Investors searching for stocks to buy or watch should make a habit of checking out the column, which focuses on a list of top ideas in the IBD Stock Screener. All the lists in Stock Screener offer a look at stocks with bullish characteristics. Today we focus on rising profit estimates — with a technical analysis angle.
When analysts raise their earnings forecasts on a company, that’s a vote of confidence. On the technical side, you’ll want to focus on those close to a buy point or breaking out to new highs, such as these three:
Google parent Alphabet is in buy range after clearing a 2,431.48 entry of a five-week flat base, according to MarketSmith chart analysis. The buy range goes up to 2,553.05. Google stock has rallied nearly 40% this year.
IBD Stock Checkup assigns Google stock a highest-possible 99 Composite Rating, which gives investors a quick way to gauge a stock’s key growth traits. That puts Alphabet among the top stocks in the 66-stock internet content group, along with Facebook (FB) and Snap (SNAP).
A 94 Earnings Per Share Rating, part of the overall composite score, is also among the group’s best. That includes a five-year compound earnings growth rate of 18%. Analysts expect EPS to jump 65% this year and 8% the next. Analysts have revised both estimates upward.
On the technical side, an 83 Relative Strength Rating means Google stock is in the top 17% of all stocks. Google’s relative strength line, which compares a stock’s performance vs. the S&P 500, is near record highs.
Shopify (SHOP) is close to a 1,499.85 buy point of a cup base, which it briefly cleared last week. A caveat: The base is late stage, as the stock has been in a multiyear uptrend. That’s a risk, since stocks tend to make their biggest advances out of early-stage bases. Shares, up 32% this year, soared 185% last year.
A 93 Composite Rating puts Shopify among the top stocks in the 101-stock enterprise software group. A 99 EPS Rating leads the group. Analysts expect Shopify’s earnings to rise 9% this year and 12% the next — both upward revisions.
Entegris (ENTG) is close to a 126.51 buy point of a cup base and is about 5% away from the entry. It also has set up an earlier entry of 123 after forming a four-weeks-tight pattern.
The chip gear maker boasts solid ratings: 96 Composite, 92 EPS and 80 RS. Entegris’ five-year earnings growth rate is 26%. Analysts have revised their 2021 and 2022 estimates higher to 26% and 18%. The relative strength line is near its highs. A move to a new high at or ahead of a breakout would be a bullish sign.
Follow Nancy Gondo on Twitter at @IBD_NGondo
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