Microsoft and AI enterprise-software play ServiceNow lead this weekend's watch list of five stocks near buy points. MSFT and NOW are joined by cement maker Martin Marietta Materials, trucking firm XPO, and Axon Enterprise which supplies Tasers, body cameras and other technology to law enforcement.
The list features two stocks with a superlative 99 IBD Composite Rating in ServiceNow and Axon. That puts them in the top 1% of stocks based on fundamental and technical factors.
Both MSFT and AXON are part of the flagship IBD 50 list of leading growth stocks.
Microsoft also is part of the IBD Long-Term Leaders list featuring companies with reliable growth that makes them worthy of buying on pullbacks.
The next week could be a pivotal one for the current rally, with key inflation data on Wednesday and Thursday.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
Microsoft Stock
Jefferies analyst Brent Thill named Microsoft the biggest winner among artificial intelligence stocks in a note last weekend, hiking his price target to 550 from 465 and keeping a buy rating. Thill says Microsoft's infrastructure and enterprise positioning facilitates "capturing most of this transformational opportunity."
Microsoft also is among the Magnificent Seven stocks to so far steer clear of major antitrust action. On Tuesday, Macquarie analyst Frederic Havemeyer wrote that Microsoft's new decision to unbundle Teams from its Office suite and sell them separately globally reflects a willingness to adapt to lower regulatory concerns. He reiterated a 455 price target and outperform rating.
MSFT stock rebounded 1.8% to 425.52 in Friday stock market action, springing off its 21-day exponential moving average. Friday's move also lifted Microsoft back above a 420.82 buy point from a short consolidation following its Feb. 9 interim peak.
Microsoft's relative strength line, the blue line in IBD charts that tracks a stock's progress vs. the S&P 500, has largely moved sideway since peaking in late November.
ServiceNow Stock
ServiceNow's cloud-based software platform automates IT processes, integrates with other enterprise-software platforms and churns out analytics for informed decision-making. The Santa Clara, Calif., company's launched of Pro Plus with generative AI features in Q3 "was the most successful product launch that we've had," ServiceNow CFO Gina Mastantuono said in a March 4 presentation at a Morgan Stanley conference.
Mastantuono explained why ServiceNow priced Pro Plus 60% higher than the Pro version launched in 2018, factoring in increased productivity and employee salaries. "What we do is we give 90% of that value to customers and we keep 10%."
"That value equation seems to work extremely well with customers," she added.
KeyBanc started coverage of NOW with an overweight rating and 1,000 price target, citing confidence in its ability to monetize AI.
NOW rose 3.4% to 783.50 on Friday, reclaiming its 50-day moving average. ServiceNow is carving out a flat base with an 815.32 official buy point, according to a MarketSurge analysis. However, the move past its 50-day and clear of a trendline from its March 13 intraday high is flashing an early entry opportunity.
Martin Marietta Stock
On March 12, Seaport Research hiked its price target for Martin Marietta to 670 from 520, keeping a buy rating. The research firm said that MLM stock's advance gives it a lofty valuation, but that's partly explained by incremental earnings that will flow from its Feb. 12 agreement to buy $2 billion worth of aggregates operations from Blue Water Industries.
More significantly, Seaport sees recent industry pricing power as sustainable, given the breadth of planned infrastructure and reshoring projects and the government funding that means the buildout isn't tied to the economic growth outlook.
Following another test of its 21-day line with Thursday's market selloff, MLM stock bounded off the support on Friday, rising 2.5% to 619.41, closing at an all-time high.
The move carried Martin Marietta stock past a 617.08 buy point from a three-weeks-tight entry that also serves as a quasi-flat base. Thursday's intraday high of 620.78 also could serve as an entry point.
MLM's RS line reached new high ground, confirming its leadership vs. the S&P 500.
XPO Stock
XPO is a less-than-truckload logistics firm, a slow-growing industry that saw a major shakeup last year. In the wake of the bankruptcy of Yellow Corp., XPO is among the firms that have seized the opportunity, acquiring 28 truck terminals at a bankruptcy auction. That's fueled an acceleration in revenue growth from -7% in Q2 to 6% in Q3 and 15% in Q4.
On March 11, JPMorgan analyst Brian Ossenbeck hiked his price target for XPO to 144 from 122, keeping an overweight rating. He expects a cyclical volume recovery to support pricing.
XPO stock motored 4.7% to 128.16 on Friday, bounding off its 21-day line. The move past Thursday's intraday high of 127.71 flashed an early entry opportunity. A weekly chart shows XPO rallying off its 10-week moving average.
XPO needs one more week for a minimum five-week flat base. Shares have shown tight action for the past two months
Axon Enterprise Stock
Axon stock has been consolidating for the past five weeks after surging 13.8% on Feb. 28 on the strength of its Q4 earnings beat and outlook.
Revenue grew 29% to $432.1 million as EPS surged 60% to $1.12, powered by demand for its latest Taser 10 weapon and software subscriptions.
William Blair analyst Jonathan Ho reiterated his outperform rating after the Q4 report. Ho touted Axon's "relentless focus on innovation" and "the clear improvements it brings both to officer safety and effectiveness."
Ho highlighted the growth of Axon's opportunity with real-time crime center and drone technology for law enforcement to manage evolving situations remotely.
Axon rose 1% to 309.90 on Friday, after finding support at its 21-day line. Axon is 5% below a 325.63 flat-base buy point. However, a move past 315.61 would break a trendline from the March 4 high and offer an early entry.
