Fund managers have been busy even amid the recent market volatility. The stock market remains in a correction and awaits a follow-through day. Meanwhile, institutional money has been rotating out of several tech stocks into health care, retail and other sectors, snapping up shares of Costco stock, Eli Lilly and others.
Four stocks in IBD's Stocks Funds Are Buying screen are near buy points or are forming bases after pullbacks, according to IBD MarketSurge: Eli Lilly, Costco stock, Alphabet and Netflix.
Shares of Eli Lilly soared Thursday after the company reported robust sales for its diabetes and weight-loss drugs and raised its full-year outlook. Earnings growth has accelerated in the three most recent quarters. Q2 sales rose 36% to $11.3 billion while earnings per share of $3.92 were 86% higher.
The stock retook the 50-day moving average after finding support earlier at the 40-week line. LLY may soon form a base with a proper buy point. But this would be a late-stage base. Eli Lilly has a perfect Composite Rating of 99 while its EPS Rating is 93 and the Relative Strength Rating stands at 94.
Costco Stock Forms A Flat Base
In retail, Costco is forming a flat base with a buy point of 896.67, and the relative strength line is at a new high. Costco stock is staging a recovery after June sales disappointed on July 10. However, the discount retail chain store is increasing its membership fee, which will likely help the current quarter's net income.
Fiscal fourth-quarter results are due Sept. 26, but Walmart's fourth-quarter earnings on Thursday could move Costco stock. Also, retail sales for July are due Thursday.
Shares of Alphabet are rebounding from the 40-week line. GOOGL stock fell below the 50-day moving average after second-quarter results came out July 23. Revenue from advertising and its Google Cloud business beat expectations, but YouTube sales missed. Alphabet continues to have a near-ideal EPS Rating of 98, although the Relative Strength Rating of 79 could improve. Funds have been buying the stock over the past eight quarters, according to IBD MarketSurge.
Netflix also seems to be working on a new base, but this would be a late-stage one for the video streaming stock, with much of its energy already spent. Shares fell below the 50-day moving average after Q2 results came out July 18.
While the company managed sales of $9.6 billion, earnings growth decelerated from 83% in the prior quarter to 48%. EPS growth is expected to slow to 36% for the current quarter. An expected deceleration in sales growth is also likely to weigh on the stock. More funds have been buying the stock over the past eight quarters.
Are Costco stock, Eli Lilly, Netflix and Alphabet on your watchlist?
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