Tuesday's IBD 50 Stocks To Watch pick, chip leader Synopsys, is one of the best stocks to buy and watch right now, as it approaches a new buy point.
Synopsys is a leading provider of electronic design automation software used to make semiconductors.
In recent weeks, the company announced an expanded partnership with Intel in which foundry customers of the Dow Jones chip giant can license intellectual property from Synopsys.
On Aug. 16, Synopsys reported strong fiscal third-quarter earnings and revenue. The company's earnings jumped 37% to $2.88 a share vs. the year-ago period. Sales grew 19% to $1.48 billion.
Synopsys also boosted its outlook for the rest of its fiscal year, which ends in October. The company projects adjusted earnings per share of $11.04 to $11.09 for the 12-month period, up from the $10.77-$10.84 range the company gave in its previous quarterly earnings report.
"We achieved another record quarter as semi design starts and R&D investments continue, unabated, to capitalize on the AI-driven, 'Smart Everything' era," said CEO Aart de Geus in the press release.
SNPS Stock's IBD Ratings
Boasting a strong long-term fundamental track record, and solid earnings results in the most recent quarter, SNPS stock shows a strong 95 Earnings Per Share Rating, according to IBD Stock Checkup. This rating takes into account EPS growth and stability of earnings over the past three years. The two most recent quarters are weighted more heavily.
SNPS stock displays a near-perfect 97 IBD Composite Rating, with solid long-term fundamentals coinciding with strong stock-price performance since February 2022. The IBD Composite Rating is designed to help investors easily gauge the quality of a stock's fundamental and technical metrics.
Synopsys: One Of Best Stocks To Buy And Watch
Chip leader Synopsys rallied nearly 2% midday Tuesday, trading about 3% away from a 468.03 buy point in a flat base, per IBD MarketSmith chart analysis. Meanwhile, an early entry at 456.82 is also in play.
A key technical indicator to watch is the relative strength line. Currently, the RS line is moving toward prior highs, a sign of outperformance compared with the S&P 500. The RS line measures a stock's price performance vs. the S&P 500 and is the blue line plotted on every IBD chart.
Solid fundamentals, along with the bullish gains in recent weeks, make SNPS one of the best stocks to buy and watch in today's stock market.
However, the stock market outlook remains in a correction, with a 0%-20% recommended exposure range, per IBD's The Big Picture. That means that investors should be mostly in cash, in preparation for a follow-through day. Be on the lookout for top stocks shrugging off the market weakness; they could be new market leaders.
Best Stocks To Buy And Watch
Three recent IBD 50 Stocks To Watch picks are among the best stocks to buy and watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Apollo Global | 79.45 | 10-week line | |
| Kinsale Capital | 369.00 | 10-week line | |
| XP | 24.48 | 10-week line |
Source: IBD Data As Of Aug. 29, 2023
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on the best stocks to buy and watch and the stock market.
