Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. So what are the best stocks to buy now or put on a watchlist? Novo Nordisk (NVO), Ares Management (ARES), TransDigm (TDG), Tidewater (TDW) and Medpace (MEDP) are prime candidates.
XInflation and the Federal Reserve tightening rates aggressively worried investors last year. But the market confounded expectations for difficulties and turned in an outstanding performance in 2023. More moderate gains are expected for 2024, but the benchmark S&P 500 turned in its best Q1 gain in years amid growing confidence the Fed will reach its goal of a soft landing.
Best Stocks To Buy: The Crucial Ingredients
Remember, there are thousands of stocks trading on the NYSE and Nasdaq. But you want to find the very best stocks right now to generate massive gains.
The CAN SLIM system offers clear guidelines on what you should be looking for. Invest in stocks with recent quarterly and annual earnings growth of at least 25%. Look for companies that have new, game-changing products and services. Also consider not-yet-profitable companies, often recent IPOs, that are generating tremendous revenue growth.
CAN SLIM has a proven track record of significantly outperforming the S&P 500. Outdoing this industry benchmark is key to generating exceptional returns over the long term.
In addition, keep an eye on supply and demand for the stock itself, focus on leading stocks in top industry groups, and aim for stocks with strong institutional support.
Once you have found a stock that fits the criteria, it is then time to turn to stock charts to plot a good entry point. You should wait for a stock to form a base, and then buy once it reaches a buy point, ideally in heavy volume. In many cases, a stock reaches a proper buy point when it breaks above the original high on the left side of the base. More information on what a base is, and how charts can be used to win big on the stock market, can be found here.
Don't Forget The M When Buying Stocks
A key part of the CAN SLIM formula is the M, which stands for market. Most stocks, even the very best, follow the market direction. Invest when the stock market is in a confirmed uptrend and move to cash when the stock market goes into a correction.
The stock market turned in stunning gains in 2023 and had been building on those gains so far this year. However recent negative action caused the S&P 500 and the Nasdaq to undercut the key 50-day moving average.
The stock market is in a correction at the moment. Now is a not a good time for investors to be making stock purchases. IBD is currently recommending 0% to 20% market exposure.
Investors should be building watchlists of high-quality stocks for when the stock market uptrend resumes. The selections below are among the best stocks to buy or watch now. The IBD 50 is also a rich hunting ground.
This is the time when it is particularly crucial crucial to stay on top of sell signals. Any stock that falls 7% or 8% from your purchase price should be jettisoned. Also beware of sharp breaks below the 50-day or 10-week moving average.
Remember, there is still significant headline risk. Inflation could still be an issue, while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market. The current issues in Israel add even more uncertainty.
Things can quickly change when it comes to the stock market. Make sure to keep a close eye on the market trend page here.
Best Stocks To Buy Or Watch
- Novo Nordisk
- Ares Management
- TransDigm
- Tidewater
- Medpace
Now let's look at Novo Nordisk stock, Ares Management stock, TransDigm stock, Tidewater stock and Medpace stock in more detail. An important consideration is that these best stocks to buy and watch all boast impressive relative strength.
Novo Nordisk Stock
Obesity drug play NVO is offering an entry for aggressive investors as it breaks a downtrend and retakes the 50-day moving average. It is also forming a a new flat base with an ideal buy point of 138.28, MarketSurge analysis shows.
The relative strength line for Novo Nordisk stock is trying to bend higher again amid some sideways movement.
All-around excellent performance is reflected in its perfect IBD Composite Rating of 99. It has won a spot on the prestigious IBD Leaderboard list of top stocks.
Stock market performance is strong, but earnings are even better. It holds an EPS Rating of 98 out of 99.
Earnings are seen popping 23% in 2024 before rising a further 20% in 2024.
Note that Novo Nordisk earnings for the latest quarter are due early May 2. This adds risk, though it could also serve as a catalyst for gains.
