Google parent Alphabet (GOOGL), computer maker Dell Technologies (DELL), steelmaker Nucor (NUE), Chip-equipment maker Lam Research (LRCX) and rental-home investor Invitation Homes (INVH) are five stocks to watch this week near buy points.
The recent plunges in many hot software stocks amid renewed sector rotation underscores the importance of having diversified leaders in your portfolio. But with the market selling off sharply Friday, this time led by energy and financial stocks, investors should be cautious about new buys.
Google, Nucor stock and Invitation Homes have pulled back modestly below buy points. Dell stock has bounced from its 50-day line, and Lam Research is closing in on a buy point.
Shares fell 4.5% to 2,845.64 in last week’s stock market trading. Google stock closed just below its 50-day line and 10-week moving average. Shares have retreated modestly below a flat-base buy point of 2,925.17, according to MarketSmith. An alternate entry would be 3,019.43 from a four-weeks-tight pattern.
Investors could use a rebound off the 50-day/10-week line as a possible entry. That’s a good place to buy Long-Term Leaders stocks such as GOOGL.
Google beat Wall Street estimates for the third quarter. It had EPS of $27.99 vs. views for $23.48. Sales came in at $65.12 billion vs. estimates of $63.34 billion.
In a call with investors on Oct. 26, CEO Ruth Porat said Apple’s privacy settings changes, which now ask iPhone users for explicit permission to track them, had a modest impact on YouTube revenue.
Google’s ad revenue climbed 43% to $53.13 billion. That’s up from $37.1 billion in the year-ago period and slightly higher than the prior quarter. YouTube ads rose to $7.21 billion, up from $5.04 billion last year.
Dell stock rose 2.1% to 56.18 last week. Shares now have a flat base with a 58.53 buy point. Dell stock bounced from its 50-day line on Thursday, flashing an early buy signal on strong earnings. But shares pulled back modestly Friday. Investors might now want to wait for Dell to get above Thursday’s high of 58, or simply wait for a breakout.
On Nov. 23, Dell reported third-quarter earnings of $2.37 a share, a year-over-year increase of 17%, on a 21% jump in sales to $28.39 billion, both above analyst views.
It was Dell’s best third quarter in its history, driven by growth in all business units, customer segments and geographies, as well as broad strength across commercial PCs, servers and storage, the company said in a written statement.
Dell was Wednesday’s IBD Stock Of The Day.
Meanwhile, rival HP (HPQ) gapped out of a base Wednesday on its earnings.
Shares rose 1% last week to 113.98. Nucor stock broke out past a cup-with-handle buy point of 119.42 on Nov. 22, but gave up most of that day’s 6% gain by Friday’s close. Its relative strength line is ticking downward but still near multiyear highs. Its RS Rating is 93, while its EPS Rating is 96.
Steelmakers like Nucor have a had a stellar year supplying homebuilders in a record year and gearing up for massive infrastructure spending. IBD’s Steel-Producers industry group has soared nearly 86% year to date.
Nucor has had four straight quarters of triple-digit earnings growth and four quarters in a row of accelerating sales growth.
Rival Steel Dynamics (STLD) broke out past a cup-with-handle buy point of 69.01 intraday on Nov. 22, but has since fallen below that buy point.
Invitation Homes Stock
INVH stock broke out past a cup-with-handle buy point of 41.93 on Nov. 24, but retreated just below it on Friday. INVH stock edged up 0.6% to 41.15 for the week.
Invitation Homes has an RS Rating of 93 and an EPS Rating of 96.
The recent housing boom isn’t just helping homebuilders. As raw materials prices spike up and supplies remain tight, folks are delaying home buying or renting homes while renovations and new homes take longer to complete. That’s pushed up rents across the board.
As a result, Invitation Homes, the largest owner of rental homes in the U.S., has seen soaring demand. The company, a real estate investment trust, or REIT, owns more than 80,000 homes, which it rents out.
In October, Invitation Homes reported better-than-expected Q3 results. The company was able to raise rents by 11% amid the housing shortage.
Lam Research Stock
Shares pulled back late last week, perhaps starting work on a handle. Chip-equipment maker Lam Research has been steadily moving toward a 673.90 buy point from a consolidation going back to early June or April.
Its relative strength line is rising again after several months of sideways movement. Lam’s RS Rating is 80, while its EPS Rating is 94. The company has posted seven straight quarters of earnings and revenue growth, amid sky-high demand for its products across all industries.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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