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? Exxon Mobil (XOM), Enphase Energy (ENPH), Neurocrine Biosciences (NBIX) Wolfspeed (WOLF) and Ormat Technologies (ORA) are prime candidates.
XWith inflation worries high, and the Federal Reserve tightening rates aggressively, market action has been challenging so far in 2022. The Russian invasion of Ukraine also continues to weigh on markets.
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. While the market battled back amid a better than expected earnings season, the latest uptrend failed amid disappointing inflation data, which comes on the heels of Federal Reserve Chairman Jerome Powell's hawkish Jackson Hole speech. The S&P 500, the Nasdaq and the Dow Jones Industrial Average has all sunk below their 50-day moving averages.
With the market back in a correction now is a time to avoid making any new buys. This will help prevent you getting sucked into a bear market trap. Reversals can be particularly severe at this time. Instead, now is a good time to build a watchlist of exceptional stocks such as those in the IBD 50. These names will tend to have rising relative strength lines. The stocks below are good candidates.
It is a good time to consider taking profits. In addition, stay on top of sell signals. Any stock that falls 7% or 8% from your purchase price should be jettisoned. Also beware of sharp breaks below the 50-day or 10-week moving averages.
Remember, there is still significant headline risk. Inflation remains a key issue while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market.
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
- Exxon Mobil
- Enphase Energy
- Neurocrine Biosciences
- Wolfspeed
- Ormat Technologies
Now let's look at Exxon Mobil stock, Enphase Energy stock, Neurocrine Biosciences stock, Wolfspeed stock and Ormat Technologies stock in more detail. An important consideration is that these stocks all boast impressive relative strength.
Exxon Stock
Exxon Mobil stock is among the best stocks to buy or watch now. It is eyeing a cup-with-handle pattern entry of 101.66, according to MarketSmith analysis.
It needs to find support at the 50-day moving average. In addition, the relative strength line sits near new highs, an encouraging sign.
Investors could use a move above the Sept. 12 high of 99.19 as an early entry.
XOM stock has a very strong Composite Rating of 98. Stock market performance is bullish, with the stock rising 47% since the start of the year. Improving earnings performance gives added credibility to a bullish outlook on Exxon Mobil stock.
Oil prices surged as the West turns away from Russian supply, topping $130 a barrel. But U.S. crude futures recently plunged to nearly $80, their lowest level since January. Gasoline futures also have tumbled significantly. Natural gas prices, meanwhile, hit 14-year highs in August, but have fallen back.
The Irving, Texas, based multinational is diversified across much of the petroleum industry spectrum. Operations range from exploration and production of crude oil and natural gas to refining and marketing fuels and petrochemicals. Exxon is one of the largest publicly traded companies in the energy sector.
Exxon Mobil earnings soared 276% to $4.14 per share in the second quarter. Sales spiked 70% to $115.7 billion. The oil major said this increase was primarily driven by a tight supply and high demand for oil, natural gas and refined products.
"Earnings and cash flow benefited from increased production, higher realizations, and tight cost control," CEO Darren Woods said in a statement.
Exxon Mobil reports compressed markets across most of its business segments, including refined products such as gasoline, Woods said during the Q2 earnings call.
"We clearly see the tightness in supply and refining with a closure rate during the pandemic that was three times the rate of the 2008 financial crisis," Woods said.
Capex totaled $4.6 billion in the quarter and $9.5 billion to date in 2022. The company said capital expenditures are in line with its full-year guidance of $21 billion to $24 billion.
The firm resumed buybacks in January, announcing $10 billion at the time.
On April 26, Exxon said it hiked its recoverable resource estimate for its Stabroek Block in offshore Guyana to 11-billion oil-equivalent barrels, thanks to three new discoveries at the site. The previous estimate was for 10 billion barrels.
But Exxon, like other oil companies, is appealing to ESG investors by earmarking funds to develop new business models to address climate change. Exxon has announced $15 billion in investments in its Low Carbon Solutions business.
