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), Canadian Solar (CSIQ), WillScot Mobile Mini (WSC), Inspire Medical Systems (INSP) and Autoliv (ALV) are prime candidates.
With inflation worries high, and the Federal Reserve tightening rates aggressively, market action was challenging in 2022, with more difficulties expected in 2023. Nevertheless, recent action is encouraging. The Russian invasion of Ukraine continues to cast a shadow over 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. The market overall has been choppy since then, with bear market rallies often being undercut by painful drawdowns. The S&P 500, the Nasdaq and the Dow Jones Industrial Average have all rebounded. The bullish action continued when stocks rallied following the latest Fed meeting and the Nasdaq is now in the midst of a power trend. But don’t be surprised to see a market pullback after the big gains in recent weeks.
The stock market is now back in a confirmed uptrend. With earnings season in full flow, investors should raise exposure at a measured pace. A confirmed uptrend is when investors should make most stock purchases. It’s also a good time to add to existing holdings at follow-on opportunities, such as support at the 50-day moving average or at the 10-week moving average.
It remains crucial to 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.
A good way to stay engaged is to build up one’s watchlist of potentially actionable stocks. Focus on fundamentally strong stocks coming out of sound chart patterns, such as those in the IBD 50. These names will tend to have rising relative strength lines. The stocks below are good candidates.
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
- Canadian Solar
- WillScot Mobile Mini
- Inspire Medical Systems
Now let’s look at Exxon stock, Canadian Solar stock, WillScot Mobile Mini stock, Inspire Medical Systems stock and Autoliv stock in more detail. An important consideration is that these stocks all boast impressive relative strength.
Exxon Mobil stock is in a buy zone after clearing a flat base buy point of 114.76.
Investors could have used its retaking of the 50-day moving average as an early entry. The relative strength line is near highs.
XOM stock has a strong IBD Composite Rating of 89 out of 99. Stock market performance is bullish, with the stock rising about 80% in 2022.
Oil prices surged as the West turns away from Russian supply, topping $130 a barrel. But they have now fallen back to around the $79 mark.
Exxon Mobil recently reported EPS grew 66% to $3.40 in Q4 while revenue shot up 12% to $95.43. In 2022, Exxon Mobil earnings skyrocketed 160% to $14.06 per share. Sales edged up 45% to $413.68 billion.
Exxon Mobil CEO Darren Woods said in a statement Tuesday that the company “clearly benefited from a favorable market” in 2022.
“Our plan for 2023 calls for further progress on our strategic objectives, which include leading the industry in safety, operating, and financial performance,” Woods said.
Irving, Texas-based Exxon is diversified across much of the oil and gas 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 previously announced its five-year corporate plan in early December, reporting it expects to maintain its annual capital expenditures at $20 billion to $25 billion through 2027. The oil giant is also planning to increase its share buyback program to $50 billion through 2024.
Investors will also have an eye on the company’s cash balance. Exxon reported $29.7 billion at the end of Q4, after having $30.4 billion at the end of Q3, up almost 350% over the $6.8 billion reported at the start of the year.
Along with keeping its annual capital expenditures level through 2027, Exxon Mobil also plans to grow its carbon emissions-cutting investments to around $17 billion through the same period. This represents nearly a 15% increase from current levels. Exxon’s capital investments in 2023 will be in the range of $23 billion-$25 billion.
Canadian Solar Stock
CSIQ stock has formed a cup-with-handle base with a buy point of 44.17. A trend line drawn over the handle’s highs reveal an alternative entry around 42.
The stock is currently trading well clear of its 50-day moving average. However, the relative strength line has dipped during the formation of its handle. So far the handle has held support at a rising 21-day line.
Overall strong performance has netted CSIQ stock a IBD Composite Rating of 86. Both earnings and stock market performance are strong.
It is in the top 9% of stocks in terms of price performance over the past 12 months. In addition, the stock is up almost 31% so far this year.
But CSIQ, like solar stocks generally, is prone to big intraday swings. Strong early gains, including in the current handle, often reverse lower by the close.
Big Money has also been snapping up the stock of late, with its Accumulation/Distribution Rating coming in at a strong B+.
Ontario-based Canadian Solar reported strong third-quarter results in November. Revenue jumped 57% from the year-ago period to $1.93 billion. It reported adjusted earnings of $1.12 a share, up 123%.
The company builds a range of modules for use in residential, commercial and industrial solar-power generation systems. Solar module shipments by the company jumped 62% during the quarter. It expects module shipments to grow 56% this year.
Modules combine solar cells and wiring in a protective case. They are then wired together into a solar panel.
Consumer publication SolarReviews released its annual panel rankings on Feb. 1, elevating Canadian Solar and Q Cells to the top spots in the manufacturing of solar modules.
“We achieved a 123% increase in net income despite the headwinds from ongoing Covid-19 shutdowns and macroeconomic challenges,” Chief Executive Shawn Qu said in a written statement with the earnings report.
