The market remains in flux amid the heart of earnings season, but several stocks are in or near buy zones. S&P 500 components GE Aerospace and JPMorgan Chase along with Toll Brothers, Tenet Healthcare and Spotify Technology are in focus this week.
The stock market rally showed mixed action following Wednesday's ugly sell-off. However, on Friday, key indexes all rallied after the release of pivotal inflation data that could tip the scale on interest rate decisions.
Meanwhile, a major week for Dow Jones index component earnings is upcoming. Apple and Microsoft top the Dow's earnings calendar as July rolls into August. By the end of next week, more than 50% of Dow Jones Industrial Average companies will have reported financials.
While earnings season is in full force, four of these highlighted stocks to watch have already reported financial results, so that risk is out of the way. Meanwhile, luxury builder Toll Brothers just report earnings for a few weeks.
S&P 500: GE Stock
Shares of GE Aerospace jumped 6.7% to 169.81 for the week. The stock retook its 50-day moving average on Monday and broke out Tuesday following earnings. Shares tumbled back on Wednesday but then bounced back, up 3.1% on Friday.
GE stock is trading just below a 170.80 buy point in a flat base pattern, according to MarketSurge pattern recognition. The flat base formed after a powerful run from an early November 2023 breakout.
GE Aerospace announced Tuesday that Q2 earnings jumped 62% vs a year earlier to $1.20 a share, beating views for 99 cents. Revenue rose nearly 4% to $9.09 billion, topping forecasts for $8.44 billion.
Orders in GE's commercial engines and services business surged almost 38% to $9.15 billion amid booming demand for spare parts.
Ongoing Boeing woes mean airlines are hanging on to older jets. That has boosted GE Aerospace's aftermarket business.
Free cash flow swelled almost 17% to $1.1 billion, beating views. GE Aerospace also raised full-year EPS and cash flow guidance.
Year to date, the S&P 500 stock has surged nearly 67%. It has more than doubled over the past year.
Is GE Stock A Buy Or A Sell Right Now?
The relative strength line is off highs, but turned up in recent days. The RS line, which tracks a stock's performance vs. the S&P 500 index, had been in a strong uptrend for several months.
GE Aerospace — once called GE's "crown jewel" — makes jet engines and aviation systems for plane makers, as well as the military. It also runs a lucrative aftermarket business for engine repair and maintenance.
The aerospace and defense pure-play company emerged from General Electric's big breakup, after the spinouts of GE Vernova and GE HealthCare Technologies. GE Aerospace kept the GE ticker symbol.
The S&P 500 stock was highlighted Tuesday as the IBD Stock Of The Day. GE Aerospace stock was also added to SwingTrader on Tuesday.
GE stock has a muscular 98 Composite Rating. The S&P 500 component also has a strong 94 Relative Strength Rating and an 84 EPS Rating.
Toll Brothers Stock
TOL shares rallied 6% during the week to 139.45, with nearly all of the gains coming on Friday. Toll Brothers stock is now in a buy zone from an official 135.37 buy point in a cup base pattern.
The luxury homebuilder is expected to report fiscal third-quarter earnings in late August. In May, Toll Brothers reported better-than-expected fiscal second-quarter earnings and forecast full fiscal-year profit growing 13% on increased delivery expectations.
The company projects full fiscal year deliveries of 10,400 to 10,800 homes with an average price of $960,000 to $970,000. Toll Brothers also forecasts EPS of $14. For Q3, the homebuilder predicts 2,750 to 2,850 home deliveries with an average price of $950,000 to $960,000.
Homebuilders for more than a year have said that high rates have pinched housing affordability. Many companies have turned to incentives to drum up demand.
However, with mortgage rates falling on the prospect of rate cuts, more people could be looking at purchasing homes without incentives.
Toll Brothers was Friday's IBD Stock Of The Day.
Fellow homebuilder PulteGroup reported better-than-expected second-quarter earnings and revenue this week. The company saw Q2 EPS grow 19% to $3.83 while sales increased 10% to $4.6 billion.
PHM stock is up more than 18% in July and slightly extended from an official 122.72 buy point.
The IBD-tracked Building-Residential/Commercial industry group surged 60% in 2023. This year, the 22 stocks in the group have collectively gained 22%, mostly in the last three weeks.
Toll Brothers stock has a 97 Composite Rating out of a best-possible 99. Shares have a 93 Relative Strength Rating and a 97 EPS Rating.
Tenet Healthcare Stock
THC surged 14% for the week to 151.63, breaking out above a 142.35 buy point from a flat base. On Tuesday, the stock began flashing a buy signal as it bounced off its 50-day moving average and broke a trendline sloping down from the June 12 peak.
Hospital operators Tenet Healthcare, Universal Health Services and S&P 500 component HCA Healthcare all reported earnings and revenue this week. Hospitals have been projected to ride a tailwind of growing demand for medical care.
Tenet Healthcare delivered an earnings and revenue beat, with EPS growing 60%. For the full year, Tenet raised its EPS outlook to a range of $10.41 to $11.12. That was above the prior range of $8.37 to $9.41. Tenet also announced a new $1.5 billion share repurchase authorization, equal to just more than 10% of its market cap.
Tenet Healthcare was Wednesday's IBD Stock Of The Day.
HCA and UHS also cleared buy points and hit record highs on their results.
Tenet Healthcare stock has a 97 Composite Rating out of a best-possible 99. Shares have a 98 Relative Strength Rating and a 97 EPS Rating.
Spotify Technology Stock
Shares of Spotify surged 9.1% on the week to 321.88. Spotify stock broke out above a buy point of 331.08 from a flat base on Tuesday but retreated modestly Thursday and Friday.
On Tuesday, Spotify beat expectations for subscribers and earnings in the second quarter. The company added 7 million premium subscribers in the June quarter. Analysts polled by FactSet had expected Spotify to add 6.2 million subscribers.
Spotify ended the period with 246 million total paying subscribers worldwide. The company also tallied 626 million monthly active users in the second quarter, vs. Wall Street's target of 631 million.
Spotify earned the equivalent of $1.43 a share on sales of $4.1 billion in the June quarter. In the year-earlier period, Spotify lost $1.71 a share on sales of $3.56 billion.
For the current quarter, Spotify forecasts adding 5 million subscribers for a total of 251 million. It also expects to reach 639 million monthly active users in the third quarter.
The Stockholm-based company is the world leader in music streaming by subscribers, with about 32% market share. Tencent Music is in second place with 14% share, followed by Apple's Apple Music with 13% and Amazon.com's (AMZN) Amazon Music with 11%.
In June, Spotify stock was highlighted in IBD's New America.
Spotify stock has an 84 Composite Rating out of 99. The stock's Relative Strength Rating is 96. The EPS Rating is 81 out of 99.
S&P 500: JPMorgan Chase Stock
JPMorgan stock gained 1.7% Friday, edging up 1.2% to 212.24 for the week. Shares are rising within range of a 205.88 flat-base buy point.
On July 12, the Dow Jones banking giant reported better-than-expected earnings and revenue. But net interest income grew less than expected, with its full-year NII forecast just below consensus.
Still, investors are bullish on bank stocks, in part because the Treasury yield curve has become less inverted. That's a positive sign for net interest income.
On July 17, JPM hit a high of 217.56. The S&P 500 component, which is also a Dow Jones stock, has rallied 24% in 2024.
The S&P 500 stock has a 95 Composite Rating out of 99, an 85 Relative Strength Rating and an 85 EPS Rating.
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