The artificial intelligence boom has propelled Microsoft, cybersecurity leaders Palo Alto Networks and Zscaler, as well as database firm MongoDB, onto this list of 25 top-rated stocks to watch. MSFT stock remains in buy range, while MDB gained nearly 5% Friday to close 6% above its 412.67 entry.
PANW stock and cybersecurity peer CrowdStrike have blasted beyond their buy zones. CRWD stock made headlines this week as it beat Wall Street's earnings estimates.
All the names on this stock screen hail from today's Top 20 industry groups — a factor worth noting since winning stocks tend to come from the top-ranked groups from the 197 industries IBD tracks.
Each company is also outpacing at least 95% of all stocks in terms of key stock-picking factors.
With cloud computing and AI increasing spreading across all industries, Adobe, Dropbox, Open Text and a string of others on this list have tapped into the artificial intelligence revolution. DBX stock poked its head into buy range Friday with a gain of more than 2%.
Education Stocks, Fashion Plays Also In Demand
Trendsetters like Lululemon Athletica, Urban Outfitters and Skechers have also fashioned a spot on this screen. URBN stock and SKX now trade at the top of their buy zones, while LULU stock is extended.
Education stocks New Oriental Education and Stride have also learned how to impress Wall Street. Both have launched strong breakouts.
MSFT Stock Among Top Stocks In Top-Ranked Industries
| Company | Symbol | Comp Rating | EPS Rating | RS Rating | Ind group RS | SMR Rating | A/D Rating |
|---|---|---|---|---|---|---|---|
| CrowdStrike | CRWD | 99 | 99 | 98 | A+ | A | A- |
| New Oriental Education | EDU | 99 | 82 | 99 | A+ | B | A+ |
| Euronav | EURN | 99 | 81 | 88 | A+ | A | B+ |
| Howmet Aerospace | HWM | 99 | 83 | 90 | A+ | A | A |
| Dorian LPG | LPG | 99 | 99 | 99 | A+ | A | B+ |
| Stride | LRN | 99 | 99 | 97 | A+ | B | A+ |
| Lululemon Athletica | LULU | 99 | 98 | 93 | A+ | A | B- |
| MongoDB | MDB | 99 | 82 | 98 | A+ | B | B |
| Microsoft | MSFT | 99 | 97 | 94 | A+ | A | B+ |
| Open Text | OTEX | 99 | 89 | 84 | A+ | A | B- |
| Palo Alto Networks | PANW | 99 | 98 | 96 | A+ | A | B+ |
| Skechers | SKX | 99 | 93 | 92 | A+ | B | A- |
| Urban Outfitters | URBN | 99 | 99 | 90 | A+ | B | B- |
| Zscaler | ZS | 99 | 99 | 96 | A+ | A | A- |
| Adobe | ADBE | 98 | 96 | 97 | A+ | A | B- |
| Celestica | CLS | 98 | 96 | 98 | A | B | B- |
| Dropbox | DBX | 98 | 98 | 89 | A+ | A | B- |
| Gen Digital | GEN | 98 | 85 | 84 | A+ | A | A |
| Ross Stores | ROST | 98 | 86 | 87 | A+ | A | B+ |
| Vertex | VERX | 98 | 95 | 97 | A+ | A | B- |
| Genesis Energy | GEL | 97 | 80 | 92 | A | B | B+ |
| AO Smith | AOS | 96 | 93 | 86 | A | B | B- |
| Hess Midstream | HESM | 96 | 85 | 87 | A+ | A | B+ |
| NuStar Energy | NS | 95 | 82 | 88 | A | B | B+ |
| Teradata | TDC | 95 | 94 | 86 | A+ | B | B- |
Data as of Dec. 1, 2023
MSFT Stock Among Top-Rated AI Plays
To make this screen of top stocks to watch in the top-ranked industries, each company must meet the following criteria:
- Industry group rank: between 1 and 20 (on IBD's 197 industries list).
- Composite Rating: 95 or higher.
- EPS Rating: 80 or higher.
- Relative Strength Rating: 80 or higher.
- SMR Rating: A or B.
- Accumulation/Distribution Rating: A or B.
- Current share price: $12 or more.
- 50-day average volume: 400,000 shares or more.
Ratings, or course, are just one part of the equation when evaluating a stock. Be sure to always check the stock chart to gauge when to buy, sell or hold.
Scan the list below and click the symbols to check the stock chart for any bases and buy zones.
Build Your Watchlist With Stock Ratings And Stock Lists
Running stock screens with the IBD Stock Screener or MarketSmith is an effective way to streamline your research to find top-rated stocks to watch like Microsoft.
You can also zero in on the best stocks to watch using IBD stocks lists based on a wide range of preset filters. You'll find top-rated stocks meeting the criteria of the IBD 50, IBD Sector Leaders, IBD Big Cap 20, IPO Leaders and more.
Meta stock and Tesla stock, for example, earn a spot on the IBD Big Cap 20.
Once you've put together potential stock picks for your watchlist, you'll want to evaluate your ideas with IBD Stock Checkup. With pass, neutral or fail ratings for each of your stocks, IBD Stock Checkup provides a detailed look at both the fundamental and technical health of the companies on your watchlist.
Additionally, based on the CAN SLIM system, the Composite Rating provides an overall score that takes into account each of the IBD ratings. The single score considers how a company and its stock are performing in terms of annual and quarterly earnings growth as well as its relative strength vs. the rest of the market. The score also accounts for sales, profit margins and institutional demand.
But note that you should not buy a stock solely on its ratings or placement on one of IBD's stock lists. No matter how compelling a company's story may seem, savvy investors will always check the technical action in the stock chart before buying.
Check The Chart To Know When To Buy MSFT Stock And Others
Using stock lists helps you zero in on the best stocks to watch. Stock ratings look under the hood to diagnose a company and its stock's fundamental and technical health. Both stock lists and stock ratings help you understand what to buy. But to fully understand when to buy stocks, take a look at the stock chart.
It's also critical to understand what type of environment you're currently in. Is it a bull market when most stocks go up? Or a bear market when most stocks go down? Or is it a volatile, choppy and uncertain time when the market indexes tend to fail to make any sustained headway? That was the case for much of 2022.
Use stock charts to evaluate both the market indexes and individual stocks. Charts will help you pinpoint the best time to buy stocks by identifying support and resistance, as well as buy points and buy zones. Using charts also helps you identify warning signs and when to sell stocks.
So when searching for potential stock picks and stocks to watch, always check the charts. They provide the most unbiased diagnosis of a stock's health.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
