The 5 Best Stocks To Buy And Watch Right Now

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? Google-parent Alphabet (GOOGL), Alcoa (AA), West Pharmaceutical Services (WST), NXP Semiconductors (NXPI) and Arista Networks (ANET) are prime candidates.


Since the coronavirus bear market, stocks rebounded powerfully. The strong action reflected rising confidence that the economy will eventually recover from the coronavirus.

Worries around Covid rose with the emergence of the omicron variant, but there are hopes that this coronavirus strain tends to result in mild cases.

The Federal Reserve has just held its final meeting of the year. Stocks initially rallied after the central bank moved to speed up tapering and offer more clarity on when it will increase interest rates. However the rally was short lived and the market finished the week on a sour note.

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.

IBD’s CAN SLIM Investing System 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.

New Covid worries have taken a toll on the market, but a rebound following the latest Fed meeting saw the IBD market outlook switch to a confirmed uptrend. The uptrend is already under pressure after the Nasdaq and Dow Jones Industrial Average fell under the key 50-day moving average. The S&P 500 finished the week a hair above its 50-day line. Market breadth also remains a concern.

Now is a time to stop buying stocks, aside from exceptional breakouts in exceptional stocks. It is also a time to be getting off margin. Taking some profits is also advisable, particularly among those receding after rallying 20% or more from buy points.

Take extra care to take heed of sell signals. Sell any stock that falls 7% or 8% from your purchase price and look out for sharp breaks of the 50-day or 10-week moving averages. Make a defensive game plan for each stock you own.

Remember, things can quickly change when it comes to the stock market. Make sure you keep a close eye on the market trend page here.

Best Stocks To Buy Or Watch

  • Google
  • Alcoa
  • West Pharmaceutical Services
  • NXP Semiconductors
  • Arista Networks

Now let’s look at Google stock, Nike stock, West Pharmaceutical Services stock, NXP Semiconductors stock and Arista Networks stock in more detail. An important consideration is that these stocks all boast impressive relative strength.

Check out IBD Stock Lists and other IBD content to find dozens more of the best stocks to buy or watch.

Google Stock

Google parent Alphabet has slipped under in its buy zone after previously breaking out of a flat base. The ideal buy point here is 2,925.18, according to MarketSmith analysis. It is actionable as high as 3,071.44.

Google stock has fallen below its 50-day and 10-week lines, though it hasn’t undercut its early December lows. In another week, shares will likely have a new flat base with a 3,019.43 official buy point.

A rebound from the 10-week line could offer an entry, perhaps using Thursday’s high of 2,953.54. The 50-day/10-week line is a good place to start a position in a Long-Term Leader like GOOGL stock, but market conditions raises the risks for all new buys.

The relative strength line has been moving sideways for the past few months after a strong advance. The RS line gauges a stock’s performance compared to the S&P 500.

GOOGL stock has a near-perfect IBD Composite Rating of 98. That puts it in the top 2% of stocks tracked overall. Earnings outshine stock market performance, with its EPS Rating a very strong 98 out of 99.

Earnings have grown by an average of 123% over the past three quarters. This is almost five times the 25% growth sought by CAN SLIM investors.

Analysts see strong growth ahead, with Google earnings per share expected to explode 105% in 2021, and then growing by a further 5% in 2022.

The tech giant has a Relative Strength Rating of 92. That means it has outperformed 92% of stocks tracked over the past 12 months in terms of price performance.

Recent performance is strong, with Google stock rising nearly 62% so far in 2021. This far outstrips the S&P 500’s gain of 23%

Big money has unloading Alphabet stock of late, though this comes amidst a broad sell-off. This is reflected in its Accumulation/Distribution Rating of D- which reflects slightly more selling than buying over the past 13 weeks.

Alphabet in April announced a new $50 billion GOOGL stock buyback. On its June quarter earnings call, Google announced a modification of the share repurchase agreement allowing the company to repurchase either class A or class C shares.

Late on Oct. 26, Alphabet posted Q3 earnings. EPS jumped 71% to $27.99, including gains on equity investments. Gross revenue rose 41% to $65.12 billion in the quarter ended Sept. 30.

