When looking for the best stocks to buy and watch, it's important to focus on those with rising stock price strength. One stock that fits that bill is Amazon.com. On Thursday the Relative Strength (RS) Rating for Amazon stock climbed to a higher percentile, rising to 83 from 73 the day before.
The rating upgrade augurs well for the online giant. Market history and research show that stocks that go on to make the biggest gains typically have an 80 or higher RS Rating in the early stages of their moves.
When the recession hit, forcing people to stay home, Amazon sales, profits and stock price took off. As the pandemic wanes more people are out and about, sales and profit growth have cooled. So is the party over for Amazon or is Amazon stock prepping for another leg up?
Mixed Ratings For Amazon Stock
Other key indicators are mixed. On one hand, the stock is still popular with mutual funds, ETFs and other big money investors. Amazon sports a B+ Accumulation/Distribution Rating. The B+ rating shows that investors are piling in fairly heavily, a bullish sign. On the other hand, Amazon has a weak 52 EPS Rating after reporting losses that past two quarters. Notably, the loss last quarter was much smaller than the prior quarter.
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Like the EPS Rating, Amazon stock's so-so 69 Composite Rating needs work because of the falloff in sales and profit growth recently.
The Composite Rating combines five separate proprietary IBD ratings, based on key fundamental and technical criteria, into one easy-to-use score. The best growth stocks have a Composite Rating of 90 or better.
Amazon stock closed at 140.63 for the day Thursday, down 1.4% for the day. However, it's shot up 38% from a 101.26 bottom it slid to on May 24 before turning up. It rose above its 50-day line late last month and continued rising. It's approaching its 200-day now. Amazon.com is not currently showing a potential buy point. See if the stock goes on to build a base that could kick off a new price move.
Profits Weak, Sales Continue Growing
Amazon.com reported a 20-cent per share loss last quarter, reversing from a 76-cent EPS gain a year earlier. Sales rose 7% year over year to $121.2 billion in its latest quarter. The online shipping giant's revenue has continued growing this past year, albeit at a slower rate than earlier.
Amazon stock holds the No. 3 rank among its peers in the Retail-Internet industry group. Diversified ventures company Live Ventures and South American online retail giant MercadoLibre are also among the group's highest-rated stocks.
When looking for the best stocks to buy and watch, one handy tool to use is relative price strength.
The exclusive Relative Strength Rating from Investor's Business Daily measures market leadership with a 1 (worst) to 99 (best) score. The rating shows how a stock's price movement over the last 52 weeks holds up against all the other stocks in our database.
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