Connect with us

Research

5 Nasdaq Stocks To Watch And Buy: Here Are The Fundamental And Technical Reasons Why

Published

on

With the Nasdaq composite at one point in June sinking almost 35% below a 16,212 peak set last November, some investors may think now is a time to buy. But among thousands of stocks, where should they start? This story showcases five Nasdaq stocks to watch right now.




X



The IBD approach emphasizes several simple yet historically proved and powerful factors that lead to long-term success. And they go beyond simply investing in a healthy stock market environment.

If you want to achieve market-beating returns, first do this. Reserve your precious capital for just companies with truly strong fundamentals. This means aiming at Nasdaq-listed companies with outstanding records of profit growth, return on equity, profit margins and sales increases. These factors make up both the C and the A in CAN SLIM, IBD’s seven-point investing paradigm.

Second, seek only those Nasdaq stocks that outperform the rest of the pack. If you confine your search to those stocks whose price performance proves superior to at least 80% or 90% of the entire market or more on a rolling 12-month basis, then you’re really focused on stocks that have the potential to break out to new highs and make major price runs.

Third, get on the side of institutional investors that are actively accumulating shares over months and even years. Their long-term power on Wall Street can never be overstated. IBD’s Accumulation/Distribution Rating will help investors in that regard. Monitor the quantity and quality of institutional ownership; this helps you assess the I in CAN SLIM.


The CAN SLIM Investment Paradigm: 7 Keys To Excellent Results In Growth Stocks


Nasdaq Stocks To Watch: Screening For Winners

To select five stocks, MarketSmith screener allows users to pick companies within IBD’s database that rate highly in terms of Earnings Per Share Rating, Relative Strength Rating and SMR letter grade, which stands for sales, profit margins and return on equity. A simple screen set up on MarketSmith demands that stocks show an 85 EPS score or higher, at least an 85 for RS, and an A grade (on a scale of A to E) for SMR.

Plus, stocks that did not have either an A or B for Accumulation/Distribution Rating didn’t make the cut. This rating analyzes price-and-volume action in a stock over the past 13 weeks. An A or B grade indicates fund managers are net buyers of the stock. A C grade points to a neutral amount of institutional buying vs. selling.

Finally, each stock had to hold a 95 Composite Rating, which combines all of IBD’s key ratings with recent price action.

5 Nasdaq Stocks To Watch

Amid the bear-market decline, just 11 companies made the cut two weeks ago. But with the market rebounding, this screen is likely to increase in stocks. For now, we highlight some notable fundamental, technical and mutual fund ownership elements for each stock as follows.

Stock No. 1: Funko (FNK) had been building a yearlong large cup base since May of 2021. It boasts a 99 Composite Rating, 90 for EPS and a 98 for Relative Strength.

A trendline drawn across the highs within the base shows an early entry point near 22. After a broad market smackdown on June 28, FNKO  backtracked near that key level. In the process, the stock built a nearly seven-day-long handle before it reached the cup’s left-side peak of 27.20.

This handle created a proper buy point of 25.18, or a dime above the handle. Last week, shares lifted above this prime entry point, creating a buy opportunity. The 5% buy zone goes up to 26.44.

A handle pinpoints a final shakeout of uncommitted shareholders and clears the deck for a potential big move up as institutions seek shares in a big way.

According to MarketSmith, the stock two weeks ago triggered the RS line blue dot alert, another bullish sign of the stock’s underlying strength.

Earnings per share at the designer and manufacturer of pop culture-related items in the past three quarters grew 26%, 31% and 42% vs. year-ago levels. Sales jumped 40%, 48% and 63% over the same time frame. On a 12-month trailing basis, sales have topped $1.1 billion.

Analysts polled by Wall Street expect earnings to rise 34% to $1.90 a share this year, which would be the highest in at least eight years.

Among Nasdaq stocks to watch, Funko ranks as a small cap with a market value of $1.3 billion, 50.8 million shares outstanding and a float of 18.1 million.


These Are Five Stocks Near A Buy Point


Consumer Spending Themes

Nasdaq Stocks To Watch, No. 2: International Money Express (IMXI) struggled on its breakout on May 4 in a base-on-base construction. Shares surpassed a 22.08 prime entry, but finished well below it the same session. Then IMXI lost support at the 50-day moving average.

The stock stabbed through the 50-day moving average multiple times in the past three months. Such action resembles a double bottom that offers a new buy point of 21.48.

