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? Google parent Alphabet (GOOGL), PayPal (PYPL), Align Technology (ALGN), BioNTech (BNTX) and Crocs (CROX) 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. Nevertheless, the rising number of cases of the new Delta variant is an emerging worry.
The major indexes have started to weaken, but conditions are worse below the surface, with market breadth and leading stock deteriorating.
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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 stock market pulled back last week, with inflation fears and concerns about the rise of the delta variant of the coronavirus weighing on the market.
The broad S&P 500 and the tech-heavy Nasdaq fell away from record highs. In addition, the Dow Jones Industrial lost ground on the previous week’s record closing high, though it stayed clear of the key 50-day moving average. Other indicators are sending more-negative signals, from declining market breadth to leading stocks coming under pressure.
It is now a time to be very careful about making any new buys, and to make a defensive game plan for each stock you own. Stay disciplined and flexible for the market direction could change at any moment.
Now is a good time to be building a watchlist consisting of fundamentally strong stocks that have built sound chart patterns. The stocks featured below are potential candidates.
But remember, 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
- Align Technology
Now let’s look at Google stock, PayPal stock, Align Technology stock, BioNTech stock and Crocs 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 parent Alphabet is at the top of a buy zone after passing a 2,431.41 flat base buy point. Google stock held up well amid Thursday’s pullback, which is encouraging.
The firm is getting set to to announce earnings on July 27th after the close. While some may be tempted to buy a stock ahead of a potential earnings move, investors should remember IBD recommends using options as a strategy to limit risk. It is a way to capitalize on the upside potential of a stock’s move around earnings, while reducing the downside risk.
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 88. That means it has outperformed 88% of stocks tracked over the past 12 months in terms of price performance. Recent performance is strong, with Google stock rising around 45% so far in 2021. This far outstrips the S&P 500’s gain of just over 15%.
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 pulled back below a buy zone from a cup-with-handle base. The buy point is 296.11. In June, PYPL cleared a 277.96 early entry.
The relative strength line has been improving, reaching a four-month high, but not yet at the all-time high 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 97. Stock market performance is improving, and PYPL stock is now up almost 31% 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.
It will be looking to get a similar boost when it posts earnings on July 28 after the close.
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.
Align Technology Stock
ALGN stock is just below a a cup-with-handle base buy point of 629.45. It is looking to bounce back after dipping 1.8% during last week’s tough action. It’s possible Align stock is working on a new, high-ish handle with a 653.96 buy point.
Over the last several months, ALGN stock has attempted with breakouts or early entries, only to pull back.
The relative strength line has been moving sideways of late, which is not ideal. The stock is holding above its 50-day moving average, a good sign.
Align stock is up around 15% so far this year. Good overall performance has netted it a very strong Composite Rating of 97.
Earnings performance is the stock’s key strength. EPS popped by an average of 114% over the past three quarters. This is well clear of CAN SLIM requirements. It rose by a higher 241% in the most recent quarter alone.
The recent Stock Of The Day makes Invisalign, a clear plastic alternative to metal braces. Last year, more than 30,000 patients enrolled in virtual care for their Invisalign systems, the company told Investor’s Business Daily in a recent email.
Align says the Covid pandemic forced dentists to find workarounds to frequent in-office visits.
“Invisalign providers are using our virtual tools to minimize in-office appointments and deliver doctor-directed, personalized treatment that meets the needs of the moment,” the company said. “And that will re-share the future of treatment.”
Analysts say demand for the Invisalign systems is just a hair below pre-pandemic levels.
Dentists use three-dimensional scanners to capture images of patients’ teeth. Align uses those images to make a series of progressive aligners. Those aligners put pressure on specific spots in the teeth. That differs from traditional metal braces, which pull indiscriminately on all teeth.
Align is getting set to post Q2 earnings on July 28. While some may be tempted to buy a stock ahead of a potential earnings move, investors should remember IBD recommends using options as a strategy to limit risk. It is a way to capitalize on the upside potential of a stock’s move around earnings, while reducing the downside risk.
ALGN stock analysts call for adjusted earnings of $2.54 per share on $938 million in sales. Under that model, earnings would swing from a year-earlier loss, according to FactSet. Sales would skyrocket 166.5%.
Align completed its acquisition of Exocad, a company that uses software to design and make precision tools for dentistry. The company says it also invested in branding.
