Spotify Technology and a pair of S&P 500 names, off-price retailer TJX Cos. and Howmet Aerospace, lead this weekend's watch list of five stocks holding near a buy point despite extreme market volatility. Insurer Bowhead Specialty and Planet Fitness rival Life Time Group Holdings round out the list.
Spotify is on the IBD Leaderboard watchlist.
Both SPOT and BOW have a maximum 99 IBD Composite Rating, a single rating that combines both technical and fundamental factors, according to IBD Stock Checkup. Howmet has a stellar 98 rating.
S&P 500 Set-Up
The S&P 500 rallied 1.8% on Friday, despite the University of Michigan consumer sentiment index showing economic expectations falling to the lowest level since 1980 and long-term inflation expectations jumping to the highest level since 1981. Markets also shrugged off a jump in the 10-year Treasury yield to 4.49%, which has pushed the 30-year fixed mortgage rate to around 7%.
The upshot is that the fallout from President Trump's tariff regime is putting a major squeeze on economic activity. That hasn't let up after Trump stepped back from the brink on Wednesday, walking backed his escalation of reciprocal tariffs even as he escalated his trade war vs. China.
Friday's action shows that markets are looking for a reason to rally, and Trump could provide one with a series of deals that resolve economic uncertainty by limiting tariffs on trading partners such as the European Union, Japan, South Korea, Mexico and Canada.
Late Friday, the Trump administration largely exempted the Apple iPhone and electronics products generally from the additional 125% tariff on Chinese goods and the 10% baseline levy on imports from other countries. Chinese-made electronics will still face a 20% tariff imposed earlier this year.
Investors should take their cue from market action, testing the waters if the S&P 500 or Nasdaq flash a follow-through day.
In the meantime, investors are advised to largely stay on the sidelines and focus on stocks that aren't especially volatile, with an average true range of around 3 or below. That metric is available on IBD's MarketSurge.
Trump Says This About Markets; Apple Gets Big Exemption
Spotify Stock
The streaming music giant has been benefiting from user growth as it pulls away from competitors, rising margins and anticipation of a new higher-priced service tier expected later this year.
Stockholm, Sweden-based Spotify's immunity to tariffs is another draw for investors, but it wouldn't be unscathed in a potential economic downturn.
Rosenblatt Securities analyst Barton Crockett wrote in a Monday note that Spotify's service "fall into a category of subscription-based cheap diversion that historically has held up well in recessions."
However, it also depends on advertising revenue. KeyBanc lowered its SPOT stock price target to 625 from 675 on Wednesday, keeping an overweight rating, saying that ad agency checks show a deteriorating outlook for marketing budgets.
SPOT slipped 1.7% to 543.66 on Friday, but ended up 8% on the week, though still below its 50-day moving average. Spotify is 12% below an official buy point of 621.20 from a double-bottom base. That's a common pattern among this week's watchlist stocks, which are showing leadership in volatile markets.
A weekly MarketSurge chart shows Spotify's relative strength line, the blue line in IBD charts that tracks a stock's performance vs. the S&P 500, at a multiyear high.
SPOT has a 21-day ATR percentage of 6.45 points.
TJX Stock
TJX was featured as IBD Stock Of The Day on April 4. The off-price clothing and home goods retailer's business model is seen as a winner from tariff-related disruption and economic weakness.
If department stores and other merchants have too much brand-name inventory to sell, TJX benefits because it can find deals to acquire quality branded merchandise on the cheap. Retail inventories have been on the rise, as firms have stocked up to avoid Trump tariffs. But there's a risk that suddenly downbeat customers will go on a buying streak.
The potential for store closures in a high-tariff environment could also provide a fertile merchandise buying climate for TJX.
Citi upgraded TJX to buy from neutral on April 3, boosting its price target to 140 from 128.
TJX stock rose 0.5% to 128.15 on Friday, nosing just above a 127.58 buy point from a double-bottom base.
TJX has a 21-day ATR percentage of 3.
Howmet Stock
Howmet supplies aircraft parts, including engine turbine blades, for both new commercial jets, and those already in service, as well as for military aircraft.
Howmet's aftermarket sales have surged in recent years, as turmoil at Boeing depressed production of new planes. An uplift in Boeing production would be positive, but Howmet is "well positioned across scenarios," including macroeconomic scenarios, BofA said in a March 25 note. BofA hiked its HWM price target to 140 from 135, keeping a buy rating.
Howmet does face exposure to tariffs, but it will likely try to shift cost increases onto customers such as Boeing and Airbus. Reuters reported on April 4 that Howmet had declared Trump tariffs to be a force majeure event, an attempt to protect itself legally if it doesn't fulfill contract obligations.
Providing turbine blades to power artificial intelligence data centers is a small but fast-growing business for Howmet.
Howmet rose 1.2% on Friday, closing 2.5% below its 50-day moving average and 9% below a 138.06 buy point from a double-bottom base.
HWM has a 21-day ATR percentage of 5.37.
Bowhead Stock
Bowhead Specialty was IBD Stock Of The Day on Friday. The May 2024 IPO is focused on providing Excess and Surplus, or E&S, insurance, which is shorthand for covering risks that traditional insurers won't. That market is about $83 billion.
Gross premiums rose 26% to $185 million in Q4, as adjusted EPS rose 75% to 42 cents.
Coverage categories include financial and environmental casualty, professional, cyber and healthcare liability. Last year, Bowhead launched a tech-based platform for small, distressed, and hard-to-place business risks, which generated $1.2 million in premiums in Q4, up 175% from Q3.
Bowhead stock dipped 0.7% to 38 last week, closing just above a 37.81 buy point from a cup base.
BOW has a 21-day ATR percentage of 4.89.
Life Time Stock
Life Time Group, more a wellness retreat than a gym, was the focus of IBD's New America feature on Feb. 7.
Life Time operates more than 175 athletic clubs in the U.S. and Canada, including a club in Evanston, Ill., that opened in March. That club is just the second to include its MIORA Performance and Longevity Clinic.
In the news release, Life Time said the clinic reflects its multidimensional approach to "all aspects of health and wellness." It provides "a bloodwork and personalized assessment," hormone replacement therapy, infrared sauna, Cryo therapy and more.
Life Time posted 42% EPS growth on 19% sales growth on Feb. 26. Life Time's 10-K says it is "less susceptible to adverse economic conditions" due to its member base in affluent suburban and urban locations.
LTH stock rose 3.9% to 31.23 on Friday, retaking its 50-day moving average. LTH has a 32.85 buy point from a double-bottom base.
Its relative strength line is hitting an all-time high.
LTH has a 21-day ATR percentage of 5.57.
