From 5G, artificial intelligence and machine learning to advances in semiconductor design and manufacturing, making "smart" devices and systems work seamlessly requires the convergence of countless technologies. That's where Synopsys comes in.
It is a leader in electronic design automation (EDA), connecting and optimizing software and semiconductors. That crucial role in enabling smart technology has SNPS stock taking aim at a new breakout.
Synopsys has earned a spot on both the IBD Breakout Stocks Index and the IBD 50.
With its track record of stable earnings growth, Synopsys also joins fellow tech stocks Cadence Design Systems, Microsoft and Alphabet on IBD Long-Term Leaders.
While the recent bear market has mauled the technology sector, Synopsys remains in demand among top funds. Including Fidelity OTC, 132 funds with an A+ rating from IBD have reported owning SNPS stock.
See Which Stocks Make The IBD Breakout Stocks Index
Synopsys Tops Peers As It Drives AI, IoT And 5G Innovations
Based in Silicon Valley, Synopsys designs and verifies complex chips. It also designs the advanced processes and models required to manufacture those semiconductors, found in everything from smartphones and wearables to self-driving cars and machines that learn.
Through AI and machine learning, cloud computing and a wide range of other technologies, Synopsys works across many sectors. The company has its hands in self-driving cars, aerospace and defense, mobile and 5G, medical devices, financial services and more.
With a 94 Composite Rating, Synopsys tops its peers in the software design industry group, which ranks a lowly No. 172 among the 197 stocks IBD tracks. Fellow software design stock and long-term leader Cadence has a 92 rating.
Synopsys has posted average annual earnings growth of 28% over the last three years. Annual sales growth has averaged 13% over the same period. The company earns an A SMR Rating, which tracks sales growth, profit margins and return on equity.
SNPS Stock Sets Up With relative strength line At New High
Double bottoms often form in choppy markets. So it's no surprise that Synopsys has crafted such a chart pattern as market volatility continues.
In a sign of strength, the relative strength line for SNPS stock has already hit a new 52-week high as it targets a 342.69 buy point.
But tech stocks, in general, and Synopsys, in particular, still have lingering signs of damage from this year's bear market. The 10-week moving average for SNPS stock remains below the longer-term 40-week line. Look for the 10-week and 50-day lines to at least start trending decisively higher to indicate rebounding technical strength.
After all the damage in technology, one silver lining for Synopsys its fresh base count. SNPS stock reset its base count this year by undercutting the low in its prior pattern. That makes its current double bottom a first-stage base, pointing to a higher likelihood of success.
Look for Synopsys to keep climbing above its 200-day line and clear the 342.69 entry in volume at least 40% above average.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