BioNTech stock has cleared a trend line following a recent pullback near 222, offering a new entry. The stock is also rebounding off its 10-week moving average. BNTX stock is buyable up to 233. The coronavirus vaccine maker could soon have a new base with a 252.88 buy point.
The relative strength line looks to be moving upwards again after a period of consolidation. This came after a sharp upwards move from late March until early June.
The powerful move saw the biotech stock added to the prestigious IBD Leaderboard of leading growth stocks.
A breakout in April produced an excellent run, and in recent weeks BNTX is making its first real test of the 10-week moving average. The three recent down weeks showed relatively light volume.
BNTX stock has a very strong Composite Rating of 94. While stock market performance is its strongest suit at the moment, earnings are improving.
The fact the stock has swung from mild losses to massive profits year-over-year in recent quarters underlines this fact. The firm posted a profit per share of $5.15 in the most recent quarter, while they made a loss of 26 cent per share in the same quarter last year.
Since the start of 2021, BioNTech stock has spiked by a more than 180%. This makes it one of the top performing stocks of the year.
BioNTech developed the first approved coronavirus vaccine with Pfizer. In addition, the company focuses on immunotherapies for the treatment of cancer and other serious diseases.
BNTX is developing a booster shot for its Covid-19 vaccine as the delta variant is proving to be more contagious.
The stock popped in May after the Covid vaccine-maker topped Q1 estimates and announced a big expansion in Asia. Sales jumped from $30.5 million in Q1 of 2020 to $2.4 billion in the March-ended period this year.
“BioNTech has continued to execute the delivery of our Covid-19 vaccine globally to more than 90 countries and territories,” Chief Executive Ugur Sahin said in a statement. “Through our continued innovation, we are expanding access to new populations and geographies, and addressing variants of concern.”
BioNTech stock has bounced back quickly after it was hit in June on revelations its Covid vaccine could lead to a heart condition in young recipients. Advisors to the U.S. Centers for Disease Control say inflammation of the heart muscle and tissues around it — known as myocarditis and pericarditis — has occurred in young people who’ve received a second dose of the messenger RNA vaccines from Pfizer and Moderna. They say the conditions are “rare,” and most people responded to medicine and rest. The CDC still says the benefits of vaccination outweigh the risks.
Crocs is back in buy range from a flat base. The ideal buy point here is 110.01, and it is buyable up to 115.21. It recently found support at the 50-day moving average, which is encouraging.
The relative strength line has been moving to new highs of late, which is a bullish indicator. Nevertheless, investors should note the risk, and possible upside, to the fact results are due Thursday before the open.
The recent IBD Stock Of The Day has a best-possible Composite Rating of 99. Compellingly, both earnings and stock market performance are stellar. So far this year, CROX stock is up almost 80%.
Earnings growth is compelling, with EPS rising by an average of 475% over the past three quarters. It reached stellar growth of 577% in the most recent quarter. Sales growth has been accelerating also, growing by 16%, 56% and then 64% in the past three quarters.
Management also gave a rosy outlook for Q2 and the second half of the year. Crocs sees second-quarter sales growing 60% to 70% year over year, well above the 40% growth rate analysts forecast. It also sees 2021 sales growing up to 50%, nearly double views for 24.6%.
The Colorado-based firm has a developed a popular following among Gen Z social media followers after it crafted a string of canny partnerships.
Popular celebrities such as pop star Justin Bieber and Latin sensation Bad Bunny have been snapped up by Crocs, while it also has deals with rapper Post Malone and county singer Luke Combs.
Most recently, Crocs teamed up with luxury fashion brand Balenciaga. The fashion house featured Crocs stilettos, which reportedly cost $1,000 a pair, at its spring 2022 collection. The high-heeled stilettos come in black and bright green.
Crocs also inked a deal with Russian band Little Big on an exclusive punk-rock-inspired collaboration featuring the brand’s Classic Clog with metal spikes, chains and Jibbitz charms inspired by the band’s unique style. The clogs will be available on June 22 in pink and black versions. They will retail for around $90 for the pink version and $98 for the black ones.
Meanwhile, its partnership with Grammy-winning DJ and producer Diplo yielded two versions of limited-edition Diplo X Crocs. One version has a swirly pink, blue and yellow design with 3D mushroom charms that light up. It retails for $70. The other design is a two-strap, slip-on sandal with eight detachable glow-in-the-dark charms priced at $50. Both went on sale June 8.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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