The company has been a pioneer in the diabetes space for almost nine decades. Cases of the disease are expected to surge in decades ahead due to an increasingly overweight and aging population.
It holds about a third of the $50 billion-plus diabetes treatment market and around half the over $15 billion insulin market.
Novo Nordisk stock is also making meaty gains thanks to excitement over two weight-loss drugs, Wegovy and Saxenda.
It is also working to bulk up its portfolio with next-generation approaches to obesity treatment. Earlier this year the stock shot up to a record high after the firm said its experimental oral weight-loss drug outperformed blockbuster Wegovy in an early-stage study.
After 12 weeks, patients who took Novo's daily pill, amycretin, lost more than 13% of their body weight. In comparison, the company's already approved weekly shot lost about 6% of their body weight over the same time period.
Evercore ISI analyst Umer Raffat called the results "solid" for amycretin. Wegovy targets a hormone called GLP-1. Amycretin loops in GLP-1 and a second hormone, amylin. Amylin delays food intake and stomach emptying, and decreases blood sugar levels, according to the National Library of Medicine.
Raffat notes that these early data don't capture the full potential of amycretin. Recipients barely reached the highest dose by week 11, and Novo reported the results at week 12.
In addition, the firm previously made two deals to bolster its weight-loss drug franchise. An agreement with Omega Therapeutics (OMGA) will explore the body's production of heat to potentially raise metabolic activity and help burn fat. Another deal with Cellarity aims to develop a treatment for metabolic dysfunction-associated steatohepatitis, or MASH, a chronic and progressive liver disease.
Ares Management Stock
ARES stock has formed a flat base with an ideal buy point of 139.48. It's moved back above its 21-day exponential moving average, an important shorter term benchmark, as well as the 50-day line.
Ares offered a fresh early buying opportunity with the move above the 50-day line, clearing a short-term high of 136.32 and just topping a trendline. The March 21 high of 137.88 also could serve as an entry.
Overall performance is very strong, with its IBD Composite Rating coming in at 97. Earnings performance is particularly strong too, with ARES stock holding an EPS Rating of 97 out of 99.
ARES has been doing very well on the stock market over the past 12 months. It is in the top 9% of issues over that period.
Ares is a diversified alternative asset manager, engaged in direct lending, private equity and investment in infrastructure and real estate. The firm is looking to put $111 billion in dry powder to work as it looks to maintain fast earnings growth.
Ares was cofounded in 1997 by Tony Ressler, who also cofounded Apollo Global Management.
The firm's assets under management grew 19% to $418.8 billion in Q4, helping to drive a 39% increase in EPS per class-A share to 86 cents.
On the Q4 earnings call, CEO Michael Arougheti said that Ares had its second-largest fundraising year despite a difficult year for fundraising across its industry. "We entered 2024 in the enviable position of having more than $110 billion in dry power to invest in what we believe is an attractive vintage, providing the opportunity to drive strong earnings growth in the years ahead."
The firm is underweight in office buildings, which comprise just 4% of its real estate portfolio. But the company recently formed a joint venture to invest in "high-quality distressed office buildings in New York," looking for favorable deals amid scarce capital for that particular asset.
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
TransDigm Stock
TransDigm stock is offering an entry as it rebounds from the 10-week moving average. It is also offering an alternative 1,246.22 four-weeks-tight entry.
TDG stock was added to SwingTrader on Tuesday.
The relative strength line for TDG stock has just hit fresh heights. This gauges a stock's performance vs. the benchmark S&P 500.
Overall performance is strong, but not ideal. This is reflected in its IBD Composite Rating of 88 out of 99. It is in the top 8% of stocks in terms of price performance over the past 12 months.
Earnings performance is also impressive for the stock. EPS has grown by an average of 51% over the past three quarters.
Aerospace contractor TranDigm got a boost after GE Aerospace (GE) served up a bullish Q1 earnings report. TDG stock has bounded off key support and is near possible entries.
