Dow Jones software leader Microsoft and peer Magnificent Seven member Alphabet headline Tuesday's IBD Screen Of The Day, a column that focuses on top ideas in the IBD Stock Screener.
Tuesday's stocks to watch come from the Rising Profit Estimates screen, which finds issues attracting higher price targets and analyst upgrades.
Other notable stocks on the screen include Deckers Outdoor, Ferrari and Progressive.
Dow Jones Stock Microsoft
The Dow Jones software giant is pulling back from its recent all-time highs, but remains extended past a flat base's 384.30 buy point, according to IBD MarketSurge chart analysis. Shares of Microsoft stock slipped 0.8% Tuesday midday. Meanwhile, shares are near their 50-day line, which is a key support level. Another decisive rebound would lead to extra buying opportunities.
On Jan. 30, Microsoft beat Wall Street's targets for its fiscal second quarter thanks to strong cloud computing business.
The Redmond, Wash.-based company earned $2.93 a share on sales of $62.02 billion in the quarter ended Dec. 31. Analysts polled by FactSet had expected Microsoft earnings of $2.77 a share on sales of $61.1 billion. On a year-over-year basis, Microsoft earnings increased 33% while sales rose 18%.
Looking ahead, Microsoft earnings are anticipated to grow 19% in fiscal-year 2024 with a 15% rise in 2025.
Magnificent Seven Stock Alphabet
Google parent Alphabet is trying to break out past its latest buy point, a 153.78 entry in a consolidation, after a 3% rally Monday. Shares slipped 1% Tuesday midday, holding right at their buy trigger.
Alphabet surged on March 18 after Bloomberg reported that Apple is in talks with the Google parent over licensing its "Gemini" artificial intelligence training model for use in iPhones.
On Jan. 30, Alphabet reported fourth-quarter earnings and revenue that topped analyst estimates. But shares tumbled as the search giant's core advertising business slightly missed views.
Following annual profit growth of 22% in 2023, Wall Street expects the search giant's earnings to grow another 20% in 2024 and 15% in 2025.
Outside Dow Jones: Deckers, Ferrari, Progressive
Outside of the Dow Jones Industrial Average, other top stocks to watch include Deckers, Ferrari and Progressive.
Deckers stock slid 3.5% midday Tuesday, retreating to just above its 50-day moving average. A strong rebound would place the stock in a new buy area, while a sharp breach of that level would be a clear sell signal.
Shares are sharply extended from a 568.47 flat-base entry following an Oct. 27 breakout.
Deckers stock soared more than 14% after the company's better-than-expected report on Feb. 1. Deckers reported a 44% increase in third-quarter adjusted earnings to a record $15.11 per share, slowing after five quarters of accelerating gains. Revenue growth also slowed, with a 16% rise to a record $1.56 billion, after accelerating the prior two quarters.
Ferrari skidded 2.5% midday Tuesday, threatening to extend a losing streak to three sessions. Shares remain extended above a 372.42 flat-base entry.
On Feb. 1, Ferrari stock roared to all-time highs after outpacing Q4 earnings forecasts. Meanwhile, Ferrari Formula 1 fans are ecstatic about reports that racing legend Lewis Hamilton may be donning a red suit for the 2025 season, rather than Mercedes' black, white and green.
Ferrari reported adjusted earnings of 1.62 euros (about $1.75) per share, a 33% increase from last year. Net revenues for the quarter increased 11% to 1.52 billion euros ($1.65 billion). FactSet analysts expected earnings of 1.56 euros per share on 1.51 billion euros in revenue.
Finally, Progressive shares are about 40% past a 149.87 buy point following an Oct. 13 breakout.
The property and casualty insurer's annual earnings are expected to jump 51% in 2024, with a 13% rise in 2025.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on the best stocks to buy and watch and the Dow Jones Industrial Average.
