With a history of beating the S&P 500, IBD’s CAN SLIM Investing System is a popular choice among investors. However, to achieve great long-term returns, performing better than this industry standard is essential.
Moreover, it is important to monitor the stock’s supply and demand, zero in on the best performers within their respective industries, and prioritize those companies that have widespread backing from institutional investors.
Markets have been volatile since this year due to inflation fears and the Federal Reserve’s rapid rate increases. In addition, weakened market sentiment is continuing to be attributed to Russia’s invasion of Ukraine.
It’s important to remember that Nasdaq and NYSE list hundreds of stocks. So first, you need to identify the top stocks to make substantial returns today. Once you have chosen a company that fulfills the requirements, it is then time to resort to stock charts to plan a solid entry point. Ideally, you would wait for a stock to develop a base and then purchase it on high volume whenever it hits a buy point. High-risk, high-reward stocks, such as Tesla (TSLA), Advanced Micro Devices (AMD), and meme stocks, such as AMC Entertainment (AMC), are popular nowdays.
Let’s take a look at the best stocks to buy now: Tesla, AutoNation, Vertex Pharmaceuticals, Ulta Beauty and Microsoft.
Tesla (NASDAQ: TSLA)
In the 4th quarter of 2021, Tesla’s stock rose by 36% due to a surge in shipments. The 308,600 cars delivered by Tesla in 2021 brought the company’s total for the year to a then-unprecedented 936,172. Despite plants “operating below capacity for many quarters as supply chain became the key limiting factor, which is anticipated to remain through 2022,” the EV manufacturer nonetheless easily surpassed Q4 profits, according to management.
Despite solid profits for the first quarter, Tesla shares dropped after CEO Elon Musk’s $44 billion acquisition attempt for Twitter was approved by the company’s board. On July 8, however, Musk said he was abandoning the agreement. As a result, Twitter filed suit against Musk to compel the acquisition. Unfortunately, it seems like it’ll be a long fight.
Production at the EV manufacturer’s Shanghai facility was also much lower in April owing to Covid shutdowns and a lack of necessary components. However, after a slow start, Tesla’s deliveries in China sped up in May as manufacturing increased as regulations were relaxed.
To be sure, Tesla’s second-quarter deliveries of 254,695 cars fell short of analyst projections of 264,000.
The White House reported on June 28 that Tesla was aiming to make its Supercharger network in the United States available to other EVs by the end of 2022). In addition, the California Energy Commission recommended on June 24 that $6.4 million be granted to Tesla so that its supercharger network may be used by drivers of other cars in Willow, Barstow, Coalinga, and Baker. ChargePoint (CHPT), a competitor in the charging industry, is also up for prizes, with around $4.6 million in consideration.
Meanwhile, Tesla is planning to put a 3-for-1 stock split to a vote at the company’s annual shareholder meeting in August. A rise in interest in its stock price is expected to result from the move. Common people may more easily afford to invest in companies with lower share prices.
On July 13, Andrej Karpathy, head of AI at Tesla, announced his departure. Musk has already announced a layoff of 3.5% of the company’s workforce. Over the following three years, he predicted, 10% of salary staff will be let go, albeit Tesla would recruit additional hourly workers.
July 20 saw Tesla announce second-quarter results that were above analyst projections. The next day, the stock price rose by 10%.
The current price of TSLA stock is almost $774. However, after looking at the stock’s chart on MarketSmith, we can see that it is not a purchase. In a daily chart analysis, the stock price has been consolidating around the $1,208.10 mark for quite some time.
AutoNation (NYSE: AN)
According to MarketSmith data, AN stock has been consolidating for the last nine months, and the current official purchase point is 133.58. Also, it’s close to the first entry in the area, approximately 125-126.
Daily chart price changes are dramatic, while weekly chart patterns are more stable. In the meanwhile, it’s worth keeping an eye on.
Since the beginning of this month, the relative strength line has been ranging in a tight range. So if the stock suddenly goes up in price, it may top its previous highs.
A score of 90 on the IBD Composite indicates a satisfactory level of achievement overall. Revenue is not its strong point, but earnings have been increasing at a 93 percent annual rate over the last three quarters.
One company on the IBD 50 with over 300 stores is AutoNation. It operates a used-car and new-vehicle divisions and offers related services and accessories.
AutoNation together with Group 1 Automotive (GPI) and Penske (PAG), have profited on automobile shortages, providing excellent earnings during the first half of 2022.
Auto retail stocks have also been generating rapid gains on the back of favorable industry fundamentals, with demand for automobiles continuing well ahead of supply while pandemic interruptions linger.
There was a significant gap between auto retail stock performance and the market average for most of 2021 and 2022, despite the robust profit growth. Although the S&P 500 dropped about 20% from April 1 and mid-June, the industry began to rebound in that month and stayed relatively steady.
AutoNation’s profits increased 34% compared to the same period a year ago, breaking the company’s run of consecutive quarters with triple-digit growth at five. However, the decline in sales of 2% to $6.87 billion was just short of the forecast.
AN has recently announced the growth of its pre-owned vehicle division. The company recorded a 14 percent drop in sales of new vehicles during the second quarter, but a 13 percent rise in sales of pre-owned vehicles.
Potential headwinds for used-car prices include a weakening economy and a probable increase in new-car manufacturing.
AutoNation USA, whose primary business is the purchase and resale of pre-owned automobiles, is about to launch its twelfth location. By 2026, the business hopes to have opened more than 130 AutoNation USA locations.
