AI stocks Broadcom and SentinelOne are on our radar this week as they break out or approach buy points. Intuitive Surgical, Freshpet and Spotify also rank among the five top stocks to watch. SentinelOne stock tried to break out again on Monday.
Among these, Freshpet stock belongs to IBD Leaderboard and the IBD 50 list of top growth stocks. Spotify stock and Broadcom are on SwingTrader. Broadcom is in the IBD Big Cap 20. Other top IBD lists for the best stock ideas include Long Term Leaders.
The relative strength lines for all five top stocks show an uptrend, not far from highs. A rising RS line, the blue line in the charts shown, shows a stock's outperformance vs. the S&P 500 index.
The stock market took a breather on Monday after six straight winning weeks. Earnings season continues to ramp up, with Tesla among notable names on the docket this week.
AI Stock Broadcom
Shares of Broadcom edged down 0.9% to 179.89 last week but held above rising 21-day and 10-week moving averages. Broadcom stock closed almost unchanged on Monday, continuing to work on a 185.16 buy point from a 16-week consolidation, just 3% below the entry. Investors could view the Sept. 26 high of 180.25 as a handle entry.
The RS line for Broadcom has risen steadily over the past 10 years, according to the MarketSurge chart. That is a sign of long-term outperformance. The AI stock earns a perfect IBD Composite Rating of 99 and a superior EPS Rating of 93.
For its fiscal third quarter, the fabless chipmaker posted nearly 18% earnings growth. That was the best in six quarters and accelerated sharply from a 6% gain in the prior quarter. Sales growth has quickened for two straight quarters, to 47% in Q3, largely on the recent VMware acquisition.
Broadcom offers a way to play the artificial intelligence theme. The California-based company is chasing Nvidia's AI success. In October, Broadcom announced new AI products.
A 93 RS Rating means that Broadcom stock has outpaced 93% of all stocks in IBD's database over the past year. So far in 2024, it has rocketed 61%.
Tesla Earnings Due After Robotaxi Dive; BYD In Buy Zone
SentinelOne: Cybersecurity AI Stock
Shares of the artificial intelligence cybersecurity leader rose 2.5% to 26.36 for the week. SentinelOne stock briefly topped a 26.62 consolidation buy point on Monday, before paring gains. It forged that entry largely above 10-week and 40-week averages as investors digested a recent swing to profitability.
Investors could have used 25.54 or a downward-sloping trendline for aggressive entries earlier this month.
SentinelOne holds a Composite Rating of 85, EPS Rating of 75 and RS Rating of 86.
In the most recent quarter, SentinelOne posted adjusted earnings of a penny per share, its first-ever profitable quarter, per IBD MarketSurge data. That profitability is set to continue over the next four quarters. Revenue growth is slowing but at robust levels above 30%.
Thanks to an improving outlook, SentinelOne was featured in IBD's New America column this week.
Several other cybersecurity stocks are trading around buy points.
So far this year, SentinelOne stock remains down 3% and far below all-time highs. But it's risen sharply from the May 31 low of 14.33.
Intuitive Surgical Stock
Shares of the minimally invasive surgical device maker gapped up above the 50-day/10-week moving averages on Friday, surging 10% to 521.15 in heavy volume. Intuitive Surgical stock also cleared several weeks of tight trading that could be treated as a de facto flat base with a 496.48 buy point. The earnings move on Friday follows a successful flat-base breakout in May. Shares closed down a fraction on Monday.
ISRG stock owns a Composite Rating of 98, EPS Rating of 93 and RS Rating of 91. On Friday, the robotic surgery giant smashed Q3 earnings estimates. Both earnings and revenue growth accelerated for a second straight quarter.
The IBD Stock Checkup tool shows Intuitive Surgical's EPS growth averaged 25% over the last three quarters, above the three-year rate of 11%.
Year to date, Intuitive Surgical stock is up 54% after Friday's earnings gap-up.
Freshpet Stock
Shares of the pet food maker fell 1.7% to 139.53 last week, continuing to test the 10-week line. Freshpet stock lost 1.9% on Monday but remains in a buy zone from an August breakout past 136.35. Investors could buy the stock at current levels or wait to see if it breaks out of the recent trading range.
Freshpet stock holds an IBD Composite Rating of 86, EPS Rating of 72 and RS Rating of 95.
In the latest second quarter, Freshpet sharply pared net losses to $1.7 million from $17 million a year ago. That followed a surprise profit of $18.6 million in the first quarter vs. expectations for a $10.6 million loss. In both quarters, the company saw margins expand and hiked its full-year outlook.
The Bedminster, N.J.-based company makes steam-cooked, grain-free and antioxidant-rich meals for dogs and cats. Impressively, Freshpet says it has grown revenue above 25% for 24 quarters in a row.
Q3 earnings are due Nov. 4.
In 2024 so far, Freshpet stock has jumped 57.6% to its best levels in nearly three years.
Spotify Stock
Shares of the music streaming and podcast company rose 1.4% last week and, at the edge of buy range from a September breakout past 359.38.
Spotify stock gained a fraction on Monday. It has a five-weeks-tight pattern mostly forged in the buy zone of the prior flat base. Friday's 3.3% gain broke the trendline of that tight pattern, offering a new buying opportunity.
Spotify stock holds an IBD Composite Rating of 93, EPS Rating of 80 and RS Rating of 96.
The Luxembourg-based music streamer had a history of deep losses, but has been profitable in the last two quarters. It's on track to deliver its first annual profit in 2024 on robust, high-teen revenue gains. Some analysts say that Spotify is in the "sweet spot" of growth and profitability.
In 2024 so far, Spotify stock has more than doubled, despite moving sideways for the last several weeks.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