Following a solid rally last week, IMXI has powered past this timely entry and is nearly getting extended past the 5% buy zone.

Earnings per share have grown 39%, 25%, 33% and 26% vs. year-ago levels. The top line expanded 37%, 26%, 28% and 21% over the same time frame. Sales also topped $100 million on a quarterly basis for four quarters in a row.

The number of mutual funds owning stock in the Miami-based specialist in money transfer and remittance services has increased for at least seven straight quarters, to 297 at the end of the first quarter this year from 149 in Q2 of 2020.

International Money Express hosts a 97 Composite, a 96 EPS and 97 RS. Few strong Nasdaq stocks are hailing from the financial services sector.

Stock No. 3: Telecom Sector Leader

Stock No. 3: Clearfield (CLFD) is carving out a wide-and-loose cup with handle of its own. This means that volatility is exceptionally high, making it tougher to make profits on the future breakout. According to MarketSmith, CLFD holds an extremely high beta of 2.20.

Nonetheless, the IBD-style buy point for now is 69.34. And this past week, shares vaulted past this entry, staging a breakout. Volume did not increase vs. the prior week, but ended above the stock’s average trading over the past 10 weeks.

Due to the solid weekly action, Clearfield’s ratings jumped to a 99 Composite, 99 EPS and 98 RS. The relative strength line made new highs, a strong sign of outperformance. The Accumulation/Distribution Rating improved to a B and is bullish.

Great breakouts occur in heavy volume, especially on the actual breakout day itself. But they also tend to succeed when the prior price action is tight and controlled. This indicates few willing sellers are hanging around the stock.

Just look at Clearfield’s tight weekly action seen in the last week of June 2020 and the first three weeks of July before CLFD leapt 24% in massive turnover during the week ended July 24.

That’s a massive breakout.

The maker of fiber optic telecom equipment and components is rare in its sector. Fundamentals are very strong.

Earnings per share have catapulted 120%, 57%, 475%, 440%, 100%, 141%, 226% and 144% vs. year-ago levels in the past eight quarters. Analysts surveyed by FactSet see the bottom line soaring 86% in fiscal 2022, ending in September, to $2.74 a share.

Sales have lifted 19%, 14%, 40%, 45%, 49%, 66%, 89% and 80% in the past eight quarters.


How To Select, Buy And Sell Stocks For Long-Term Profits Consistently: Read This Column


Nasdaq Stocks To Watch: Final Two

Stock No. 4: Ulta Beauty (ULTA) staged a bullish breakaway gap twice in a row on May 26 and 27 after a robust earnings report.

Now, a new cup with handle appears to be forming. The new entry point is 429.58, or the highest price within the handle plus 10 cents.

Great stocks ascend past their 50-day moving average before staging a breakout. ULTA is doing the opposite for now.

What about the handle that began forming on May 31 and generated a 426.93 buy point? It yielded a June 8 breakout that lasted only a day.

Ulta’s bottom line bulged 54% to $6.28 a share as sales rose 21% to $2.35 billion. That 21% increase came on top of a 65% revenue boost in the year-ago quarter.

The cosmetics, hair care and personal care products retailer enjoyed a tremendous run and helped lead the market out of the ashes of the 2008-2009 Great Recession.

Ulta owns a 96 Composite, 89 EPS and 85 RS Rating. At the end of Q1 2022, 1,875 funds held shares, a 24% jump vs. 1,511 in Q1 2021. Plus, fund ownership has risen every quarter since the fourth quarter of 2020 (when it was 1,468).


Use The IBD Stock Screener To Find More Top Stocks To Watch


Five Nasdaq Stocks To Watch: No. 5

LPL Financial (LPLA) is building a new base that shows the elements of a cup with handle. But LPL’s pattern shows flaws.

For instance, the handle within the base shows a decline of almost 15% from head to toe (using intraday high and intraday low). You’d normally like to see the handle make a correction of no more than 8% to 12%, especially since the correction within the pattern exceeds 25%.

The correct buy point, for now, stays at 204.47. Drawing a trendline across the base’s highs may offer a lower entry point near 195.

Another point of concern? Within the current pattern, all of the biggest weeks in terms of volume came on down weeks in price. However, the week ended June 3 saw LPLA shares fall a trifling amount, even as turnover exploded to 7.59 million shares. That suggests institutional support. A chartist may even view that week’s action as a support week.

