S&P 500 stocks Tesla and DexCom, along with Fluence Energy, Wingstop and Extreme Networks are in focus this week.
The market rally picked up steam late in the week. Breadth improved as well, though market leadership has remained concentrated in the artificial intelligence space. Still, there are a lot of other stocks that are starting to flash buy signals or on the cusp of doing so.
Congress approving the debt-ceiling legislation this past week and Fed officials signaling a June rate pause likely helped buoy the market.
Meanwhile, the U.S. economy added 339,000 jobs in May, sharply above Wall Street's estimates that had employer payrolls growing by 190,000. The unemployment rate rose to 3.7%, above the 3.5% estimate. Average hourly earnings rose 4.3% vs. a year earlier, just below views.
However, while action seems to be picking up, it is a small sample size with the market in a confirmed uptrend. Investors should exercise patience and allow many stocks to set up before diving in. The five stocks, including two S&P 500 giants, in focus this week offer options until a broad market rally takes hold.
S&P 500 stock TSLA and Wingstop stock are featured on IBD Leaderboard. Meanwhile, Fluence stock along with Wingstop are on the IBD 50. Fluence Energy, Wingstop and EXTR stock were all IBD Stock Of The Day selections last week.
S&P 500: Tesla Stock
Tesla stock popped 3.1% to 213.97 in Friday's market trade, capping a 10.8% weekly gain. Tesla stock advanced more than 24% in May and has now soared more than 100% from a January low.
The S&P 500 stock has formed a cup base with a 207.89 buy point. The pattern could also be read as a double-bottom base, but the buy point remains the same. The base, until this week, formed below the 200-day, which is not ideal. But the 200-day line has fallen below the 200 level and below the buy point.
Notably, TSLA stock has advanced on above-average volume for five straight sessions, after few such days in the prior three months.
Meanwhile, the global EV giant once again whittled away its prices on U.S. inventory vehicles to entice consumers this week.
The S&P 500 stock ranks seventh in IBD's automaker industry group. TSLA has a 75 Composite Rating out of 99. Tesla stock has a 39 Relative Strength Rating. The EPS Rating for Tesla stock is 93 out of 99.
Fluence Energy Stock
FLNC dropped 2.6% to 23.57 Friday. Meanwhile, on the week, Fluence Energy stock advanced 2%. FLNC shares are below a 24.87 handle buy point, but are still trading above an early entry from breaking the downtrend of the handle, according to MarketSmith analysis.
FLNC has advanced more than 50% since it hit a low of 15.82 on May 4. Fluence Energy stock jumped more than 37% in May and 39% since the end of 2022. On May 11, Fluence Energy reported better-than-expected Q2 2o23 financials and shares jumped around 7%. This came after a run-up in strong volume on the way up in early May around earnings.
Similar to Tesla's Megapack energy storage business, Virginia-based Fluence Energy engages in grid-scale energy storage products and services. As with Tesla, Fluence uses batteries from China's CATL. Fluence is also developing artificial intelligence applications to maximize renewable energy storage solutions. In a joint venture, Siemens and AES founded Fluence Energy is June 2021.
Fluence Energy has not yet posted a profit. But analysts project that will soon change as the Inflation Reduction Act is set to be a tailwind for U.S. renewable energy projects in coming years. Added renewable energy projects increase the need for battery storage, while the IRA offers big subsidies for such storage.
In the second quarter, FLNC reported a loss of 14 cents per share. That was less than expected and down from a loss of 31 cents a year ago. Meanwhile, Q2 revenue soared 103% to $698 million.
Fluence Energy stock ranks second in IBD's Energy-Alternative/Other industry group. FLNC has an 83 Composite Rating out of 99. Shares also have a 97 Relative Strength Rating. The EPS Rating for Fluence Energy stock is 55 out of 99.
Wingstop Stock
WING dipped 0.5% to 197.77 on Friday, down 1.5% for the week. Wingstop stock soared nearly 44% so far in 2023.
WING found support Friday at its 50-day moving average and 10-week line, close to a prior 193.84 buy point for a consolidation. However, a move above Wednesday's high of 202.43 could offer an early entry. That would see WING pushing above its 21-day line and breaking a downtrend, while still trading close to its 50-day/10-week lines.
Wingstop stock also now has a new flat base with a 223.87 buy point.
The Addison, Texas-based restaurant chain averaged a 75.5% spike in earnings over the past four quarters while sales gains averaged 35.8%.
Wingstop easily topped Q1 estimates on May 3. Earnings vaulted 74% to 59 cents per share while revenue leapt 43% to $108.7 million. Wingstop, which operates in 44 states, also reported that domestic same-store sales grew 20.1% during the quarter. Its digital sales reached a record 65.2% of overall sales.
For the year, Wingstop guided for "high single-digit" domestic same-store-sales growth in 2023. FactSet expects 6.7% same-store sales growth. Analysts see full-year earnings jumping 14.5% to $2.12 per share on an 18.6% sales spike to $424 million.
Wingstop stock has a 95 Composite Rating out of a best-possible 99. WING has a 98 EPS Rating based on its strong earnings growth. The stock has a near-perfect 97 Relative Strength Rating.
S&P 500: DexCom Stock
DexCom stock rose 2.5% to 122.57 on Friday, up 6.5% for the week. The S&P 500 stock topped an early entry from a downtrend as it broke back above its 50-day moving average.
DXCM has formed a flat base with a 126.54 buy point, according to MarketSmith. But that's right next to two other consolidations going back to early November.
Over the past seven months, DexCom has run up to the top of its recent ranges, only to fall back to the 50-day line or below.
DexCom specializes in a wearable, continuous glucose monitoring (CGM) system for folks with Type 1 or 2 diabetes, ages two and higher. The sensor measures glucose levels just beneath the skin and sends readings to a smart device in real-time, without finger pricking.
DexCom stock sold off for five days in heavy volume after it posted better-than-expected first-quarter earnings on April 27, though some of the losses were modest or off lows.
DexCom reported 113% earnings growth with sales increasing 18%. DXCM executives also raised the company's full-year revenue guidance to $3.52 billion, up from the previous estimate of $3.4 billion.
S&P 500 stock DCXM ranks third in IBD's Medical-Products industry group. DexCom stock has a 98 Composite Rating out of 99. The S&P 500 stock has a 91 Relative Strength Rating. The EPS Rating for the S&P 500 stock is 98 out of 99.
Extreme Networks Stock
EXTR jumped 4.9% to 21.87 on Friday and surged 16.4% on the week, with above-average volume throughout the week. Extreme Networks stock on Friday moved above a 21.13 buy point from a six-month consolidation.
Extreme Networks has surged 49% since its April 19 intraday low of 14.67. Earlier this past week, Extreme Networks stock offered early entries around the 20 level. But now EXTR is 22% above its 50-day moving average. While still in the traditional buy zone, a pause around current levels would be constructive.
Extreme focuses on cloud-managed networking solutions, automation, analytics and artificial intelligence to optimize performance and security. The company has weathered supply-chain constraints and is now working through an order backlog that could lift revenue growth even if the U.S. economy weakens.
Extreme Networks bought wireless networking gear maker Aerohive in 2019 and Ipanema in 2021. With the Ipanema purchase, Extreme entered the SD-WAN market. SD-WAN technology centrally manages and speeds up cloud-computing applications. With software-defined networks, companies have less need for costly private data networks leased from telecom companies.
Extreme Networks stock has a 99 Composite Rating. EXTR has a 91 EPS Rating. The stock has a near-perfect 95 Relative Strength Rating.
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