Enphase Energy Stock
Enphase Energy is powering higher after rebounding above the 21-day exponential moving average and breaking above a short trendline.
Shares of the solar power leader have rebounded after dipping on an analyst downgrade. It never undercut its recent buy signal and ended up rising 4% last week.
The RS line for Enphase is strong, especially on its weekly chart. It is in the top 1% of stock in terms of price performance over the last 12 months.
The solar system inverter maker has experienced phenomenal growth over the past three years.
Earnings performance is very strong, with its EPS Rating coming in at a near-perfect 98. It has average EPS growth of 65% over the past three quarters. Earnings also accelerated in the most recent quarter.
Big Money has been getting behind the stock of late, with its Accumulation/Distribution Rating coming in at a strong A-.
The Fremont, Calif.-based company is a leading provider of solar microinverters. Microinverters boost solar energy production, improve reliability in solar energy systems and support intelligent energy management.
Enphase also makes software to monitor energy generation and battery systems. The company focuses primarily on residential markets.
"As I have stated before, our strategy is to build best-in-class home energy systems and deliver them to homeowners through our network of distributors and installers, enabled by our installer platforms," Enphase Chief Executive Badri Kothandaraman said in the company's earnings call with analysts. "We have certified more than 1,600 installers worldwide to date, and we are continuing to win around 15 new installers a week in the U.S."
In 2021, earnings hit $2.41 a share, up 76% from 2020, and Wall Street sees continued growth in the bottom line. The Street has boosted its forecast and now sees earnings rising 70% this year to $4.09 a share.
Enphase is also trying to bolster sales in its battery storage systems powered by solar power. The firm posted a Q2 EPS increase of 109% to $1.11, well clear of analyst views. Revenue ran up 68% to $530 million. It estimated that third-quarter sales will be in the range of $590 million-$630 million, also above consensus.
Neurocrine Biosciences Stock
NBIX stock managed to hold above a trendline near 106 within a short consolidation last week. It has also formed a flat base with a 109.36 buy point.
The relative strength line has just hit a new high. Neurocrine Biosciences stock previously rebounded from just above its 10-week line, an encouraging sign.
There are reasons for optimism. Firstly, biotech stocks are currently showing strength, with the industry group ranking seventh out of 197 groups tracked by IBD.
NBIX stock also boasts good all-around performance, which is underlined by its very strong IBD Composite Rating of 96.
Earnings are solid, its EPS Rating coming in at 81 out of 99, while it is in the top 9% of stocks tracked in terms of price performance over the past 12 months.
The company recently scrapped a high-profile treatment for essential tremor. Typically, a move like that would tank a biotech stock.
Instead, NBIX stock surged. It has held the bulk of those gains, even as Wall Street feels the pangs of a lower-than-expected jobs report and the continued worry of rising interest rates.
This is perhaps due to the fact it has plenty of other potential winners in the pipeline, according to analysts.
Mizuho Securities analyst Uy Ear notes Neurocrine also is testing the same drug that failed to help essential tremor patients in patients with a form of pediatric epilepsy. He expects early test results from that effort this year. Further, Neurocrine is expected to soon ask U.S. regulators to approve Ingrezza for Huntington's disease patients with movement complications.
Neurocrine also expects to begin studies in schizophrenia and an undisclosed disease this year. The company also could have test results for depression and seizure treatments next year.
"Looking into 2023, we see more room for optimism with top-line readouts expected across multiple mid- and late-stage programs," Ear said in a report to clients. He kept his neutral rating on NBIX stock, but raised his price target to 98 from 95.
Wedbush analyst Laura Chico is watching a drug called crinecerfont. Neurocrine is testing it in patients with an inherited disorder of the adrenal glands that affects growth and development. Neurocrine is on track to release additional testing data in 2023, she said in her note to clients.
