Netflix and Eli Lilly lead this weekend's watch list of five stocks near buy points that are all enjoying rapid sales growth. In addition to Netflix stock and Eli Lilly, Interactive Brokers, Shift4 Payments and Wingstop round out the list.
After a week in which a big Fed rate cut helped lift the S&P 500 to a record high, Netflix, Interactive Brokers, Shift4 and Wingstop stock are all flashing either a buy signal or early entry opportunity.
Wingstop and Interactive Brokers stock are both part of the flagship IBD 50 list. WING stock is on the watchlist for the IBD Leaderboard portfolio of elite stocks. Shift4 stock is on IBD Sector Leaders.
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.
Netflix Stock
Netflix revenue growth has accelerated the past four quarters, going from 3% to 17%. That's come as subscriber additions surged thanks to a crackdown on unpaid account sharing and the rollout of a lower-priced, advertising-supported service.
In Q2, Netflix added 8.05 million subscribers, trouncing forecasts for 4.53 million.
In August, Netflix said its second year of upfront negotiations with advertisers generated a 150% increase in ad sales commitments compared to last year.
Meanwhile, Netflix content costs have plateaued.
On Aug. 5, Jefferies reiterated its buy rating and 780 price target for NFLX stock, touting its "impressive content slate" and strong prospects of a price hike in Q4. The analysts noted that its latest price hike on the standard plan came in January 2022, while it offers the cheapest ad-supported plan among major players.
A day later, Disney increased prices for Disney+, Hulu and ESPN+, opening the door wider to a NFLX price hike.
NFLX rose 0.6% to 701.03 on the week, edging back above a 697.49 buy point from a cup base, according to a MarketSurge analysis. A week earlier, the streaming leader's move off its 50-day moving average flashed an early entry.
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Eli Lilly Stock
Eli Lilly has benefited from some rivals' bad news recently. On Friday, Novo Nordisk tumbled after its new approach to weight loss caused neuropsychiatric side effects.
Deutsche Bank analysts said the Phase 2a results for Novo remove a competitor to Eli Lilly's orforglipron drug, which resulted in greater weight loss. The firm kept its buy rating and 1,025 LLY price target.
On Sept. 13, Citi analyst Peter Verdult resumed coverage of LLY with a buy rating and 1,060 price target, while noting that a rival oral GLP-1 drug from Roche was dealt a setback from the prevalence of elevated heart rate and nausea.
Eli Lilly saw 38% sales growth last quarter.
LLY stock, after testing its 10-week and 50-day averages recently, darted past its 21-day exponential average on Friday's Novo news, but settled for a mild 0.7% gain to 921.49.
A move past Friday's intraday high of 939.86 could offer an early entry opportunity, confirming a break of the trendline sloping down from LLY's recent plateau.
LLY has been consolidating for four weeks and ideally would forge a new base. For now, the consolidation since the Aug. 22 high of 972.53 could be treated as a high handle buy point.
Interactive Brokers Stock
The Fed news was mixed for Interactive Brokers and rivals. The company says a one-percentage-point rate cut by global central banks would cut net interest income by $307 million. On the other hand, a pivot to Fed rate cuts historically fuels further gains for the S&P 500.
For the month of August, the global electronic brokerage reported 2.712 million daily average revenue trades, up 40% from a year ago, though 2% below July's total. Client equity rose 36% to $515.3 billion, while margin loan balances grew 30% to $54.9 billion.
IBKR rose 4.95% to 133.02 for the week, clearing a 128.98 handle buy point from a 15-week consolidation. The buy zone runs through 135.43.
IBKR has a 99 IBD Composite Rating out of a possible 99, according to IBD Stock Checkup. The rating combines a range of fundamental and technical factors.
Shift4 Stock
William Blair started coverage of Shift4 on Sept. 4 with an outperform rating, saying it's capable of "steadily taking share" in the $12 trillion U.S. electronic payments market, while also expanding internationally.
Blair called Shift4 the "vertically integrated market leader" in serving professional sports and entertainment venues. Since then, the Miami Heat's Kaseya Center joined its roster of more than 20 such facilities.
The research firm also sees its SkyTab point-of-sale solution taking share in the large hospitality and restaurant verticals.
Shift4 has averaged steady 30% revenue growth the past three quarters.
On Friday, Wells Fargo raised its Shift4 Payments price target to 95 from 75, keeping an overweight rating, anticipating an acceleration in organic growth in 2025, helped by synergistic opportunities from recent acquisitions.
FOUR rose 4.8% to 86.90 last week, clearing an 83.64 cup-with-handle buy point.
Wingstop Stock
On Monday, Wedbush raised its WING stock price target to 440 from 425, predicting 22% same-store sales growth in Q3 among franchised U.S. stores. That's above the 20.6% consensus.
After Q2 results, Piper Sandler analyst Brian Mullan called sales trends "almost hard to believe." Sales grew 45% to $155.7 million in the quarter as EPS surged 63% to 93 cents.
Wingstop had 2,352 restaurants at the end of June. In a CNBC Mad Money interview on Sept.10, CEO Michael Skipworth said Wingstop has "a ton of runway for brand awareness," predicting the company would grow to 6,000 restaurants in the U.S. and 10,000 globally.
Wingstop stock rose 6.35% to 419.90 on the week, while flashing an early entry as it cleared 409.77, a short-term high.
WING has an official 431.03 buy point from a 12-week consolidation.
