Apple stock, Shell and Brown & Brown are stocks to watch, along with Marriott International and Juniper Networks.
Apple and these other stocks are acting well and setting up, as the stock market builds on its recovery. Most of these top growth stocks are just below buy points after rebounding powerfully off key technical levels. Juniper Networks stock broke out Friday.
Following the recent follow-through days on the S&P 500 and Nasdaq composite, investors could raise exposure by buying top stocks breaking out past proper buy points.
On a weekly MarketSmith chart, the relative strength lines for Apple and Juniper Networks are hitting bullish new highs while the stocks are in bases, indicated by a blue circle at the end of their RS lines. The RS lines for the others are just below recent highs.
A rising RS line means that a stock is outperforming the S&P 500 index. It is the blue line in the charts shown.
Stock Market Action: Watch The RS Line
The relative strength line is a quick way to spot winners in any market — up or down.
The Relative Strength At New High stocks list is a great place to look for quality names with strong RS lines. IBD's stock research platform MarketSmith has a screening tool that identifies stocks with RS lines making new highs.
In addition, the best growth stocks have a Composite Rating of 90 or better, out of a best-possible 99. The IBD Composite Rating combines key fundamental and technical metrics in a single easy-to-use score.
Most of the stocks to watch this week meet that bar. Shell stock leads with a near-perfect Comp Rating of 98 out of 99. It's followed by Marriott International with a 97, and Apple and Brown & Brown with a 94 each. Juniper Networks has a solid Comp Rating of 85.
Apple Stock: 'Monster Growth'
The iPhone maker has rallied for the past nine sessions, regaining its 50-day moving average for the first time in about a month. Apple stock crossed an early trendline entry last week and is now closing in on a 176.75 buy point from a double-bottom base. AAPL sits about 2% below the traditional entry, which follows a successful breakout in November.
Apple's rally came as Wall Street said demand for its latest iPhone 13 continues strong and one analyst predicted a "monster growth cycle" over the next year and a half.
Ideally, AAPL would form a handle around here or at least pause for a few days before powering higher. Shares seem due for a pullback.
The RS line for Apple stock is making a new high after rallying for most of the past year, according to MarketSmith chart analysis. That's a strong positive ahead of a potential breakout. That strength indicator shows a longer-term uptrend that includes most of 2020, a sign that Apple stock was outperforming in the throes of the coronavirus pandemic.
Apple shows an IBD Relative Strength Rating of 90 out of 99. That means it has outperformed nine out of 10 stocks over the past 12 months.
AAPL stock has a superior EPS Rating of 95 out of 99.
In fiscal 2021, Apple earnings per share leapt 71% year over year as sales jumped 33%. Wall Street expects AAPL earnings to slow to 10% growth in 2022 and to 7% in 2023, according to FactSet.
The slowdown would come as pandemic tailwinds ease. Earlier in the coronavirus pandemic, stay-at-home orders fueled demand for laptops and other consumer electronics.
For Apple and stocks at large, rising rates and inflation are a new worry.
Shell Stock: Soaring Oil Prices
Shares of the Dutch oil and gas giant also winged higher in recent trading sessions, retaking the 50-day average. Shell stock has carved out a flat base with a 56.23 buy point and sits roughly 1% below the entry.
That flat base is slightly above a prior cup base.
Shell's rally comes as the Russia-Ukraine war hits energy supplies, causing oil and gas prices to skyrocket. Russia is a major oil producer and key natural gas supplier to Europe.
Shell initially fell as the Russia-Ukraine war started, as the energy giant backed out of Russia projects. But after undercutting its 50-day line on March 4, SHEL stock has rebounded.
The RS line for Shell stock surged at the start of 2022 and is not far from February highs. It shows a longer-term decline and remains well off all-time highs.
Shell earns a superior RS Rating of 94 and an 84 EPS Rating.
In 2021, Shell earnings rebounded 302% and sales bounced 45% after a severe pandemic hit the prior year. Earnings growth is seen slowing to a still-robust 58% in 2022, before falling 5% in 2023, though earnings would be well above 2021's level, FactSet shows.
Oil giant Shell has joined the energy transition. Its EV charging partners include Chinese EV makers Nio and BYD.
Brown & Brown Stock: Rising Interest Rates
The insurance broker eyes a 70.85 buy point from a flat base stretching back to the start of 2022. Brown & Brown stock is within 1% below the entry, setting a record close on Friday. The pattern formed around the 50-day average, though shares are now above that key technical level.
BRO stock reclaimed the 50-day line as the Fed hiked a benchmark interest rate for the first time since 2018 and signaled six more increases to come this year. Rising rates are good for financial services, including those selling insurance products with a fixed return.
The RS line has pulled back just slightly from early March highs and has rallied solidly in the past year. It also shows a longer-term uptrend.
The stock has a 92 RS Rating and a 92 EPS Rating as well.
In 2021, Brown & Brown earnings jumped 31% as revenue rose 17%. Growth is expected to continue in 2022 and 2023 but at a slower pace, FactSet shows.
Marriott International Stock: Travel 'Reopening Play'
Shares of the hotel operator sit roughly 1% below a 173.54 buy point, trading right around prior buy points that are no longer valid.
Marriott stock failed a February breakout amid Russia's invasion of Ukraine, which hit travel stocks broadly.
Now MAR stock has made a V-shaped recovery. The current 173.54 buy point is just above a "handle," which is technically not valid because there is no proper base yet. But the short consolidation could be a base in another week.
The RS line rallied to highs in February then retreated. It remains off those peaks.
Marriott International bears an 87 RS Rating and a 78 EPS Rating. It's a "reopening play" as travel and the economy open up further after the pandemic. MAR stock broke out in February as management gave an upbeat 2022 outlook, saying new hotel bookings have rebounded to pre-omicron levels.
In 2021, Marriott earnings rebounded 1,672% from a pandemic hit the prior year. Analysts expect growth to slow to a still-strong 71% in 2022 and 29% in 2023, FactSet said.
Juniper Networks Stock
Shares of the networking services provider cleared a 36.13 buy point on Friday, rising 2.4% to 36.52. Juniper stock cleared an early entry the prior week. On a weekly chart, the RS line struck a high as JNPR stock briefly broke out, a bullish sign.
Juniper Networks has a 92 RS Rating but a 52 EPS Rating.
In 2021, Juniper earnings per share rebounded 12% after taking a hit the prior year. Analysts expect Juniper earnings to grow a further 14% in both 2022 and 2023, FactSet says.
While not booming, it's not bad. And JNPR stock has a price-earnings ratio of just 20. In a rising-rate environment, stocks with high P-Es are more vulnerable.
For more great stock ideas, check out IBD's proprietary watchlists, like the IBD 50 and the IBD Big Cap 20.