Analysts had estimated Google earnings of $23.73 per share on gross revenue of $63.5 billion.

Internet search and other revenue rose 44% to $37.93 billion vs. estimates of $36.41 billion. Google said cloud-computing revenue rose 45% to $4.99 billion vs. estimates of $5.17 billion. Despite the revenue miss, Google cloud cut its operating loss almost in half to $644 million.

YouTube advertising revenue rose 43% to $7.2 billion. Analysts had estimated YouTube ad revenue of $7.42 billion.

While Google has expanded into cloud computing and consumer hardware, digital advertising still makes up the lion’s share of revenue. Google announced in early March that it will stop employing web browser-tracking technology for the purpose of selling advertising. Earlier, Google said it would phase out third-party cookies.

Google plans to utilize “contextual” technology that enables advertisers to target aggregated groups of consumers with similar interests, such as travel, sports or fashion.

Alcoa Stock

Alcoa stock is sitting in its buy zone after clearing a 52.96 buy point from a double-bottom base.

The relative strength line is currently looking bullish. It is spiking higher and closing in on recent highs. It traded up last week in high volume, another positive sign.

Overall performance is very good, but not quite ideal.  This is reflected in its Composite Rating of 89. Earnings are the Achilles heel at the moment though, and there are positive signs on this front.

Big money certainly seems to see good times ahead. It holds an Accumulation/Distribution Rating and has seen the number of funds owning shares climb from 452 a year ago to 600 in the most recent quarter.

Metals stocks regained luster in the wake of Wednesday’s Federal Reserve meeting. While the Fed surprisingly penciled in three interest-rate hikes for 2022, policymakers offered a bullish view for strong near-term economic growth and a long expansion.

This helped ease worries high inflation could force the Fed to hike rates aggressively over the next few years, risking a potential recession.

Aluminum prices, though off their October peak, are up by about one-third over the past year. Alcoa has said that Chinese enforcement of curbs on aluminum smelting capacity this year to reduce carbon emissions represents an “inflection point” for the industry. The resulting higher prices have transformed the company’s balance sheet.

Along with its Q3 earnings report, Alcoa announced a new 10-cent quarterly dividend and a $500-million buyback of AA stock.

The demand outlook for aluminum also looks favorable. “Aluminum is a big part of the solution of decarbonizing the world,” Alcoa CFO William Oplinger said at a Goldman Sachs metals and mining conference on Nov. 17.

Thanks to its combination of light weight and strength, Oplinger estimated that the aluminum content of EVs is about 100 kilograms more than that of internal-combustion-engine vehicles.

“Aluminum is our favored commodity pick, with positive demand prospects for light-weighting and packaging, plus potentially severe limitations on supply,” wrote Wolfe Research analyst Timna Tanners. She initiated coverage of AA stock with an outperform rating and 63 price target on Nov. 16.

She called 2021 a “breakout” year for the aluminum price. Given high energy costs in China and Europe, “we don’t see it capitulating near term.”

Alcoa said at its Nov. 9 investor day that it would only add aluminum capacity that is produced with zero carbon. For longer-term investors in AA stock, Alcoa is working on several green innovations that could pay off.

Why This Market Rally Is So Dangerous

West Pharmaceutical Services Stock

WST stock has formed a handle with an ideal buy point of 458.09. It is also actionable as it rebounds off the 10-week line. WST stock rose 4.2% last week as it continues to trade tightly.

The relative strength line is trying to move higher again following a pause. It has performed solidly overall for the year. West Pharma is up nearly 59% so far in 2021.

WST stock has a very strong IBD Composite Rating of 97. At the moment earnings are even better than stock market performance, with its EPS Rating coming in at 98.

West Pharmaceutical earnings held solid in the most recent quarter, which was slightly disappointing.

But the Stock Checkup shows EPS growth has come in at an average of 67% over the past three quarters. This is well clear of the 25% growth sought by the CAN SLIM cognoscenti.

