In today's IBD Screen Of The Day, the Stocks That Funds Are Buying filter reveals four compelling growth stocks near buy points of new bases. Three are in the energy field and one is a drugmaker.
Novo Nordisk has waffled a bit after breaking out above the 117.45 buy point of a cup base April 7, according to MarketSmith. But the stock is still near that entry after finding support at its 21-day moving average.
Denmark-based Novo Nordisk makes drugs to treat diabetes.
Mutual funds own just 2% of Novo Nordisk's 2.29 billion shares, according to MarketSmith. While that might suggest a lack of broad institutional investor interest, the flip side is there's plenty of potential for support if the percentage of fund ownership should increase.
Also, the ready-made Stocks That Funds Are Buying screen in IBD Stock Screener reveals that the company has a Sponsorship Rating of A. The rating takes into account the performance of funds that own the stock, as well as whether fund ownership has been increasing.
Fundamentally, Novo Nordisk leaves a bit to be desired. Earnings growth has averaged 17.1% the past three quarters, according to Stock Checkup. That's less than the 25% or more that is typically seen in strong growth stocks. That and annual earnings growth of 11% the past three years combine to put the company's IBD Earnings Per Share Rating at a tepid 79 out of 99.
But the big drugmaker, with a market cap of $266.15 billion, is no longer a spring chicken, so consistently high growth can be harder to come by than for younger companies.
First-quarter results are due May 4. Wall Street analysts expect earnings per share of 84 cents, down 2% from 86 cents a year earlier.
Technically, this growth stock near a buy point is on stronger footing. Novo Nordisk's Relative Strength Rating is a solid 93 and its Composite Rating, which combines fundamental and technical ratings, is right up there at 94.
Also on the plus side, Novo Nordisk ranks No. 5 in its Medical-Ethical Drugs group, according to Stock Checkup. The group itself ranks No. 40 among IBD's 197 industry groups and has been showing momentum. The industry group rank is up from No. 48 three weeks ago and 64 six weeks ago.
Energy Growth Stocks Near Buy Points
U.K.-based contract oil driller Valaris is another growth stock near a buy point. It has formed a three-week tight pattern with a buy point of 55.81. With a relative strength line at its highest point since the stock first started trading after it emerged from Chapter 11 restructuring in May 2021, it also boasts a near-perfect 98 Relative Strength Rating.
This stock's weakest link appears to be its 63 EPS Rating. But things are looking up, as the world struggles with supply shortages amid Russian President Vladimir Putin's attack on Ukraine. Valaris' Q4 EPS swung to 37 cents from a loss of 65 cents a year earlier. Earnings are due May 3. Analysts see a loss of 89 cents a share, shrinking from a loss of $1.03 a year earlier.
The company said it emerged from Chapter 11 restructuring with a strengthened capital structure.
Renewable natural gas producer Archaea Energy is in a buy zone after breaking out above the 22.11 entry of cup base on March 29. The buy range goes up to 23.22. Sales growth ramped up to $58.4 million in Q4 last year from $12 million in Q3 and $3.4 million in both Q2 and Q1.
Shell is also in a buy zone. The Netherlands-based integrated oil producer broke out above a flat base entry of 56.23 on April 8. The buy zone goes up to 59.04.
Q4 EPS exploded to $1.66 from 10 cents a year earlier. Analysts expect Q1 EPS to jump 154% to $2.13 from 84 cents a year earlier, according to MarketSmith. Q1 results are due May 5.
Shell is on IBD's Stock Spotlight list.
