Costco and Broadcom count among this week's top five stocks to watch near buy points. Wingstop, AppLovin and Comfort Systems also make the cut, sporting furious earnings growth.
Among these, Costco stock can be found on IBD SwingTrader. Comfort Systems belongs to the IBD 50 list of top growth stocks. Other top lists for the best stock ideas include IBD Leaderboard and IBD Long Term Leaders.
The relative strength line for Costco stock has rallied to highs. The RS lines for the other four top stocks to watch are improving and not far from highs, a sign of strength in a volatile market. A rising RS line, the blue line in the charts shown, shows outperformance vs. the S&P 500 index.
The stock market continues to rebound on more positive economic data, after a sharp sell-off in early August. Investors may be better off nibbling, rather than feasting, on new purchases in this market.
Costco Stock
Shares of the warehouse club extended their rally above the 10-week moving average last week. Costco stock has now drawn within 3% of an 896.67 buy point from a flat base. COST stock edged higher, near 872, on Monday.
The RS line is trending higher, according to the MarketSurge chart. The relative strength indicator has risen steadily since 2000, a sign of COST stock's long-term outperformance.
Costco stock earns an IBD Composite Rating of 91 and an EPS Rating of 89, out of a best-possible 99.
For its latest fiscal third quarter, the retail leader reported its best earnings growth in years: 29%. That accelerated sharply from a 12% gain in Q2.
Analysts expect 14.5% earnings growth for the full year and a further 9.6% gain next year, according to FactSet. That would be up from the 2023 level but down from 2021. Costco's fiscal year ends in August.
Despite inflation, the warehouse club continues to grow store visits and e-commerce sales. Costco's gold and silver sales have received attention, though reports suggest profits are low.
In July, Costco announced its standard annual membership fee will go up by $5, the first hike since 2017. The move was much awaited by some analysts and investors.
A 92 RS Rating means that Costco has outpaced 92% of all stocks in IBD's database over the past year.
It's up 32% so far this year on the back of a strong start to 2024 and a successful breakout in May.
Powell Looms After Market's Best Week Of 2024
Broadcom Stock
Shares rallied powerfully above the 10-week moving average last week. Broadcom stock continues to work on a 185.16 buy point in a nine-week consolidation, well below the entry. However, the chip stock offers an early entry from a trendline drawn from the June 18 peak. AVGO stock reversed 1.2% higher on Monday, near 168.
Broadcom stock owns an IBD Composite Rating of 98, EPS Rating of 87 and RS Rating of 96.
Analysts expect earnings growth to sharply accelerate from gains around 6% in the latest three quarters. They see profit growth of 13.6% for the full year and a 27% jump next year. The fiscal year ends in October.
Broadcom offers a way to play the important artificial intelligence theme. The chipmaker and infrastructure software provider reported that its AI products generated record $3.1 billion in revenue during its second quarter.
Year to date, Broadcom stock has rocketed 50%.
Wingstop Stock
Shares of the restaurant chain closed just below the 50-day/10-week lines last week. A decisive move above that level, perhaps topping the July 31 high of 397.90, would offer an early entry. Wingstop stock continues to work on a 431.03 consolidation buy point, far below the entry for now. WING stock lost 0.9% on Monday, near 385.
The "chicken wings" eatery holds an IBD Composite Rating of 91, EPS Rating of 99 and RS Rating of 95.
Wingstop boasts two straight quarters of earnings growth above 60%. Sales growth accelerated the last two quarters, with a 45% gain in the second quarter.
That fast-paced growth comes as the restaurant operator adds stores at a brisk clip in the U.S. and globally, totaling 2,279 in March. It also owes to a savvy sourcing and marketing strategy.
Analysts expect a 51% earnings gain in 2024, up from 34% in 2023, and a 22.5% increase next year.
So far in 2024, Wingstop stock has soared 50% on the back of a sharp first-half rally to record highs.
AppLovin Stock
Shares jumped above the 10-week line last week after a powerful bounce from the 40-week line the prior week. AppLovin stock provides an early entry from the move above the 50-day /10-week line. It continues to work on a 91.91 buy point in a consolidation going back to early July, 7% below the entry for now. It would be a healthy sign to see the software stock pause after a sharp run-up from the Aug. 5 low. APP stock gave up 0.6% on Monday, near 86.
AppLovin stock holds an IBD Composite Rating of 98, EPS Rating of 83 and RS Rating of 97.
The company helps other businesses monetize apps and expand advertising reach. Analysts expect 239% earnings growth this year and a further 27% gain next year. That would continue its recovery from an earnings collapse in 2022.
Year to date, AppLovin stock has more than doubled, rocketing 115%. Huge earnings gap-ups in February and May fueled that move to multiyear highs.
Comfort Systems Stock
Shares extended their rally above the 10-week line last week. Comfort Systems stock eyes a 352.45 buy point from a 14-week consolidation, now 7% below the entry. The July 31 high of 341.17 offers an early entry. Shares of FIX stock closed up 11 cents on Monday, near 331.
Comfort Systems holds a Composite Rating of 99, EPS Rating of 99 and RS Rating of 94.
It's an AI-adjacent stock as a cooling play. Data centers have significant air conditioning needs.
Earnings growth accelerated the past three quarters, capped with a 94% leap in the second quarter. For the full year, analysts forecast a 58% profit gain on a 34% sales jump. That would mark a slight slowdown on earnings growth from the 2023 level, with a further slackening to 14% seen next year.
Year to date, FIX stock has soared almost 62%, largely on a late January to early March run.