Both GE Aerospace and TransDigm derive the bulk of their profit from aftermarket sales, which are expected to be given a tailwind by Boeing (BA) production problems. That will keep older aircraft operating for longer.
In a presentation released with fiscal Q1 earnings on Feb. 8, TransDigm said that aftermarket sales accounted for just over 75% of earnings before interest, taxes, depreciation and amortization. Fiscal Q2 earnings are expected to be released around May 7, with no date yet announced.
TransDigm comprises about 50 companies that produce highly engineered components and systems for nearly all military and commercial aircraft. About 90% of sales are unique, proprietary products, according to the company. About 50% to 55% of sales come in the aftermarket.
Earlier in April, Cowen highlighted Boeing's problems while hiking its price target for TDG stock to 1,300 from 1,250. It also maintained a buy rating. The firm cited healthy demand, pricing power and M&A opportunities. At the same time, TD Cowen upgraded GE Aerospace to buy from hold.
Tidewater Stock
Tidewater is bouncing back from its 10-week moving average for the first time after a heavy-volume breakout during the week ended March 1. This rebound offers a buying opportunity.
The stock has moved back above its 10-day line and its 21-day exponential moving average as it breaks a downtrend.
Overall performance is very strong, reflected in its Composite Rating of 99. Price performance is its strongest suit, with TDW in the top 5% of issues in terms of price performance over the past 12 months.
Earnings are seen ramping up, with EPS expected to surge 173% in 2024 before rising 59% in 2025.
One thing to be aware of is earnings are expected May 6. This could be a catalyst that leads to future gains for the stock, but could also adversely affect performance..
A strong earnings report provided fuel for its most recent prior breakout. The stock cleared the 20% profit-taking zone from the 77.53 entry
Tidewater provides offshore marine support and transportation services to the offshore energy industry. It is a member of the IBD 50 list of top growth stocks.
The Houston, Texas firm operates in the Americas, Asia Pacific, Middle East, Europe and Mediterranean, and West Africa.
Fundamentals are outstanding and growth prospects still look bright, with full-year profit expected to nearly triple this year to $5.16 a share.
When the company reported Q4 results in January, adjusted profit jumped 133% to 70 cents a share. Revenue increased 62% to $302.7 million. Mutual funds holding shares rose to 434 at the end of Q1 this year vs. 339 in Q2 of 2023.
Market Rallies But This Big Test Looms
Medpace Stock
Medpace stock has formed a flat base with an ideal buy point of 419.42. Aggressive investors could use the retaking of its 50-day line as an early buying opportunity.
The relative strength line recently hit fresh highs on its weekly chart, a good sign.
Medpace is also in the top 5% of stocks in terms of price performance over the past 12 months.
Overall performance is excellent, with the stock holding a best-possible IBD Composite Rating of 99. It holds a near-perfect EPS Rating of 98.
Indeed, earnings are seen continuing to drive higher. Analysts expect EPS to grow 22% this year and to rise a further 20% in 2025.
Medpace is among a group of companies that provide the backbone for research into new drugs and medical devices. About 85% of its revenue is tied to the biotech segment. Wall Street is getting more bullish on the area.
While giant pharma firms manage their own trials, smaller biotechs "outsource" the work to companies like Medpace. Business has been brisk. Medpace reports a backlog increase of 20% totaling $2.8 billion.
In a Feb. 14 note Jefferies analyst David Windley, who rates the stock as a hold, said "biotech funding is on the mend, employee turnover is down, and MEDP continues to take share."
On top of that, he noted, the favorable 2024 outlook for Medpace stands out because of its "minimal exposure to large pharma," insulating the firm from expected budget cuts.
Meanwhile, UBS hiked its price target to 480 from 452 on March 8 and maintained a buy rating on MEDP stock. It believes 2024 guidance is achievable and sees upside to 2025 results if the biotech funding recovery continues.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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