During the June quarter, Neurocrine's biggest moneymaker, Ingrezza, brought in $350 million in net sales. Ingrezza treats an involuntary movement disorder called tardive dyskinesia. Sales surged by a double-digit percentage and beat expectations.
Neurocrine also sells a Parkinson's disease med called Ongentys and two women's health drugs with AbbVie (ABBV).
Wolfspeed Stock
WOLF stock is one of the best stocks to buy or watch now after forming a handle on a very large double bottom. It is shooting for an ideal buy point of 123.45.
The pattern itself is deep, however, for a typical pattern. That said, the RS line has been climbing sharply and looks poised to take out its November peak.
The midcap stock is holding up better than most tech stocks amid the bear market.
The stock was given a boost after it issued strong Q2 sales growth and a much smaller net loss for the quarter than expected.
Wolfpseed, originally known as Cree, is based in Durham, N.C. The company has expertise in using unique materials such as gallium and carbon to create semiconductors that have special characteristics.
WOLF stock is a turnaround candidate. It has been bleeding red ink for three years in a row.
But while its EPS Rating of 58 is far from ideal, analysts on consensus see earnings in fiscal 2023 of 16 cents a share and the bottom line surging to $1.76 in FY 2024.
Wolfspeed has announced plans announced plans to build a state-of-the-art, multibillion-dollar silicon carbide materials facility in Chatham County, N.C. The facility will make primarily 200-millimeter silicon carbide wafers. The wafers will supply Wolfspeed's Mohawk Valley Fab, which opened earlier this year.
The firm has been hailed as an ideal way to invest in the ongoing electric vehicle revolution
"As a leading supplier of both silicon carbide (SiC) materials and devices, we believe Wolfspeed is one of the greatest ways to invest in the electric vehicle transition underway today," Evercore ISI analysts said in a note to clients.
"With SiC enabling higher power requirements and improved energy efficiency, demand for SiC is accelerating significantly faster than anyone expected just 6-12 months ago (across both auto and industrial markets)."
The Evercore team sees a clear path for Wolfspeed earnings per share to grow from less than $1 in 2023 to about $12 by 2030.
Market Looks To Fed But This Reality Has Set In
Ormat Stock
ORA stock has formed a flat base with an an ideal buy point of 98.22. It consolidated above a prior base after getting support at the 21-day exponential moving average.
The relative strength line for ORA stock is sitting at highs, which reflects recent outperformance of the broader S&P 500.
Alternative energy play ORA is in the too 4% of stocks in terms of price performance over the past 12 months.
The Reno, Nevada-based company is expanding in energy storage and solar. It has tied up with NV Energy, a utility company owned by Berkshire Hathaway (BRKB), which is developing battery storage projects in Nevada.
It could be some day be a beneficiary of the Tesla (TSLA) Gigafactory outside of Reno. That plant makes battery packs for Tesla's electric vehicles, and for its Powerwall and Megapack power backup products.
Tesla is said to have built the Nevada Gigafactory partly due to the state's geothermal resources. Geothermal power plants use steam trapped below the earth's surface to produce electricity.
Earnings are currently a weakness, with the stock boast an EPS Rating of 39 out of 99. This is partially due to a decline in Ormat earnings in the latest two quarters.
On the other hand, revenue grew 10% in the March quarter and 15% in the June quarter. Ormat tied the weak bottom line to foreign currency hedging.
"The strong performance of our Electricity and Energy Storage segments is expected to continue in the second half of the year, benefiting from the ramp-up" of five new projects, Ormat CEO Doron Blachar said in an Aug. 3 earnings release.
The company anticipates a "strong tailwind" from the Inflation Reduction Act, signed into law Aug. 16. The IRA's provisions include an extension of geothermal and solar tax credits, as well as other tax benefits, according to an Ormat investor presentation in September.
In 2023, analysts polled by FactSet expect Ormat earnings to rebound 54% from an estimated 5% decline this year.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
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