There's no better time to build a strong watchlist of great companies than during a serious market correction, or when the current outlook for stocks turns positive after a sharp slide in prices. Therefore, this story covers five top NYSE stocks to buy or watch closely.
It also highlights five more NYSE names that deserve monitoring.
Among companies that got featured in recent months, Model N has done surprisingly well. And it's a rare software firm that continues to make IBD's screen for excellent NYSE-listed companies.
Model N shares, up more than 26% year to date, have climbed past the 5% buy zone after making a second try past a 35.10 buy point in a symmetrical seven-week cup without handle. This means the stock, prior to Wednesday's 5% slide, got extended. Wednesday's decline also shows why investors should not chase after Model N.
Meanwhile, notice on the daily chart how the San Mateo, Calif., expert in revenue management for life science and technology clients has gotten firm buying support at its rising 21-day exponential moving average. A new test of the 21-day has arrived. Also, all of its key moving averages are rising in slope. A rarity in the 2022 bear market? Absolutely, especially in the mighty tech sector.
Watch for a potential test of the 50-day line (on the daily chart) or the 10-week moving average in the coming weeks and months. A successful test could result in a follow-on buy opportunity.
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Model N's market value has climbed to $1.4 billion. A 98 Earnings Per Share Rating is amazing. The long- and near-term growth rate in profits at Model N surpasses 98% of all companies in the IBD database. Amid Wednesday's steep drop, the stock's 96 Relative Strength Rating stands very tall among its NYSE peers. No wonder MODN also gets an impressive 96 Composite Rating.
Model N reports fiscal Q4 results on Nov. 8.
With just two months left in 2022, the NYSE composite index continues to outperform its Nasdaq sibling. This may come as no surprise given that the latter benchmark made a much stronger move since the bottom of the coronavirus market crash in March 2020.
Since the November 2021 peak in the market, the NYSE composite has fallen almost 24% from its 17,442 peak. Not pretty, for sure. Yet, that highlights a much milder drop than the 37.7% shellacking of the Nasdaq composite after it peaked at 16,212 on Nov. 22, 2021.
At its Oct. 13 low of 10,088, the Nasdaq now has to rally 61% just to meet its all-time peak of 16,212. But it would only take a 31% rebound by the NYSE composite to do the same.
Now trading near 14,767, the NYSE composite needs to rally 18% to breach that 17,442 all-time high.
NYSE Stocks To Watch: Using A CAN SLIM Filter
The IBD approach emphasizes several simple yet powerful factors, based on decades of IBD market research, that lead to long-term success among NYSE stocks to watch. They go beyond simply investing in a healthy stock market environment.
If you want to achieve market-beating returns, first do this. Reserve your precious capital for just companies with truly strong fundamentals. This means aiming at companies with outstanding records of profit growth, return on equity, profit margins and sales increases. These factors make up both the C and the A in CAN SLIM, IBD's seven-point investing paradigm.
Second, among top NYSE stocks to buy and watch, seek those names that outperform the rest of the pack. If you confine your search to those stocks whose price performance proves superior to at least 85% or 90% of the entire market or more on a rolling 12-month basis, then you're truly focusing on stocks with the potential to break out to new highs and make major price runs.
A Key Third Layer Of Analysis
Third, get on the side of institutional investors that are actively accumulating shares over months and even years. Their long-term power on Wall Street can never be overstated. IBD's Accumulation/Distribution Rating will help in that regard. Monitor the quantity and quality of institutional ownership; this helps you assess the I in CAN SLIM.
To select five NYSE stocks to watch, MarketSmith screener allows users to pick companies within IBD's database that rate highly in terms of Earnings Per Share Rating, Relative Strength Rating and SMR letter grade, which stands for sales, profit margins and return on equity. A simple screen set up on MarketSmith demands that stocks show an 85 EPS score or higher, at least an 85 for RS, and an A grade (on a scale of A to E) for SMR.
Plus, stocks with an Accumulation/Distribution Rating of below B didn't make the cut. This rating analyzes price-and-volume action in a stock over the past 13 weeks. An A or B grade indicates fund managers are net buyers of the stock. A C grade points to a neutral amount of institutional buying vs. selling.
Finally, each stock had to hold at least a 90 Composite Rating, which combines all of IBD's key ratings with recent price action.
Amid the strong rebound since the mid-October near-term low, 78 NYSE stocks made the cut even after Wednesday's market bloodbath. That rises from 76 on Monday. That also compares favorably with 53 names on Sept. 2, but remains well below 94 on Aug. 22.
NYSE Stocks To Buy And Watch: No. 1
Industrial stocks have gained a presence within this prestigious list throughout the year. Consider Deere, a megacap equipment play on the agricultural and construction markets.
Among the best NYSE stocks to buy today, Deere has been acting especially well since it retook the 50-day moving average on Oct. 4. It continues to build the right side of a six-month cup-style pattern.
