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? They are Amazon (AMZN), Costco (COST), Axon Enterprise (AAXN), Tempur Sealy (TPX) and Splunk (SPLK).
The current stock market rally is looking strong again after showing signs of faltering. The Dow Jones Industrial Average, S&P 500 index and Nasdaq composite rebounded to record highs after a recent pullback on China coronavirus fears. The coronavirus crisis, which has been declared an international emergency by the WHO, is hitting economic growth and global supply chains.
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Software stocks have mounted a comeback, while chips are still doing well, along with some medical names and megacap techs such as Amazon stock, Apple (AAPL), Microsoft (MSFT) and Google parent Alphabet (GOOGL). A number of IPOs are joining the leaders.
So why are these five names above the best to buy or watch? Before turning to that question it is important to consider how one goes about choosing a stock in the first place. Superior fundamentals and technical action and buying at the right time are all part of a shrewd investing formula.
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 current 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 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 in a stock market correction. One good sign for investors is the market’s current uptrend, which offers opportunities for assertive investors, overcame a recent stern challenge.
The major averages have been falling from record highs, though some breakouts are continuing to flourish. It is worth keeping a close eye on the market trend page here in case its current status of market in confirmed uptrend changes.
Best Stocks To Buy Or Watch
Now let’s look at Amazon stock, Costco stock, Axon Enterprise stock, Tempur Sealy stock and Splunk stock in more detail. Several of these stocks are on IBD Leaderboard or its watchlist.
Check out IBD Stock Lists and other IBD content to find dozens more of the best stocks to buy or watch.
Amazon stock blasted out of a long saucer-with-handle base on Jan. 31 following earnings. The handle buy point was 1,917.91. But with the big earnings gap, investors could have treated the opening price as a buy point. They also could buy Amazon stock after clearing the top of its post-gap up consolidation. But it is getting a little extended now.
The FANG stock’s AMZN’s relative strength line has spiked higher after a long period of slow decline that stretches back to last July.
Its strong recent performance has provided Amazon stock with a big boost that has saw its IBD Composite Rating shoot up to a strong 90. The Stock Checkup Tool shows its stock market performance has been its biggest weaknes, but its Relative Strength Rating has been improving, and now sits at 79.. Amazon stock’s RS line has been trading near 52-week lows, but vaulted higher on Jan. 31.
Amazon earnings rose 7% in Q4, defying views for another year-over-year drop after sliding 26% in Q3. The $6.47 a share annihilated views for $4.05. Revenue climbed 21% to $87.4 billion, also beating.
The cloud-computing business, Amazon Web Services, reported revenue grew 34% to $9.95 billion, also topping estimates. AWS is high margin vs. the fiercely competitive e-commerce business..
The company said it ended the quarter with 150 million members of its Amazon Prime rewards program.
“The number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year,” Amazon CEO Jeff Bezos said in a press release.
The Leaderboard stock has powered back into buy zone. It rallied after drifting lower following a breakout from a flat base in heavy volume on Jan. 21. The ideal buy point is 307.20, which is still be valid. As a long-term leader, Costco stock also can be bought on pullbacks, such as to the 50-day moving average.
Costco stock spent several weeks below the 50-day line, but reclaimed that key level earlier this year.
The relative strength line is giving mixed signals. The RS line, which tracks a stock’s performance vs. the S&P 500 index, had been trending higher since the start of the year, but has flattened again in the last…