Also, the relative strength line has jumped into new highs, signaling strong outperformance vs. the S&P 500.

Earnings estimates are superb. The Street sees profit rising 38% this year to $9.66 a share, then vaulting 61% to $15.51 a share next year. Both consensus estimates recently got a boost.

The financial advisory giant boasts a five-year EPS growth rate of 28%. Sales have shown a growth acceleration phase since the second quarter of 2020, going from a 2% dip that quarter to gains of 3%, 9%, 17%, 39%, 38%, 32% and 21%.

LPL shows a 94 Composite score and a 93 Relative Strength Rating.

Please follow Chung on Twitter: @saitochung and @IBD_DChung

YOU MIGHT ALSO LIKE:

Here Are The Current Long-Term Leaders

IBD 50 Stocks To Watch

This Is Still The Golden Rule Of Investing

Want To Find New Breakouts? Consult This List Each Day

Learning CAN SLIM? Go Inside Investor’s Corner

News

Copper price chart Copper price chart
Commodities3 hours ago

Copper price chart fluctuates at previous closing levels

Copper prices chart are fluctuating slightly near the level of the previous close as investors estimate a lot of factors,...

Natural gas price europe per m3 Natural gas price europe per m3
Commodities3 hours ago

Natural gas price in Europe per 1,000 m3 hits $2,100 on the exchange

Natural gas price Europe per 1,000m3: September gas futures contracts (benchmark TTF) were trading at $2,100 per 1,000m3 on Monday,...

Portugal and cryptocurrency Portugal and cryptocurrency
Cryptocurrency3 hours ago

Portugal and cryptocurrency: 12 companies await permission to operate

Portugal and cryptocurrency news: Central Bank is considering 12 applications submitted by companies that intend to provide cryptocurrency services in...

Ethereum PoS algorithm Ethereum PoS algorithm
Cryptocurrency3 hours ago

Vitalik Buterin: Transition to Ethereum PoS algorithm could make crypto payments popular again

During the Korea Blockchain Week 2022 conference, Ethereum co-founder Vitalik Buterin said that the network’s move to Ethereum PoS algorithm...

Hodlnaut news Hodlnaut news
Cryptocurrency3 hours ago

Hodlnaut news: cryptocurrency lender halted cryptocurrency withdrawals

Urgent Hodlnaut news: Cryptocurrency lending site Hodlnaut has unilaterally frozen cryptocurrency withdrawals. This is reported in the blog of the...

why worldwide food prices are rising why worldwide food prices are rising
Economy10 hours ago

World food prices chart: World food prices have plummeted

Why are worldwide food prices rising? First, because of the current world situation. But world food prices fell sharply in...

are hedge funds bad are hedge funds bad
Economy10 hours ago

Are hedge funds bad? Investors are disappointed in hedge funds

Are hedge funds bad? This year is sure to be one of the worst years in hedge fund history. In...

chinese economy 2022 chinese economy 2022
Economy10 hours ago

Chinese economy 2022: China will give up first place in the list of the largest importers of raw materials

Chinese economy 2022 news: China’s commodity-buying companies will be adversely affected by government debt and demographic problems. Over the next...

fed rate hikes this year fed rate hikes this year
Forex10 hours ago

Positive news from the U.S. labor market has raised fears of further FED rate hikes this year

FED rate hikes and inflation this year are at record highs. The U.S. jobs data released on Friday were truly...

recession announcement recession announcement
Forex10 hours ago

The strength of the U.S. dollar delayed the recession announcement

The jobs report was released at the end of last week’s work week. Economists were confident that 258,000 jobs were...

us market today us market today
Forex10 hours ago

The US market today maintains growth. Inflation Ahead

The main U.S. index closed the week near the highs of recent months, the highest prices since early May. The...

price of gold falls price of gold falls
Commodities11 hours ago

Price of gold falls on expectations of further US Federal Reserve rate hike

Price of gold falls: the price of the precious metal on Monday morning slightly decreased on the prospects of further...

goldman sachs oil price forecast 2022 goldman sachs oil price forecast 2022
Commodities11 hours ago

Goldman Sachs oil price forecast 2022: Oil price forecast worsens in Q3 and Q4

Current Goldman Sachs oil price forecast 2022: Analysts (NYSE:GS) believe another drop in Brent prices has been driven by low...