Vertex Pharmaceuticals (NASDAQ: VRTX)
Vertex Pharmaceuticals is inside buying range in a cup with a handle scenario. To enter, 279.23 is the sweet spot. Currently, it is trading around its 21-day exponential moving average, below that level.
On June 9, VRTX broke down below its 50-day moving average, thereby ending a breakout attempt from a cup with handle pattern. However, the RS line is rising, and there was an increase in volume during two weeks in June, so it’s possible that it will still be the leader in 2022.
Although the Boston-based biotech’s primary focus is on treating cystic fibrosis, it is also conducting clinical trials for treatments of other chronic diseases.
The near-perfect EPS Rating of 98 indicates the strong earnings performance. Its price performance over the previous year also places it in the top 4% of all stocks.
In the 2nd quarter of this year, over 3,000 mutual funds were sponsored, up from 2,233 at the end of 1st quarter 2020 and 2,736 at the end of 2021. Funds own a total of 61% of the shares in the company.
The company’s VX-147 drug candidate for renal illness has entered a critical phase of testing. However, due to disappointing findings, vertex benefits when rival AbbVie abandons its CF medication study.
Positive trial results for a treatment for type 1 diabetes released last month boosted the company’s stock price.
One patient no longer required insulin injections or a pump around nine months after starting therapy with Vertex. In another case, after five months, the patient required 30% less insulin from an external source. During the safety evaluation phase, Vertex gave them each a reduced dosage, CFO Charles Wagner said in an interview. In addition, a third patient has been dosed by the company.
Both patients also increased the percentage of time their blood sugar was within the normal range. Dr. Camillo Ricordi termed the findings “extraordinary and promising.” Ricordi is the Diabetes Research Institute and Cell Transplant Center director at the University of Miami Miller School of Medicine.
“As a treating physician, I have observed the great impact of this condition on patients, particularly those who endure extreme (low blood sugar),” he added in a written statement. Restoring a patient’s islet function and improving glycemic control may lessen the need for (external) insulin, which greatly benefits the patient’s quality of life.
The medicine has so far been well tolerated by patients, which is positive news for VRTX stock.
Ulta Beauty (NASDAQ: ULTA)
After a string of unsuccessful bases, Ulta Beauty is now targeting a flat base purchase objective of $429.58.
Although an early entrance at 411.68 was possible, it did not pay off for risk-takers last week.
In May, the cosmetics merchant posted Q1 earnings that were much higher than forecast. In addition, more consumers reverted to their pre-pandemic routines, such as forgoing masks and increasing their use of cosmetics, which boosted sales.
Sales increased by about 21 percent to $2.356 billion, which led to a rise in profits of $6.30 per share for Ulta Beauty. In addition, there was an 18 percent jump in sales in stores where the prices were kept the same. As a result, earnings per share were forecasted to be $4.46 by industry experts.
Despite the impressive earnings record, the price performance is even more special. Its performance relative to the market over the last year puts it in the top 7% of all stocks.
The cosmetics stock is attracting significant investor interest. Recently, institutions have been aggressively buying up shares, and now they own 50% of the company’s equity.
Over almost two years, individuals consistently used masks and fewer cosmetics to protect themselves and slow the spread of Covid-19. However, during that same period, Ulta Beauty, like many other businesses, saw a cosmetics sales dip. So why bother putting on lipstick if you’re going to hide your face?
Ulta Beauty’s sales and profits plummeted as a consequence. As a result, shares of ULTA dropped to a low of $124. Ulta’s prognosis was gloomy, but things brightened in Q1 of 2021.
Profit growth at the Bolingbrook, Illinois, firm has been strong for four consecutive quarters, falling to a still-vigorous 54% in fiscal Q1 2013. The previous four quarters have also shown a rise in sales for Ulta. However, due to tougher comparisons and a weakening economy, EPS growth is predicted to decrease to 13% for the fiscal year.
On April 21, ULTA shares rose to a new intraday high of $438.63. However, in light of the recent market collapse, share prices have dropped to roughly $400.
Many businesses, including stores, have felt the effects of customers’ reduced spending as stimulus funds have run out. Even discount retailers like Target (TGT) and Walmart are seeing revenues erode due to rising inflation and ongoing supply-chain difficulties (WMT).
Yet, according to D.A. Davidson analyst Michael Baker, Ulta could perform better than others.
Although TGT’s financial statistics were poor, he noted that their beauty products were a bright spot in a message he released on May 22.
Many companies in the beauty industry have had gains as of late, including elf Beauty (ELF) and Olaplex (OLPX); however, these stocks have had chart problems.
Microsoft (NASDAQ: MSFT)
However, on April 27, MSFT stock gapped up on results and sales that were better than expected, while the company is still not a buy. In the third quarter of 2018, Microsoft paid almost $69 billion to acquire Activision Blizzard.
The firm revised downward its Q4 forecast. Securities filings made on Thursday revealed a decrease in forecasted revenues for the fiscal fourth quarter, from $52.4 billion to $53.2 billion to $51.94 billion to $52.74 billion. It expects earnings per share from $2.24 to $2.32, down from $2.28 to $2.35.
The MSFT stock price has fallen short of the 50-day moving average. In addition, according to a Bloomberg article from June 8, Microsoft has laid off 400 employees in Russia as it winds down operations and sales there in the wake of the country’s invasion of Ukraine.
Meanwhile, Alex Kipman, head of the business’s augmented reality division, is leaving the company due to misbehavior charges.