcomm stock has a very strong Composite Rating of 95. Qualcomm has an IBD Relative Strength Rating of 84. That means it has outperformed 84% of stocks over the past 12 months.
The Stock Checkup shows earnings have grown by an average of 45% over the past three quarters. They also accelerated in the most recent quarter to 86% growth.
The stock also holds an Accumulation/Distribution Rating of B. This indicates moderate buying among institutions.
Qualcomm has just announced an agreement to buy startup Nuvia for about $1.4 billion. Santa Clara, Calif.-based Nuvia develops central processing units for high-performance computing applications.
KeyBanc Capital Markets have listed Qualcomm stock as one of their “key ideas” among semiconductor stocks for 2021.
The investment bank expects Qualcomm to profit from smartphone sales returning to growth this year thanks to the rollout of 5G wireless handsets, including the first-ever 5G iPhone. KeyBanc forecasts smartphone unit shipments to rise 9% in 2021 after falling 5% in 2020.
The firm rates Qualcomm stock as overweight with a price target of 180.
Chinese e-commerce stock JD.com stock has staged a rebound from its 10-week line, and has now powered into buy zone. It’s consolidation pattern buy point is 92.87. Investors also could view 96.30 as an alternate or add-on buy point.
The RS line is also flashing bullish signs. It has been making progress since mid-December, and could soon retake all-time highs.
The stock holds a perfect Composite Rating of 99. While stock market performance is strong, earnings are even better. It holds an EPS Rating of 97 out of 99.
JD.com has a multitude of business units and offers a vast selection of products across every major category. This includes electronics, apparel, home furnishings and appliances. It also sells fresh produce and other groceries. In addition, it’s also transforming to become a leading supply-chain-based technology and service provider.
Further, it holds strategic partnerships with Walmart (WMT), Google-parent Alphabet (GOOGL) and Tencent, among others. JD competes primarily with Alibaba in the e-commerce space, followed by Pinduoduo.
JD.com has had some ups and downs as China cracks down on big internet platforms, though Alibaba (BABA) has the main target. Alibaba founder Jack Ma resurfaced in a video aired on state media recently, easing fears for Alibaba and other Chinese internet giants.
JD stock was recently upgraded to buy from hold as Stifel analyst Scott Devitt said the company faces a “multifaceted growth opportunity” in the years ahead. He also raised his price target on JD stock to 150, up from 84.
“JD has the opportunity to monetize investment stakes in newer businesses, which should be additive to the company’s equity value as valuation events occur,” Devitt wrote in a note to clients.
In addition, he said JD.com has a number of “secular growth trends to support healthy long-term growth and ongoing margin expansion.”
DocuSign stock is near a buy zone after briefly breaking out of a cup with handle base. That wide-and-loose handle offered a 256.10 buy point is 256.10. However, DOCU stock has been consolidating for the past several days, forming a new handle with a 263.10 entry.
The RS line had been lagging, but has seen a resurgence in recent weeks.
DOCU stock has a top notch Composite Rating of 98. Earnings are impressive for an IPO stock, with its EPS Rating coming in at a healthy 84. In the most recent quarter, earnings grew by 100%.
The firm’s software automates the filing of contracts and certifies electronic signatures. Business has been boosted by the coronavirus crisis.
It has been continuing to enlist more customers, who turned to electronic signatures to close contracts.
DocuSign topped Wall Street earnings targets when it reported earnings last month. In addition, the company said second-quarter billings rose 63% to $440.4 million vs. estimates of $385 million. Billings are a sales growth metric.
DocuSign said it added 73,000 customers in the October quarter. That’s down from 88,000 in the second quarter and about the same as 72,000 in the first quarter.