Tech stocks GlobalFoundries (SFP), Palo Alto Networks (PANW) and Wolfspeed (WOLF) are the top stocks to watch this week as they work out buy points in a tough market. Paylocity (PCTY) and Arista Networks (A NET) complete the list.
The PANW shares and the PCTY shares belong to the IBD classification watchlist, after strong earnings and guidance. The ANET share belongs to the INN 50 list of best growth stocks. PSTG stock is on SwingTrader. GlobalFoundries was the IBD stock of the day on Friday.
More generally, in a rising interest rate environment, most of the major stocks showing buy signals reside in the solar, pollution or medical space. But these five tech stocks are settling or settling.
Keep in mind that the uptrend of the market remains under pressure, which makes new purchases more risky. But now is a good time to create stock watchlists.
All major stocks to watch this week have relative strength lines up, at or near highs. That means they outperform the S&P 500, making them solid picks for your investing watchlist.
GlobalFoundries grew 4% last week stock market tradingeven with a quiet Friday session.
GFS stock remains below a buy point of 66.06 from a very deep double bottom base. The pattern began to form on August 12 after GlobalFoundries hit a peak in earnings, following a massive surge in July.
The GlobalFoundries handle recently found support at the 200-day moving average. Aggressive investors could use a breakout of the downtrend in the handle – still near the 21-day line – as an early entry.
Ideally, the handle of the GFS stock would grow into its own base.
In a positive technical sign, the RS line for GFS stocks is poised to hit new highs.
New York-based GlobalFoundries is a chip foundry, meaning it makes semiconductors for fabless chip companies.
GFS stock debuted on the Nasdaq in October 2021, amid fears a global chip shortage could persist through 2023 or beyond. He specializes in the less advanced but essential semiconductors that led to the chip crisis.
The GFS stock shows a IBD Composite Rating of 91 out of 99. It also carries a relative strength rating of 91, meaning it has outperformed 91% of all stocks in IBD’s database over the past 12 months.
As a young company with a short history of quarterly profits, GlobalFoundries earns mediocre income EPS Ranking out of 78 out of 99.
But GFS’s earnings per share have steadily increased, on a sequential basis, over the past three quarters. Revenue growth has ranged from 23% to 74% over the same period.
Analysts polled by FactSet expect GlobalFoundries to grow to earnings of $2.61 per share in fiscal 2022, from a loss of 5 cents in 2021.
Shares of Palo Alto Networks gained 3.2% to 565.77 on Friday, up for a third consecutive session. PANW stock rose 4.7% for the week.
The cybersecurity stock formed a cup-with-handle base with a buy point of 578.89. It found support at the 50-day average on September 6 and its subsequent break above the 200-day line (and the downtrend of the handle formation) offers early entry.
PANW shares have a Comp rating of 94, an RS rating of 88 and an EPS rating of 95.
The California-based cyber giant recently reported its third straight quarter of accelerating earnings growth. Palo Alto Networks also raised its guidance and declared a 3-for-1 stock split.
After the Russian invasion of Ukraine on Feb. 24, Palo Alto said it was monitoring cyberattacks in the region and preparing for any spread beyond.
Wolfspeed rebounded 2.6% to 114.21 on Friday. WOLF shares gained 4.9% over the week.
Another semiconductor maker, Wolfspeed, consolidated with a buy point of 123.35 after a profit gap on Aug. 18. This move could be seen as a handful in a longer consolidation dating back to late March or even late November.
Stocks can be said to be flashing an early entry after breaking a downtrend from the “handle”.
The stock WOLF has an 88 Comp rating, a 96 RS rating and an EPS score of 59.
In August, the North Carolina-based chip company released a revenue forecast that beat analysts’ estimates.
Earlier this year, Piper Sandler analyst Harsh Kumar called Wolfspeed the best chip stock for 2022. He expects the tech stock to benefit from the global adoption of electric vehicles, which are trending higher. use many more chips than traditional cars.
Paylocity shares rose 3.4% to 258.45 on Friday, climbing for a fourth straight day. PCTY stock jumped 9.6% for the week, rebounding powerfully just above the 10-week moving average.
The move follows three weeks of declines, which saw Paylocity withdraw after a revenue gap on August 5.
The recent decline in PCTY shares can be seen as a handful in a long consolidation, offering a buy point of 276.99. It could become its own base in a week.
Paylocity achieves a Comp rating of 95, an RS rating of 95, and a near-perfect EPS rating of 98.
Over the past five quarters, Paylocity’s earnings per share have increased from 39% to 74%. Revenue growth has fluctuated between 28% and 37% over the same period.
The workforce management software provider targets companies with less than 50 employees and stands out from its competitors thanks to its partnership with 401(k) advisors.
A successful breakout in July 2021 saw PCTY stock rally over 50%.
Why the market rally is stronger than it looks
Arista Networks added 1.3% to 124.41 on Friday, climbing for a fifth consecutive session. ANET stock rose 6.1% for the week, which saw it rebound from the 10-week moving average and return to its 200- and 21-day lines.
ANET stock is eyeing a buy point of 132.97 handles from a double bottom basis. There is now an early entry from the downtrend of the handle, although it was quite steep. Volume over the past few days has also been average.
As a provider of cloud networking software and hardware, Arista’s stock boasts a perfect 99 Comp rating, a 94 RS rating, and a 96 EPS rating.
It shows three quarters of accelerating earnings and revenue growth, capped at a 59% gain in EPS and a 49% increase in sales over the latest period.
This high-tech value should benefit from the growth of data centers. ANET’s high-end Ethernet switches speed up communications between computer server racks.
For more quality stocks with strong RS lines, check out IBD’s Strength relative to the new list of highest actions. The MarketSmith stock research platform also has a scout tool to identify stocks with RS lines reaching new highs.
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