The IBD Screen of the Day highlights stocks that are showing signs of increasing institutional accumulation. Today's focus goes to three growth stocks that make the Stocks That Funds Are Buying list. They include Novo Nordisk in the ethical drug industry group and Alliance Resource Partners, a leader among coal stocks.
Strong buying by mutual funds, hedge funds, banks, insurers, pension plans and the like go a long way in supporting the long-term price advances of great stocks. IBD research has found this factor to be critical in finding the best stocks. Heavy institutional accumulation satisfies the I in CAN SLIM, IBD's seven-point paradigm for successful growth investing.
Meanwhile, Ryan Specialty went public about a year ago. The stock is forming a consolidation with a 42.53 buy point. The RS line is near highs, which is positive. The last three weeks saw the stock make tight weekly price closes, another bullish sign.
Share Repurchase, Technical Indicators Bullish For NVO
Novo Nordisk specializes in diabetes care. It has been buying back shares since February 2022. The Danish firm plans to buy back shares worth 24 billion Danish krone (DKK), ($3.27 billion), over a 12-month period.
Novo Nordisk's American depositary receipts (ADRs) have been forming a shallow cup base that is too deep to serve as a flat base.
This new pattern presents an entry point at 122.26, or 10 cents above the base's left-side high. The developer of human insulin, insulin analogs and oral antidiabetic drugs also shows a 94 Relative Strength Rating.
NVO also boasts a strong Composite Rating of 97. It also ranks 3rd in the medical-ethical drugs group, according to IBD Stock Checkup.
The company beat estimates in the first quarter of 2022 largely due to increased sales of its diabetes and weight management drugs. Earnings grew 8% to 93 cents a share on a 17% jump in revenue to $6.25 billion.
Fund ownership has been increasing for four quarters in a row. In the latest quarter, 279 funds owned NVO stock, rising from 273 in Q1.
Coal Stocks Today: ARLP's Bull Run Continues
In the energy-coal group, Alliance Resource Partners is near a proper buy point of 21.34 in a six-week cup without handle. Shares on Monday tried to clear the entry. But later in the day, ARLP pulled back alongside the market to end just below the pivot point. ARLP rose 0.7% for the day in heavy turnover.
Based on pattern analysis, the stock is in the third stage of its run, going all the way back to its pandemic lows in 2020. ARLP's Composite Rating and Relative Strength Rating of 99 indicate its superior performance.
Coal stocks have been on a rebound since the war-induced disruption to energy supply in Europe left the region searching for alternatives to Russian fossil fuels.
ARLP is scheduled to release its second-quarter earnings on July 25. This report should give a clearer view of the impact of higher energy prices and inflationary pressures on the company's earnings.
Fund ownership has been increasing at Alliance Resource in at least the past three quarters. A total 31 mutual funds owned ARLP as of the last quarter, according to MarketSmith data.
Mergers Drive RYAN's Growth
Beyond coal stocks, the insurance brokerage industry has been witnessing several mergers and acquisitions along with the increasing adoption of technology.
Ryan Specialty ranks No. 2 in IBD's group of insurance brokers, agents and carriers. Since going public in July last year, RYAN has been consolidating and is close to a buy point of 42.53.
The relative strength line has been moving up gradually and is now near all-time highs. The stock has been posting weekly price closes that are tightly spaced, indicating a stronger near-term consolidation that augurs well.
It has a Composite Rating of 96 and an RS Rating of 95.
This Is The IBD Stock Of The Day
What's New Inside Investor's Corner?
Which Way Is The Market Headed? Read This Column Each Day
MarketSmith: Research, Charts, Data And Coaching All In One Place
