Despite the NASDAQ Composite Index and S&P 500 Index having risen significantly since the beginning of the year, 2023 has been a difficult year to watch for many blue-chip stocks, due in part to rising interest rates and the Federal Reserve becoming more hawkish. It’s been a year.
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But interest rates and the Fed’s views have changed dramatically, with the Fed set to begin lowering rates this year. As a result, many stocks to buy and watch in the technology sector are doing well as the stock market returns to a solid uptrend. Although markets have dialed back expectations for rate cuts, Wall Street remains reassured by the economy’s soft landing.
This year has been a sensational year for Magnificent Seven stocks. Nvidia (NVDA) and meta platform (META) ended the year with gains of 239% and 195%, respectively.
But in a year when the S&P 500 index rose 24%, the S&P 500 Equal Weight ETF rose only 12%.
best stocks to buy
After hitting a low of 3.3% in early May, the 10-year Treasury yield rose to around 4% last summer as investors weighed the possibility of further rate hikes by the Federal Reserve to combat inflation. skyrocketed beyond that.
The rising interest rate environment is bad for the best stocks to buy, including high-multiplier tech sector stocks. why? Because it creates a more difficult operating environment. When the stock market senses a potential slowdown in earnings growth for stocks with high P/E ratios, these stocks will be the first to sell.
At one point, fears of an economic recession and concerns about the spread of infection to the financial sector after the financial collapse were heightened. SVB Financial and signature bank It has become a very difficult environment for many blue-chip stocks to buy or pay attention to.
However, new follow-through days for the Nasdaq Composite and S&P 500 in early November provided a buy signal, and the market began to widen almost immediately. The Nasdaq saw a 1.6% increase in volume on November 1st, confirming a new upward trend. The S&P 500 followed suit on November 2nd with volume up his 1.9%.
Main characteristics of the best stocks to buy
As long as you’re fishing the right pond, it’s not difficult to find the best stocks to buy and keep an eye on.Like top stocks Arista Networks (ANET) and Monday.com (MNDY) has received less attention, but both share characteristics seen in past stock market winners before big price moves.
The best stocks to buy and watch have strong fundamentals with top-tier price performance within their industry groups. Additionally, many funds exhibit favorable fund ownership trends.
The best tech stocks tend to be resilient in down markets. IBD Stock Checkup allows you to quickly identify industry group leaders with the potential to become stock market leaders.
IBD experts analyze the top stocks on the stock market rise on IBD Live.
Screening for the best stocks to buy and watch is as easy as watching the MarketSurge Growth 250, a daily screen of high-quality stocks. Click on the column headers to sort the screen by either stocks with the highest price, highest overall rating, or highest volume.
The best stocks to buy and keep an eye on may not necessarily be the big winners in the stock market. But they do have the qualities of past stock market winners before their stock prices rose significantly.
The best tech stocks to buy and watch now include Arista Networks, Monday.com, cloud strike (CRWD), Palantir (PLTR) and ServiceNow (now).
Best stocks to buy: ServiceNow
The enterprise software bellwether is testing its 10-week line again after bouncing off a key support level in the week ending January 12th. Now’s sideways movement since mid-February resulted in a flat base of 815.32 entries.
ServiceNow has an impeccable track record of revenue and revenue growth, as evidenced by four consecutive quarters of accelerating revenue growth.
On January 25, the company reported a 36% increase in quarterly profit and a 26% increase in sales to $2.44 billion. Results exceeded expectations, with subscription revenue increasing 27% to $2.37 billion.
NOW forecasts 2024 subscription revenue in the range of $10.55 billion to $10.57 billion, above the $10.5 billion consensus.
“ServiceNow ended the year with another great quarter,” said CEO Bill McDermott. “Generative AI is injecting new fuel into our already high-performing engines. ServiceNow’s intelligent platform for end-to-end digital transformation is driving significant productivity leaps and explosive growth. This is a landmark moment.”
Announces partnership with Now in H1 2023 Nvidia (NVDA) develops enterprise-grade generative AI capabilities to accelerate business processes with more intelligent workflow automation.
Most recently, Service Now announced a five-year partnership with Amazon Web Services (AWS) to offer the ServiceNow platform on AWS Marketplace. Amazon (AMZN) and NOW also plan to jointly develop and launch AI-powered applications.
comprehensive evaluation: 99 (on a scale of 1 to 99, the top is 99)
Latest quarter EPS change: +36%
Sales change in latest quarter: +26%
5-year EPS growth rate: 32%
Annual return on equity: 35%
Upper and lower volume ratio: 1.8
Palantir Technologies
Palantir, known for its data analytics software, reported strong earnings on February 5th and gave a bullish outlook.
The company, which has a number of defense and intelligence operations with the U.S. government, reported a 100% increase in quarterly profit. Revenue growth accelerated from the third quarter, increasing 20% to $608.4 million. The company said government revenue rose 11% to $324 million, slightly below the consensus of $333 million. Commercial revenue exceeded expectations, increasing 32% to $284 million.