why is oil rising in price why is oil rising in price
Commodities11 hours ago

Why is oil rising in price today after a decline last week

Why is oil rising in price? The price of October futures on London’s ICE Futures Exchange for Brent amounted to...

bitcoin bearish trend bitcoin bearish trend
Cryptocurrency11 hours ago

The Balance: Bitcoin bearish trend hasn’t stopped Americans from investing more in cryptocurrencies

Analytical resource The Balance posted a report stating that 39% of U.S. investors have become more invested in cryptocurrencies, despite...

bitcoin growth prediction bitcoin growth prediction
Cryptocurrency11 hours ago

Cumberland: institutional investors give bitcoin growth predictions as high as $32,000 as early as 2022

US market maker Cumberland conducted a survey of institutional investors and found that most respondents were making bitcoin growth predictions...

is dogecoin a good investment is dogecoin a good investment
Cryptocurrency11 hours ago

Is dogecoin a good investment? Elon Musk: Dogecoin is much faster than the Bitcoin network

Is dogecoin a good investment? The CEO of Tesla again spoke out in support of Dogecoin. He stressed that the...

voyager crypto voyager crypto
Cryptocurrency12 hours ago

Voyager Digital is restructuring and preparing for sale

Cryptocurrency broker Voyager Digital said it is preparing a plan to restructure and resume cash withdrawals from the platform According...

Bitcoin oversold Bitcoin oversold
Cryptocurrency12 hours ago

Mike McGlone: Ethereum and Bitcoin oversold

A senior commodities strategist at Bloomberg Intelligence believes that according to technical analysis of the market, leading cryptocurrencies are selling...

next ethereum fork next ethereum fork
Cryptocurrency12 hours ago

Chainlink protocol developers refused to support next Ethereum fork

Ethereum is preparing to switch to PoS, and the community expects forks of the second cryptocurrency to appear on the...

predictit news predictit news
Cryptocurrency12 hours ago

PredictIt news: CFTC shuts down PredictIt prediction market in US

Important PredictIt news: The U.S. Commodity Futures Trading Commission (CFTC) has issued an order to shut down one of the...

is bitcoin mining profitable is bitcoin mining profitable
Cryptocurrency12 hours ago

Is bitcoin mining profitable today? Bitcoin mining difficulty drops for third month in a row

Is bitcoin mining profitable? The difficulty of mining bitcoin began to drop precipitously as the largest-capitalization cryptocurrency’s price fell below...

wazirx news wazirx news
Cryptocurrency13 hours ago

WazirX news: Indian authorities froze assets of WazirX

WazirX news: India’s economic intelligence agency froze assets of Binance-bought WazirX after allegations of money laundering Indian authorities have seized...

us recession and stock market us recession and stock market
Forex2 days ago

US recession and stock market. Thomas Barkin, Fed: Recession is virtually impossible

The U.S. recession and the stock market are closely linked. The key U.S. stock market indices – Dow Jones, NASDAQ...

usd to euro rate usd to euro rate
Forex2 days ago

Euro rate chart: the euro is not going into a trap

No matter how much FOMC officials try to convince investors of the Fed’s commitment to aggressive tightening of monetary policy,...

european stock market news european stock market news
Forex2 days ago

European stock market news: Europe started to lag behind the rise in U.S. stock prices

Current European stock market news: U.S. stock futures rose slightly Friday, helped by tech stocks as investors prepare for the...

dollar rate exchange dollar rate exchange
Forex2 days ago

Dollar rate today live: What is happening to the dollar today?

As you know, the dollar exchange rate has been lagging lately. We all wish wars would end as quickly as...

u.s. stock market capitalization 2022 u.s. stock market capitalization 2022
Forex2 days ago

U.S. stock market capitalization 2022: Morgan Stanley advises against buying U.S. stocks

U.S. stock market capitalization by 2022 leaves much to be desired. The key U.S. stock market indexes – DOW Jones,...

eur/usd chart eur/usd chart
Forex2 days ago

EUR/USD: European Union’s main currency problems

EUR/USD: The pair stayed in the flat, as investors refrained from making big bets before the U.S. labor market data...

asian stock market charts asian stock market charts
Forex2 days ago

Asian stock market charts: Major Asian indicators are up 0.88%

What’s happening on the Asian stock market charts right now? The major Asian indicators are mostly up 0.88%. Some indicators,...

Trending

©2021-2022 Letizo All Rights Reserved