AI play HubSpot, S&P 500 stocks Allstate and TransDigm along with recent IPO Cava and Sea Limited are in focus this week.
The stock market has suffered significant losses in the past week. The major indexes have broken decisively below 50-day moving averages. More leading stocks need significant work before triggering buy signals.
Investors should be looking for strong evidence of market strength before adding exposure. However, with that being said, these five stocks, which all are showing good relative strength, should be on investors watchlists.
HubSpot Stock
HUBS shares fell 2.8% to 631.24 on Friday, sinking 4.8% for the week. The marketing software firm had flirted with reclaiming a 660 buy point from a flat base, but was turned back. Shares are holding the 50-day moving average.
HUBS stock broke out on April 4 on a report that Google-parent Alphabet was mulling a bid for the marketing software maker. There was some buzz about another possible suitor on April 19.
HubSpot develops customer relationship management software that combines marketing, sales, customer service, content, operations and commerce in a single platform. Its system of five modules, called hubs, can be used alone or bundled together. It uses AI in its website generator, content and email writer, meta description generator and social media blog writer.
HubSpot is expected to report its fiscal first-quarter earnings around May 1. The AI stock is on the IBD 50 and the IBD Big Cap 20.
HubSpot stock has a 98 Composite Rating out of 99. The AI stock has a 91 Relative Strength Rating. The EPS Rating for the AI play is a perfect 99.
S&P 500: Allstate Stock
Allstate stock advanced 2.3% on Friday, continuing to advance above an buy point. For the week, the S&P 500 stock gained 3.7% to 172.96.
Allstate shares bounced from their 50-day moving average Thursday, reclaiming a 168.05 buy point from a cup base. The move Thursday broke a short downtrend. Meanwhile, the relative strength line, which tracks a stock's performance vs. the S&P 500, is at a 52-week high.
Allstate was Friday's IBD Stock Of The Day.
The insurance giant on Thursday estimated catastrophe losses for the month of March of $328 million, or $259 million after-tax. Total catastrophe losses for the first quarter were $731 million, pretax. Meanwhile, rate increases for Allstate brand auto insurance resulted in a premium impact of 0.9% in March and 2.4% year-to-date.
Allstate also reported that rate increases for its brand homeowners insurance resulted in a premium impact of 0.7% in March and 3.4% so far this year.
Last week, JPMorgan and Piper Sandler increased price targets on the S&P 500 stock to 185 and 188, respectively.
Meanwhile, HSBC last week upgraded Allstate to buy, from a previous hold rating, with a price target of 190, up from 158. HSBC wrote that rate increases continue to compound across personal auto and homeowners insurance in the U.S. and that decelerating inflationary trends put U.S. personal lines insurers "in a sweet spot."
The S&P 500 stock has a 97 Composite Rating out of 99. Allstate also has a 91 Relative Strength Rating and an 81 EPS Rating.
Sea Limited Stock
Shares of Sea Limited fell 2.2% to 55.06 Friday but still climbed 3.3% to 55.06 on the week. The stock is bouncing off its 50-day moving average in an emerging base.
Investors could use the stock's April 10 high of 58.47 as an early entry. However, the consolidation probably needs another week or so with a buy point of 63.25, the stock's six-month high which it hit on March 14.
Singapore-based e-commerce and gaming firm Sea Limited jumped Tuesday, rebounding from a recent dip to move ahead of its 21-day moving average.
Shares have gained nearly 40% this year after a rough 2023.
A recent JPMorgan note looked at how efforts by TikTok Shop to improve take rates in Indonesia could allow Sea to do the same in the country for its Shopee e-commerce business.
JPMorgan maintains an overweight rating for SE stock and a 70 price target. TikTok is a top competitor to Shopee in Indonesia.
Sea Limited is one of the largest internet services providers in Southeast Asia. It operates businesses in digital entertainment, e-commerce, and digital payments and financial services. The company's products include the e-commerce focused Shopee, which services Southeast Asia and Taiwan.
The company also owns digital-payments provider SeaMoney and Garena, a global online games developer.
A strong earnings report in March helped push Sea stock higher.
Sea earnings are expected to soar in 2024.
Sea Limited stock has a 69 Composite Rating out of 99. The stock also has an 87 Relative Strength Rating. SE shares have a 19 EPS Rating.
S&P 500: TransDigm Stock
TransDigm stock fell 2.7% to 1,187.70 on the week, almost all on Friday. The S&P 500 stock has traded tightly for weeks, offering a 1,248.39 buy point. Shares are now just below the 50-day and 10-week moving average.
Cleveland-based TransDigm manufactures highly engineered parts and devices used in commercial and military aircraft, as well as proprietary products for defense applications. Its products include ignition systems, pumps, flight controls, cockpit displays and radio systems.
In February, TransDigm reported a 56% increase in adjusted earnings to $7.16 per share in Q1 compared to FactSet expectations of $6.41 per share. Revenue jumped 28% to $1.79 billion in Q1 while Wall Street anticipated $1.68 billion.
Revenue from the commercial original equipment manufacturer (OEM) segment jumped 25% during the quarter. Commercial aftermarket sales leapt 22%. Defense revenue increased 28% for the quarter.
Meanwhile, the S&P 500 stock lifted its 2024 net sales outlook, predicting a range from $7.58 billion to $7.76 billion. That would represent a 16.4% increase at the midpoint compared to 2023.
TransDigm guided 2024 adjusted EPS to $29.97-$31.73 per share, up from $25.84 per share in 2023. However, the S&P 500 play lowered its guidance by about $1.12 per share at the midpoint. That reflects about $130 million in additional interest expenses after issuing $2 billion of debt.
In 2023, TransDigm profit jumped 50% to $25.84 per share. Full fiscal-year revenue advanced 21% to $6.58 billion.
TransDigm stock has a 90 Composite Rating out of 99. The S&P 500 stock also has a 92 Relative Strength Rating and a 91 EPS Rating.
Cava Stock
Cava fell 6.4% to 59.67 for the week, pulling below its 50-day and 10-week moving averages. A decisive retaking of those levels would offer an early entry. But a decisive break lower could be a sell signal.
Cava stock is out of range from its February breakout at 56.34, according to MarketSurge analysis. It's also far extended from two earlier breakouts, including one from an IPO base.
The Mediterranean restaurant chain specializes in falafel bowls and pita. Cava delivered its first profit on an annual basis on 60% revenue growth in 2023, the year it went public.
Cava ties its rapid growth to more new and repeat customers. On top of that, Cava benefits from the broader health and wellness trend. More generally, restaurant stocks continue to act well as inflationary pressures abate.
Founded in 2010, Cava remains in the early stages of expansion after its initial public offering in June. Some people call Cava the next Chipotle Mexican Grill, which sits on the S&P 500, due to its customizable bowls and growth potential.
Chipotle reports first-quarter earnings and revenue late Wednesday.
Cava was featured in IBD's New America on March 28. CAVA stock has a perfect 99 Composite Rating. The stock also has a 94 Relative Strength Rating and an 81 EPS Rating.
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