For now, the buy point holds at 446.86, 10 cents above the pattern's left-side high.
Since Deere still trades 50 points below that price, watch for the possibility of a large cup with handle to emerge. Also, one could make the argument that Deere shares have surpassed a near-term high near 393 and is actionable. Four up weeks in a row also suggest institutional investors are loading up on shares.
Deere's 98 Composite Rating stands out on a scale of 1 to 99, ALB also holds a good Earnings Per Share Rating of 94 and Relative Strength Rating of 90.
The company saw earnings slip 25% in the first quarter of fiscal 2023 ended in January earlier this year; however, keep in mind that in the year-ago quarter, Deere's bottom line soared 137%. This unusual jump made for a tough comparison.
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Stock No. 2: Pollution Control Leader
Clean Harbors is close to challenging a crystal-clear buy point of 124.59 within a seven-week cup-like base. The stock cooled off on Wednesday following third-quarter results. Earnings soared 113% to $2.43 a share vs. a year earlier while revenue climbed 43% to $1.36 billion. In the prior three quarters, the top line grew 41%, 45% and 46%.
At 119, CLH still shows a healthy 21% gain since Jan. 1. Shares have been getting bullish support at the 50-day moving average.
The 93 Relative Strength Rating is good, and helps bolster Clean Harbors' 98 Composite score. Plus, the stock's relative strength line is poised to potentially hit new highs. Watch to see if it makes the prestigious MarketSmith RS line blue dot list.
The midcap growth stock has shown tremendous gains in quarterly earnings and sales lately.
The top line has grown 22%, 41%, 45% and 46% vs. year-ago levels in the prior four quarters. Such excellent revenue increases have helped boost profits too, up 27%, 41%, 98% and 105% over the same time frame.
Wall Street sees 88% growth in earnings this year to $6.85 a share and a tiny dip in 2023 to $6.82.
Clean Harbors has gained 100-fold since bottoming out near 1 a share in 2001.
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Stock Numero Tres
Deckers Outdoor , a midcap growth stock, is working on a new base.
On the positive side, DECK has been trading mostly above the key 50-day moving average since early July. And this intermediate-term technical price level has now risen for nearly four months. This means over the past 50 trading sessions, Deckers' price action has strengthened.
DECK is getting closer to the top of its large cup base. If the stock cools off before getting to the 448.06 high, watch for a potential handle to latch on to the big pattern.
A handle offers a final shakeout of weary shareholders and clears the decks for a potential new breakout and a big run to new highs.
At 346, DECK still trades nearly 23% off its 52-week peak of 448.06.
Generally, you'd like to see a stock rise to within 5% to 15% of its 52-week high, then form the handle and complete the pattern.
Famous for its Ugg boots and Teva sandals for outdoors enthusiasts, Deckers is also reaping the success of its new premium-priced athletic shoe, the Hoka One.
The Goleta, Calif., firm has seen its earnings slow down in two of its past three quarters. But sales have remained robust, rising 16%, 10%, 31%, 22% and 21% vs. year-ago levels in the past four quarters. Analysts think Deckers will grow earnings by 11% in fiscal 2023 (ending in March next year) to $18.12 a share, then accelerate 19% to $21.53 in FY 2024.
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5 NYSE Stocks To Buy And Watch: Final 2
Two more to view: W.W. Grainger and India-based commercial bank Icici Bank. The former has finished the right side of a cup and is attempting a new breakout. For now, the proper buy point still stands at 588.72, 10 cents above the left-side high.
The current cup in GWW sits pretty much on top of a pair of other bases that formed from January through June. Base-on-base patterns can generate powerful moves, especially at the end of a bear market.
Grainger (95 Composite, 94 EPS, 91 RS) specializes in distributing plumbing, lighting and construction products via its branches across the U.S. Earnings per share vaulted 49%, 58%, 68% and 46% vs. year-ago levels in the past four quarters. Sales rose 14%, 18%, 20% and 17% over the same time frame.
The latter is etching a cup with handle that offers a 23.12 correct buy point. With IBD falling just 13% from high to low, the base still meets the minimum decline of 12% for this pattern. Icici has rallied 242% from its 2020 low of 6.86. In other words, the large-cap bank has proven it can outperform.
The S&P 500 has rebounded 120% over the same time frame.
5 More Names To Investigate
Among NYSE stocks to buy, five additional companies of interest include electrical equipment firm Hubbell (94 Composite, 93 RS), which has gotten nice support along its 10-week moving average in recent moves after a breakout past 204.29 in July; Timken (94 Composite, 88 RS), which cleared a shallow double bottom at 69.18 and remains in the 5% buy zone; contract electronics maker Jabil (98, 87) of St. Petersburg, Fla., which is near a 65.98 entry in a long saucer with handle; Quanta Services (95, 92), which is constructing a new cup with handle with a 144.41 entry point; and turf maintenance and landscaping gear maker Toro (92, 93).
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