General Electric leads five stocks to watch for the week ahead as GE stock hovers in a buy zone. Toll Brothers, Booking Holdings, Textron and SPC Commerce are all showing relative strength amid a weaker market.
The current market uptrend is under increasing pressure as indexes break support levels. It's recommended investors trim exposure to 40% to 60%, and they should look across sectors for the right plays until the indexes regain their footing.
GE Stock
Industrial giant GE is showing strength as commercial aviation improves despite global recession worries growing. On Jan. 24, GE reported its first quarterly results since spinning off its health care business, reporting a healthy earnings beat.
For the fourth quarter, adjusted earnings leapt 51% to $1.24 per share, topping expectations of $1.15 per share. Sales growth accelerated the past three quarters, increasing to 7%, or $21.8 billion, and beating FactSet forecasts of $21.2 billion.
For fiscal 2023, GE projects high single-digit revenue growth, and adjusted EPS to range from $1.60 to $2 per share.
General Electric recently spun off GE HealthCare Technologies, with the remaining GE, a once-sprawling conglomerate, planning to be an aerospace pure play by early 2024.
GE stock is in a buy range for a cup-with-handle base after passing the 81.28 buy point in late January. Buy ranges generally extend 5% beyond a buy point. However, the current handle is very small on the daily and weekly chart, so consolidating a little longer could prove beneficial.
GE stock's relative strength line hit a 52-week high on Friday and shares have a 94 RS Rating, out of 99. The shares have a 79 Composite Rating but only a 46 EPS Rating.
GE stock is up nearly 28% year to date.
Toll Brothers
Luxury homebuilder Toll Brothers topped expectations for Q1 earnings results on Wednesday despite U.S. home prices showing signs of slowing in January.
"Since the start of the calendar year, we have seen a marked increase in demand beyond normal seasonality as buyer confidence appears to be improving," CEO Douglas Yearley said in a statement.
For the full year, Toll Brothers projects delivering 8,000 to 9,000 units with selling prices ranging from $965,000 to $985,000.
TOL stock is trading in a cup with handle base with a 62.71 buy point. Shares found support at their 10-week moving average and are now holding the 21-day exponential moving average. Investors could find an early entry opportunity from breaking the down-sloping trendline at the base's handle or punching above 60.
TOL stock has a 96 EPS Rating out of a best-possible 99. The stock's relative strength line is at 52-week highs. The RS line, the blue line in the charts provided, hitting new highs before a stock breaks out is especially bullish.
It has a 91 RS Rating as it outperforms a majority of its stock peers. Toll Brothers has a 95 Composite Rating, which combines a number of technical indicators into one easy-to-read score.
Booking Holdings
Online travel agency Booking Holdings beat quarterly expectations late Thursday driven by a surge in travel demand. The parent company of Kayak.com, Priceline.com and its flagship Booking.com reported a 36% jump in revenue to $4.05 billion for the quarter. Meanwhile earnings leapt 56% to $24.74 per share.
Booking noted a new January record for monthly room night bookings, with vacationers booking further in advance than during the pandemic. Meanwhile, the company said gross bookings for the fourth quarter rose 44% to $27.3 billion.
BKNG stock now has a small handle on its long consolidation with a 2,537.10 buy point. Shares are finding support at the 21-day line and holding above the 10-day moving average.
BKNG stock leads the IBD Leisure-Travel Booking Group, according to the IBD Stock Checkup. The stock has a 74 EPS Rating and 91 RS Rating as its outperformed other travel stocks that are having a bit more trouble. Booking Holdings has a near-perfect 98 Composite Rating.
BKNG stock is off to a strong start in 2023 and is up more than 21% year to date.
Textron
New England-based Textron manufactures various defense and civilian aircraft, along with armored vehicles, helicopters and automotive operation technology. In early December, Textron's subsidiary Bell beat out Boeing and Lockheed Martin for an $80 billion U.S. Army contract to build a new fleet of attack helicopters. The Bell V-280 Valor helicopter will replace the Black Hawk utility chopper.
Textron matched the FactSet earnings consensus for its Q4 results on Jan. 25, with earnings rising 13.8% to $1.07 per share. Revenue rose 9.4% to $3.64 billion, just surpassing estimates of $3.62 billion.
For 2023, Textron forecasts revenue to grow 8.5% to $14 billion. Adjusted earnings are seen spiking up to 57% to range from $5 to $5.20 per share.
TXT stock has a 76.07 buy point for its massive cup-with-handle base. Shares are currently finding support at the 21-day line. A rebound could offer a slightly lower entry around 75.
Textron has a 78 EPS Rating after posting positive earnings the past year. TXT stock has an 88 Composite Rating and 83 RS Rating.
SPS Commerce
Supply chain management software provider SPS Commerce was the IBD Stock Of The Day Wednesday. On Feb. 9, SPS Commerce reported better-than-expected fourth quarter results. The Minneapolis-based company's adjusted earnings shot up 37% year over year to 63 cents per share on 19% revenue growth to $122 million. Analysts predicted earnings of 54 cents per share on $120.8 million in sales.
SPSC stock is trading in a buy zone for a cup base after passing the 146.91 buy point on Feb. 10. Shares are off post-breakout highs but holding up well.
SPSC stock leads the Computer Software-Specialty Enterprises Group according to the IBD Stock Checkup. It has a perfect 99 Composite Rating and a near-perfect 98 EPS Rating after two quarters of accelerating earnings growth. SPCS stock's 91 RS Rating is near 52-week highs.
Shares are up nearly 15.5% year to date.
You can follow Harrison Miller for more news and stock updates on Twitter @IBD_Harrison.