Qu added: “We are also actively evaluating options in the U.S. market given the recent passing of the Inflation Reduction Act and its potential positive impact as another growth catalyst.”
The Inflation Reduction Act is a gold mine for the solar power industry and issues such as CSIQ stock. The act is packed with tax credits designed to expand solar industry manufacturing in the United States.
Further, the act kicks in $369 billion to expand renewable energy over the next 10 years, the largest spending plan for alternative energy in U.S. history. Also, solar energy stocks already were getting a boost from international agreements to slash carbon emissions to lessen the impact of global warming.
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
WillScot Mobile Mini Stock
WillScot Mobile Mini stock is in a buy zone after it cleared a flat base buy point of 49.12.
This new base formed just above a prior flat base, which itself set up just above a prior consolidation.
The relative strength line is moving higher again following a dip. This is an encouraging sign.
All-around strong performance is reflected in its perfect IBD Composite Rating of 99. It is in the top 8% of stocks in terns of price performance over the past 12 months.
While its EPS Rating of 75 is not ideal, earnings are improving. Over the past three quarters EPS grew by an average of 218%.
WSC shares have also been on a strong run since hitting a low of 7.45 in early March 2020.
WillScot Mobile Mini stock has booked a gain of around 554% since then and has generally found support along its 10-week moving average. Since July 2020, when WillScot and Mobile Mini merged, shares have advanced 270%.
The storage solutions company is set to report Q4 results on Feb. 21. Wall Street estimates EPS growing 26% to 43 cents. Analysts predict revenue increasing 14% to $593 million.
Wall Street forecasts full-year earnings advancing 62% to $1.43 per share while sales are expected to increase 19% to $2.26 billion.
WSC shares rank seventh in the Commercial Services-Leasing industry group.
Inspire Medical Systems Stock
INSP stock is in the buy zone after clearing a flat base entry point of 262.64 following earnings. It is actionable as high as 275.77.
The new flat base highlights tighter action, a positive, and comes after a very good shakeout near the rising 50-day moving average.
Inspire belongs to the Medical-Products industry group and specializes in treatments for sleep apnea.
INSP is in the top 9% of stocks in terms of price performance over the past 12 months.
The Golden Valley, Minn., company’s implantable device uses neurostimulation technology that eliminates the need for a daily set-up by users.
JPMorgan analysts said in a recent research note that “penetration of the U.S. sleep apnea market opportunity is only in the low single digits, leaving significant room for future share capture in Inspire’s core market.”
Big Money certainly seems to be impressed with the company’s prospects. The stock currently holds an Accumulation/Distribution Rating of A-, which reflects heavy buying among institutions of late. INSP has racked up six straight quarters of increasing mutual funds owning the stock.
During the December quarter, sales rocketed 76% year over year to $137.9 million. Earnings were 10 cents a share, turning around from a year-earlier loss.
Sales came in at the high end of Inspire’s preannouncement in early January and beat Wall Street calls for $131.1 million, according to FactSet. Analysts projected a loss of 61 cents a share.
It also boasts a solid annualized three-year sales growth rate of 75%.
During the quarter, Inspire opened 61 new centers in the U.S., bringing the total up to 905 centers able to implant the company’s sleep apnea device. On average, each center is implanting about 1.45 devices per month.
The company also plans to launch a new device called Inspire V in late 2023 or early 2024. The new device takes less time to implant, helping increase the number of implants each center can perform.
What To Do As Market Rally Faces Tests
ALV stock just below its buy range from an 89.98 bottoming base. This is an early stage pattern, which means it is more likely to result in rich gains.
Investors could also view the recent pause as a handle on a base going back to November 2021. The cup-with-handle buy point is 93.88.
ALV stock has been consolidating after gapping up 9% on Jan. 27 following strong earnings.
Many other auto parts stocks are showing strength in 2023, a positive sign.
Sweden-based Autoliv is an automotive safety devices supplier with sales to many leading auto manufacturers worldwide.
The firm recently topped Q4 earnings estimates but missed on revenue. EPS grew 41% to $1.83 per share while sales increased 10% to $2.33 billion.
Analysts forecast 2023 earnings growing 48% to $6.51 per share and revenue advancing 12% to $9.9 billion, according to FactSet.
Autoliv stock ranks eighth in the Auto/Truck-Original Equipment industry group, with several other auto parts makers showing strong action. All-around strong performance has netted ALV stock an IBD Composite Rating Rating of 88.
Autoliv is a global market leader and is well positioned for increasing demand for vehicular safety features. Rising New Car Assessment Program safety standards will require auto manufacturers to use active safety features to even be considered for a 5-star crash-test rating.
ALV’s passive safety products interact with active safety systems in occupant collision protection.
The firm has proved capable of being a technological leader, with the firm’s innovations including the retractable seat belt, seat belt pretensioners, side-impact air bags, and various pedestrian collision safety technologies.
The firm spends about 5% of sales per year on research and development and holds more than 6,400 patents, mainly in air bags and seat belts.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
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