New S&P 500 entrant Airbnb and DraftKings, the online sports betting platform, lead this weekend's watch list of five stocks near buy points. If the S&P 500 rally can find its footing, these stocks could be poised to make a move. In addition to DKNG and ABNB, the list includes Costco Wholesale, Netherlands-based biotech Argenx, and enterprise software stalwart ServiceNow.
DKNG, NOW and ARGX are all part of the flagship IBD 50 list of leading growth stocks. The trio of stocks are all on the watchlist of the IBD Leaderboard portfolio of elite stocks. Airbnb is set to join the S&P 500 ahead of the stock market open on Monday.
S&P 500 Set-Up
The S&P 500 fell sharply on Friday, sinking below its 50-day moving average. That's a sign the powerful stock market rally has lost momentum and there's risk of a bigger pullback. The 10-year Treasury yield's move back above 4.3%, near a 15-year high, looks like the biggest hurdle for growth stocks right now.
The S&P 500 has pulled back 3% from its 15-month closing high on July 31, but remains 24.4% above its bear market closing low on Oct. 12.
The coming week's Federal Reserve meeting could be pivotal. With no chance of a rate hike, the focus will be on the Fed's guidance about the path of interest rates for the rest of this year and 2024. The chance of a soft landing for the economy have improved, which is mostly great news. But interest rates could stay higher for longer if the Fed doesn't have to sweat over a sharp downturn in economic activity.
Be sure to read IBD's The Big Picture every day to stay in sync with the market direction and what it means for your trading decisions.
DKNG Stock
DraftKings launched its Golden Nugget Online Gaming casino app in Pennsylvania on Aug. 21, featuring more than 500 slots and table games like blackjack and roulette.
On Aug. 3, DraftKings reported its first profitable quarter, as revenue growth accelerated to 88% in Q2 from 84% and 81% the prior two quarters.
With more states legalizing sports betting and DraftKings gaining market share, Argus analyst John Staszak hiked his price target for DKNG stock to 34 from 30 on Aug. 10.
On Aug. 8, Truist analyst Barry Jonas hiked his target for DKNG stock to 44 from 31, upgrading it to a buy from hold. Jonas called DraftKings "the best top-line story in gaming today."
DKNG stock slipped 1.4% to 31.04 on Friday. The 2.5% decline over the past week has set up a 32.65 buy point from a cup-with-handle base.
The relative strength line for DKNG stock is signaling market leadership, sitting right near a 52-week high, according to MarketSmith. The RS line is the blue line in IBD charts that tracks its progress vs. the S&P 500.
ABNB Stock
Vacation rentals are gaining lodging share from hotels and Airbnb is once again the fastest-growing online travel agency, Bernstein analyst Richard Clarke wrote in an Aug. 29 note. He kept an outperform rating and 168 price target for ABNB stock.
Airbnb was featured as IBD Stock Of The Day on Wednesday. Booking Holdings and Marriott International are among other travel stocks near buy points.
On Aug. 4, Airbnb topped Q2 estimates, as the average daily rate customers pay for a stay rose 1% from a year ago to $166. Active listings climbed 19% from a year ago to more than 7 million.
On Friday, ABNB stock dipped 0.95% to 142.75, retreating 2.1% for the week. ABNB has a 151.16 cup-with-handle buy point, according to a weekly MarketSmith chart. The daily chart shows a 154.95 cup buy point, but a lower handle should become available with two more days of trading.
COST Stock
On Aug. 30, Costco reported that August sales rose 5% from a year ago. Same-store sales grew 3.4%, or 3.2% excluding gas and foreign exchange differentials. The results point to fiscal Q4 revenue coming in $500 million above expectations, Evercore ISI analysts wrote. The firm raised its price target to 595 from 590 with an outperform rating.
The August results marked two months of accelerating sales growth. In an Aug. 3 note, UBS analyst highlighted Costco's strong July sales, even as it contended with competition from Amazon Prime Day and Target's Circle Week. He kept a buy rating, while hiking his price target to 640 from 550.
COST stock fell 1.5% to 556.36 on Friday, but climbed 0.9% for the week. Costco has a 571.16 buy point from a flat base. The latest flat base is just seven weeks, but it's pretty much an extension of the long consolidation in Costco stock back to August 2022.
ARGX Stock
Argenx was Friday's IBD Stock Of The Day, as it continues to make strides with its drug Vyvgart.
On Friday, a panel of advisors to the European Commission recommended full approval for an under-the-skin version of Vyvgart for treating an autoimmune condition called generalized myasthenia gravis (gMG).
Argenx stock caught fire on July 17. The biotech released a study showing better-than-expected results for Vyvgart in preventing a relapse of patients with a progressive nerve disorder, chronic inflammatory demyelinating polyneuropathy, or CIDP.
H.C. Wainwright analyst Douglas Tsao called Vyvgart a "game-changer," noting that rival therapies have intolerable side effects and long infusion times. The FDA approved a subcutaneous shot of Vyvgart in June.
Numerous analysts boosted their price targets for ARGX stock in July, with a couple citing a Vyvgart's $3 billion CIDP revenue opportunity. Still, ARGX isn't seen reaching profitability until 2025.
ARGX stock rose 0.9% to 527.98 on Friday and 3.6% for the week. ARGX is building the right side of a cup base with a 550.76 buy point. The stock has been finding support at its 21-day exponential moving average.
NOW Stock
ServiceNow was featured on Thursday in an IBD 50 Stocks To Watch article, which covered its steady sales and earnings growth and recent AI initiatives.
NOW stock is ranked No. 1 by IBD Stock Checkup in the enterprise software industry group, based on technical and fundamental factors.
On Friday, HSBC started coverage of ServiceNow with a buy rating and 704 price target. While the timing of substantial AI revenue remains uncertain, HSBC prefers firms like ServiceNow already benefiting from strong demand from spending on the cloud and the digital transformation of business practices.
NOW stock slipped 1.8% to 579.58 on Friday and 3.4% for the week. Software stocks fell solidly last week in the wake of lackluster earnings and guidance from Oracle and Adobe.
NOW has a 607.90 buy point from a cup-with-handle base, which can be seen on a weekly MarketSmith chart. That handle will show up on a daily chart after Monday.
