When looking for the best stocks to buy and watch, those with rising price strength are ones to watch. One stock that fits that bill is AI and cybersecurity play Cloudflare. On Wednesday the Relative Strength (RS) Rating on Cloudflare stock shot up to 92, up from 86.
What's remarkable is that Cloudflare stock was already in a top group. Research shows that the market's biggest winners often have an 80 or higher Relative Strength Rating in the early stages of their moves.
Cloudflare Stock was Due For Some Action
Over the past four quarters its earnings grew 500%, 700%, 900% and then a smaller but still outstanding 167% last quarter, to 16 cents per share. Its sales growth has also been strong. Sales in that period grew 42%, 37%, 32% and 32% again last quarter to $335.6 million.
Despite its strong earnings and revenue growth over the past year, its stock traded in a fairly narrow range between 37 and 76 during that period. On Wednesday, Cloudflare stock rose 0.3% to near 71.
The IBD 50 stock is building a cup-without-handle base with a 76.07 buy point. See if the stock can break out in heavy volume.
Small-cap San Francisco-based Cloudflare makes software for firewall, routing, traffic optimization and other network services. The company incorporates artificial intelligence into its software.
CEO Matthew Prince said in the company's Nov. 2 third quarter earnings report, "In our third quarter, we relentlessly innovated and accelerated our efforts in AI, announcing the most complete platform to deploy fast, secure, compliant AI inference at scale," with its Workers AI platform. He also noted several partnerships and collaborations in Q3 "with the who's who of AI."
300 Of Fortune 1000 Use Cloudflare
Cloudflare says on its website that 30% of Fortune 1000 companies rely on its software including IBM, Shopify, Garmin and Broadcom.
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Cloudflare stock earns the No. 7 rank among its peers in the 127-stock Computer Software-Enterprise industry group. Docebo, Datadog and ServiceNow are among the top 5 highly rated stocks in the group.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength. The unique IBD Relative Strength Rating measures market leadership by showing how a stock's price action over the last 52 weeks compares to that of the other stocks in our database.
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