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? Apple (AAPL), Raytheon Technologies (RTX), Shell (SHEL), Raymond James Financial (RJF) and Expedia (EXPE) are prime candidates.
With inflation worries growing, and the Federal Reserve taking a more hawkish approach to interest rates and bond purchase tapering, market action has been challenging so far in 2022. The Russian invasion of Ukraine continues to weigh on markets. The current market rally is coming under renewed pressure.
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.
A stock market rally that kicked off 2022 soon fell on its face. The market is trying to rally again but has been struggling to make decisive progress. The Nasdaq and the S&P 500 have both fallen back below the 50-day moving average. The Dow Jones Industrial Average has so far managed to hold above the key technical benchmark.
The current uptrend is now under pressure, which means it is time to adopt a defensive posture. It is a bad time to making new buys, aside from exceptional breakouts in exceptional stocks. This is a bad time to be adding shares to existing holdings and it is a good time to get off margin, too. This is an ideal time to add names to one’s watchlist though, with the names below being good candidates.
Remember, there is still significant headline risk going forward. Inflation remains a key issue while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market.
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
- Raymond James Financial
Now let’s look at Apple stock, Raytheon stock, Shell stock, Raymond James stock and Expedia stock in more detail. An important consideration is that these stocks all boast impressive relative strength.
AAPL stock is trading below a handle buy point in a double-bottom base. The ideal buy point here is 179,71.
Apple stock is seeking support just below its 50-day line after previously rebounding from its 200-day moving average. The relative strength line has just hit a new high. A protracted upwards spike could propel AAPL higher once again.
A key point in the favor of Apple stock is the fact it performed better than most stocks, especially techs, during the market pullback.
Apple has seen its Composite Rating shoot up to a strong 93 out of 99. Apple became the first company to reach a market capitalization of $3 trillion earlier this year, though it has now backed off this level.
The IBD Stock Checkup tool shows earnings growth is bouncing back in recent quarters following the Covid-19 pandemic. Apple stock got a boost after reporting earnings for Q1 of fiscal 2022.
It was the firm’s best-ever quarter for revenue, with all categories excluding iPads coming in above views. Apple did not give guidance for the current quarter, though executives were relatively upbeat. The firm has not given specific quarterly guidance since the Covid-19 pandemic began.
Supply constraints meant supply could not keep up with demand. Another bright spot was sales in China, which grew 21% in the quarter.
Apple‘s EPS growth has averaged 65% over the past three quarters. This is comfortably clear of the 25% earnings growth sought by the CAN SLIM cognoscenti.
Analysts see earnings growth of 10% in fiscal 2022 and 7% growth in 2023. Investors will want to see CEO Tim Cook squeeze out more impressive gains.
With its iPhone business maturing, investors are looking for a new big growth driver for Apple stock. Services and wearables are seen as two key drivers.
In the September quarter, Apple’s services revenue rose 26% year over year to $18.3 billion. Services include the App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade and other offerings.
One reason to be bullish on Apple is it continues to produce new products, which is a major success factor in the CAN SLIM system.
Earlier this month Apple hosted its latest product launch. The event, broadcast live online from Apple Park headquarters in Cupertino, California, saw a slew of products unveiled.
Perhaps most notable was a new low-cost 5G iPhone SE. It will retail for $429 and will hit store shelves on March 18.
Speculation continues that Apple is looking to make a self-driving electric car. In November Bloomberg reported Apple is aiming to launch self-driving EVs in 2025.
Raytheon Technologies Stock
Given current market conditions, investors looking for an early entry might be better off waiting for RTX stock to clear its March 25 high of 125.97. It hit resistance just shy of that key level at the end of last week.
The relative strength line has just hit a new high on its weekly chart, an encouraging sign. The current global security situation a continued period of ascent would be no great surprise.
At the moment Raytheon stock holds a good-not-great IBD Composite Rating of 87 out of 99.
Earnings are something of an Achilles heel, with its EPS Rating coming in at 71.
However this appears to be on the upswing, with earnings growing by an average of 112% over the past three quarters.
This is a significant improvement on its longer term performance. Over the past three years EPS has shrunk by 25%.
Raytheon makes missile defense systems, aircraft engines and communications technology. Russia’s invasion of Ukraine has sent defense stocks higher, on anticipation of more demand for artillery as the conflict continues.
The U.S. has been sending missiles and other equipment to Ukraine. That includes the Javelin anti-tank missile, made by Raytheon and Lockheed Martin (LMT).
The U.S. is sending Raytheon’s advanced Patriot Missile defense system to some NATO allies. Some NATO countries in turn are sending Ukraine older anti-aircraft defense systems.