Following the results, Jefferies analyst Brett Till upgraded the stock from underperform to neutral.
“Palantir delivered an excellent fourth quarter, driven by strong order backlog and accelerating U.S. commercial growth,” Till said in the report. “The highlight was the implementation of our free cash flow guidance, which exceeded expectations by 34%. We are impressed with how our AI platform (AIP) is growing faster than we originally expected, and we look forward to reflecting this momentum.” We believe it is appropriate to raise the stock price.”
Palantir has retreated to the buy zone from February’s 21.85 entry. But the stock soared nearly 10% on March 6 after the company received a new $178 million contract from the U.S. Army to develop a ground station targeting system.
The company’s stock has been steadily rising since its profits surged in early February. A successful test of support near the 10-week moving average near the 22nd will move Palantir back into the alternative buy zone.
comprehensive evaluation:99
Latest quarter EPS change: +100%
Sales change in latest quarter: +20%
5-year annualized EPS growth rate: 10%
Annual return on equity: 19%
Upper and lower volume ratio: 1.3
cloud strike
CrowdStrike fell sharply on February 21st, along with other securities stocks, weighed down by the industry’s flag bearer’s weak earnings report. palo alto networks (PANW). However, it didn’t take long for CrowdStrike to find support with his 10-week line.
CrowdStrike on March 5 reported its third consecutive quarter of triple-digit profit growth. Sales increased by 33% to $845.3 million. The company also raised its profit and revenue outlook for fiscal 2025.
CrowdStrike, one of the best stocks to buy in the security software group, rose on Nov. 29 after the company announced its second consecutive quarter of triple-digit profit growth.
Adjusted earnings rose 105% to 82 cents per share. Revenue growth was also impressive, increasing 35% to $786 million, supported by the continued strong performance of the AI-powered Falcon platform.Annual recurring revenue (ARR) increased by 35% to his $3.15 billion
“CrowdStrike’s record third quarter numbers exceeded expectations and set another milestone across the business. Net new ARR growth accelerated to a record $223 million, with “ARR exceeded $3 billion, making CrowdStrike the fastest and only pure cybersecurity software vendor in history to achieve this milestone,” said CrowdStrike President, CEO and Co-Founder. said George Kurtz.
Annual profits for FY2025 are currently expected to increase by 27%, with growth slowing slightly in FY2026 to increase by 24%.
CRWD is still holding near its highs, but it has extended after testing the 10-week line several times. Watch as new bases form.
comprehensive evaluation:99
Latest quarter EPS change: +102%
Sales change in latest quarter: +33%
5-year annualized EPS growth rate: 148%
Annual return on equity: 40%
Upper and lower volume ratio: 1.3
Arista Networks
The company, which provides cloud networking software for data centers, appeared to be stuck when ANET stock fell below its 50-day line on July 28. However, a bullish earnings report on July 31 sent buyers back into the stock in droves.
ANET continues to perform well on the stock market and is one of the hottest stocks in the networking space. The company’s stock surpassed the 292.66 buy point on March 21st and is near the upper end of the 5% buy zone. The line of relative strength at the new high is also noteworthy, as the stock has significantly outperformed the S&P 500.
On February 12th, despite the announcement of another strong financial result, the stock price fluctuated wildly. Adjusted earnings were $2.08 per share, well above the Zacks Consensus Estimate of $1.71 per share. Revenue rose 21% to $1.54 billion, slightly above consensus of $1.53 billion.
Important Arista Networks meta platform (meta) and microsoft MSFT is a large customer and has shown strong revenue and revenue growth in recent quarters, driven by strong demand for cloud networking software and hardware for the fast-growing data center market.
ANET stock rose sharply in late October after the company announced a 46% increase in quarterly profit.Revenues increased by 28% to just over $1.5 billion
Revenue growth over the past eight quarters has ranged from 21% to 57%.
Full-year profits are expected to rise 8% this year and 14% in 2025.
comprehensive evaluation:98
Latest quarter EPS change: +48%
Sales change in latest quarter: +21%
5-year EPS growth rate: 26%
Annual return on equity: 36%
Upper and lower volume ratio: 1.2
Monday.com
The enterprise software company is offering a strong combination of fundamentals and technicals after releasing another bullish earnings report.
Monday.com, known for its project management software, reported a 48% increase in adjusted profit and a 35% increase in revenue to $202.6 million. Investors pushed the stock lower on Feb. 12 after the company’s earnings outlook was broadly in line with expectations, but the stock rose above its 50-day line as buyers pushed the stock from its lows to the close.
The stock has held steady for six weeks, with a new entry of 233.52.
In the Enterprise Software group, Monday.com competes with the following companies: Asana (Asan), smart seat (SMAR) and atlassian (team) etc.
comprehensive evaluation:96
Latest quarter EPS change: +48%
Sales change in latest quarter: +35%
5-year annualized EPS growth rate: n/a
Annual return on equity: 13%
Upper and lower volume ratio: 1.4
Follow Ken Shreve on X/Twitter @IBD_KShreve Get more stock market analysis and insights.
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