A number of notable funds own WST stock, including Baron Asset Retail Fund (BARAX) and the T. Rowe Price New Horizons Fund (PRNHX).

The company is a leader in integrated containment and delivery of injectable medicines. It is not itself a drugmaker, but its vials, syringes and other products and services help customers deliver drug products to patients.

Its biotech and pharmaceutical customers include many, if not most, of the companies working to develop Covid-19 vaccines and treatments. With Covid looking likely to become endemic going forward, this could make a lasting contribution to its business.

It’s unclear how West Pharma will respond to omicron variant news.

WST stock is currently an IBD Long-Term Leader. This is means it is part of a portfolio of select high-performing stocks that could potentially be held for years.

Looking For The Next Big Stock Market Winners? Start With These 3 Steps

NXP Semiconductors Stock

NXPI has been trading around its buy point for a couple of weeks after breaking past a 227.60 buy point in a cup-with-handle base.

The fact it has been holding clear of the 50-day moving average should encourage investors.

The chip stock did give up strong gains after UBS gave NXP stock a sell rating. Nevertheless, it has held up well overall, rising 38% so far this year.

The stock’s relative strength line slipped back a bit after nearing August highs, but looks to be trying to regain momentum.

NXPI stock has a strong 96 out of a perfect 99 IBD Composite Rating. This puts it in the top 4% of stocks when a combination of technical and fundamental metrics are taken into account.

The IBD Stock Checkup shows that earnings are picking up steam as the firm looks to get its profitability back on track. In the most recent quarter earnings came in at $1.91 per share, improving on a loss of eight cents per share a year ago.

The largest share of Netherlands-based NXP’s revenue comes from sales of chips to the automotive industry.

It also makes chips for industrial uses, Internet of Things, mobile and communications infrastructure applications.

With demand for autos seen ramping up as the economy gets back on its feet following the coronavirus pandemic, the future could be bright for the firm.

Automotive semiconductors have been in short supply this year because of tight capacity at chip foundries. The situation has forced some carmakers to idle factories.

The firm’s CEO Kurt Sievers was keen to point out the broadness of the firm’s offerings during its most recent earnings call at the start of November.

“For NXP, it’s of course, not just automotive driving our performance, within the Industrial and IoT market, we see our ability to provide complete turnkey connected edge processing solutions consisting of processes, connectivity, security and analog, all leading to increased customer traction,” he said. “These are all just a few examples that underpin our confidence in our Company-specific growth.”

Arista Networks

Arista Networks stock is in its buy zone from a flat base, amid some whipsaw action moves up and down. The entry point here is 134.24. It is also extended after offering up an early entry by breaking a trend line and clearing the 21-day moving average.

Arista stock gapped up in early November after delivering strong earnings and guidance. The cloud computer networking company was able to hold on to those gains despite a choppy market.

ANET stock has a near-perfect IBD Composite Rating of 97. It offers a robust balance of earnings and stock market performance. The stock is up nearly 81% so far in 2021.

Big money is piling into the stock, with its Accumulation/Distribution Rating coming in at B+.  In total, 54% of stock is held by funds, with a further 22% being held by management.

Santa Clara, Calif.-based Arista sells switches that speed up communications among racks of computer servers packed into data centers. Arista’s primary customers have been internet companies.

ANET stock soared last month after the firm issued fiscal 2022 revenue growth guidance.

For fiscal 2022, Arista forecast revenue growth of 30% as data center orders pick up from Meta (FB). The Cisco Systems (CSCO) rival also sees strong demand ahead from the corporate market.

Needham analyst Alex Henderson said the 30% revenue growth target is do-able. “Part of that upside reflects a 10% price increase going effective imminently in the fourth quarter, but much of it also reflects exceptionally strong supply chain management,” he said in a research note.

Arista said it expects $400 million in corporate campus sales next year, up about 100%.

“They raised their picture for revenue growth in 2022 to 30% year-over-year, or roughly $3.7 billion in total sales,” Jefferies analyst George Notter said in a note to clients. “It’s a huge bump up. Prior consensus views called for $3.23 billion.”

A four-for-one stock split announcement also fueled ANET stock.

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