Shell stock is just above a 56.23 buy point after rebounding from its 21-day line. It has built a bullish base-on-base formation due to firm support at the 50-day line. SHEL stock edged higher last week, flirting with a breakout last Friday before backing off.
The stock has bounded away from its 10-week line of late. And while the RS line has been choppy in recent weeks it is still in the midst of a general uptrend since the start of the year.
Stock market performance is a key strength for Shell stock. It is the top 6% of stocks in terms of price performance over the last 12 months, with shares popping nearly 40% during that period.
Earnings are also solid, though its EPS Rating of 77 out of 99 is nowhere near as impressive. Nevertheless, analysts expect the company’s earnings to jump this year. They see EPS surging 61% to $8.04. They also see sales jumping 40% to $365.5 billion.
The recent IBD Stock Of The Day has been attracting investment from Big Money of late. This is reflected in its Accumulation/Distribution Rating of A. It also boasts a low P-E rating of 11, which is about half that of the broader S&P 500.
SHEL stock is gaining after Russia’s invasion of Ukraine drove energy costs higher and, after some early missteps, Shell joined other energy leaders in exiting all of its operations in Russia.
But questions remain about the impact from China’s recent Covid lockdowns, efforts to lower gas prices and whether those efforts can effectively provide any relief for consumers.
Oil prices tumbled 13% last week to $99.76 per barrel, as the U.S. led many nations in releasing emergency oil reserves
Shell executives are among of a group of six big oil names set to testify before a House hearing this coming week, looking into allegedly disproportionate increases in gasoline prices.
Raymond James Financial Stock
Raymond James stock is currently closing in on a handle buy point is at 114.10. It is also actionable from an early entry above Monday’s high of 110.27.
It currently sits above its 21-day exponential moving average, and is also pulling away from the 50-day average.
It has battled back well after stocks sold off broadly after volatility fueled by the Russia-Ukraine war, inflation and rate hikes. A key indicator of this is the relative strength line, which is spiking after a lull.
Earnings are a key strength for RJF stock, which is reflected in its EPS Rating of 94. Raymond James expects to report Q2 results on April 27.
The recent IBD Stock Of The Day boasts a network of 8,500 financial advisors. It also offers investment banking, securities trading, equity research and other financial services.
The financial company entered 2022 with record client assets of $1.26 trillion and record net loans at Raymond James Bank of $26.1 billion.
Banks and financial companies, including Raymond James, tend to benefit from rising interest rates.
The 10-year U.S. Treasury yield closed the week at 2.83%, a three-year high. Expectations for the combined Fed rate hikes and the unwinding of bond purchases have sent bond prices sharply lower, leading to a jump in Treasury yields.
The Federal Reserve’s federal funds rate was near zero throughout 2021. But on March 16, the Fed hiked its key interest rate for the first time since 2018 and signaled six more increases to come this year.
Higher interest rates give a boost to net interest margins. Loans represented about 70% of Raymond James total assets for the fiscal year ended Sept. 30, 2021.
Expedia stock has a 204.08 cup-with-handle buy point, according to MarketSmith analysis. Investors could use a downward-sloping trendline from the top of the base to find an early entry around 195.
The stock made a key move last week by recapturing its 50-day moving average. The relative strength line for EXPE stock is not ideal though, currently sitting well below consolidation highs. There are signs it is starting to turn higher again though.
Expedia stock has a triple-digit price-to-earnings ratio. Highly valued P-E stocks haven’t done well in recent months.
But unusually strong growth is seen ahead for Expedia, which means it could be an exception. Wall Street expects EPS to skyrocket 364% in 2022 and by a further 38% in 2023.
Expedia brands include Hotels.com, Vrbo, Orbitz and Travelocity. It is a good option for those keen to invest in the reopening of the U.S. economy.
There are already green shoots of recovery following the Covid pandemic. CEO Peter Kern touted progress when the firm posted earnings in February.
“While we experienced yet another significant travel disruption from Covid this quarter, we were pleased to see that the impact was less severe and of shorter duration than previous waves.” he said in a news release. “We continue to expect a solid overall recovery in 2022, barring a change in the trajectory of the virus.”
Lodging revenue during the quarter more than doubled to $1.7 billion, accounting for 75% of revenue. Airline tickets climbed 68% to $65 million. Advertising jumped 85% to $152 million, due to growth from both Trivago and Expedia Group Media Solutions.
Other revenue “increased significantly” to $349 million. That’s due to growth from both car and travel insurance products.
“We are increasing our speed of innovation for travelers, our breadth of tools to help power the travel ecosystem, and our effectiveness and efficiency as a company,” Kern said.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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