Costco, Eli Lilly and Broadcom are near buy points in today's IBD Screen Of The Day, a column that focuses on top ideas in the IBD Stock Screener.
Today's screen, Stocks That Funds Are Buying, finds winning growth stocks in which mutual funds are beefing up their positions. IBD looks for stocks with increasing ownership from institutions and outperforming mutual funds as a tail wind for a stock's upward price movement. Today's screen identified 40 growth stocks.
Costco Stock In Buy Zone As Earnings Loom
Costco stock is in the 5% buy zone of a cup base with a 787.08 buy point, according to MarketSurge pattern recognition. Shares broke out in earnest on May 16 in sympathy with Walmart, after the big box retailer beat earnings and sales estimates. The membership warehouse retailer is trading near all-time highs.
Costco reports its fiscal third-quarter results Thursday after the market close. FactSet estimates call 27% profit growth, or more than double the 12% in the last two quarters. Sales are expected to increase 8%, which is a modest improvement over the 6% increase in the prior two periods.
Mutual funds have added Costco stock, with 3,579 owning shares in March, up from 3,437 in December and 3,378 in September. Fidelity Contrafund (FCNTX) is one of its best-known shareholders. It owns 2.2 million shares of Costco stock.
The stock's IBD Accumulation/Distribution Rating of B+ indicates institutions have been fairly heavily buying shares over the last 13 weeks. Its up/down volume ratio of 1.3 also shows demand for the stock. Its low Earnings Stability factor of 3 out of 99 signals stable earnings over the last three to five years.
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Eli Lilly Stock Near Record Highs
IBD Leaderboard drug stock Eli Lilly is in a buy zone up to 833.35 of a double-bottom base with a 793.67 buy point. Shares have gained 39% this year so far and are near record highs.
The stock jumped after the drugmaker reported better-than-expected first quarter adjusted earnings but lower sales than expected on April 30. Shares broke out May 21 on positive news of a Phase 3 study on its Crohn's disease drug.
Full-year profit estimates show $13.68 per share, more than double from $6.32 earned in 2023. In addition, earnings growth looks robust for 2025, with a 40% increase slated.
The number of mutual funds owning Eli Lilly stock grew to 5,124 in March, up from 5,014 in December and 4,819 in September. Big fund names owning shares include Fidelity Contrafund and JPMorgan Large-Cap Growth Fund (SEEGX), each owning more than 5 million shares.
Lilly has an Accumulation/Distribution Rating of B.
Besides Costco Stock, Funds Buy Broadcom
Broadcom tapped the 1,438.17 buy point of an irregular base in mid-May, but never quite broke out. The stock is above its 21-day exponential moving average and its 50-day line is leveling out near highs. The stock could be biding time ahead of Broadcom's fiscal second-quarter earnings report on June 12, after the market close.
FactSet estimates project Q2 earnings to drop 18% on 38% sales growth.
Mutual fund ownership increased to 4,972 funds in March, up from 4,885 in December and 4,532 in September. JPMorgan Large-Cap Growth Fund and Fidelity Contrafund both added shares of the chip company in the March-ended quarter.
JPMorgan Chase broke out of a flat base but shares tumbled below the entry May 20 after CEO Jamie Dimon gave hints about his retirement and a stock buyback that spooked investors. Shares are within 1% of the 200.94 buy point. Fidelity Contrafund owns a hefty 7.6 millions shares on JPMorgan.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
