There’s no better time than to build a strong watchlist during a serious market correction. This story covers five NYSE stocks to watch and consider buying.
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In 2022, the NYSE’s composite index is outperforming its Nasdaq sibling. This may come as no surprise given that the latter made a much stronger move since the bottom of the coronavirus market crash in March 2020.
Since the November 2021 peak in the market, the NYSE composite has fallen as much as 20% from its 17,442 peak. Not pretty, for sure. Yet, that highlights a much milder drop than the 35% shellacking of the Nasdaq composite.
Put another way, at its June low of 10,565, the Nasdaq has to rally 53% just to meet its all-time peak of 16,212. But it would only take a 25% rebound by the NYSE composite to do the same.
NYSE Stocks To Watch: Using A CAN SLIM Filter
The IBD approach emphasizes several simple yet powerful factors, based on decades of IBD market research, that lead to long-term success among NYSE stocks to watch. They go beyond simply investing in a healthy stock market environment.
If you want to achieve market-beating returns, first do this. Reserve your precious capital for just companies with truly strong fundamentals. This means aiming at companies with outstanding records of profit growth, return on equity, profit margins and sales increases. These factors make up both the C and the A in CAN SLIM, IBD’s seven-point investing paradigm.
Second, seek only those NYSE-listed firms that outperform the rest of the pack. If you confine your search to those stocks whose price performance proves superior to at least 85% or 90% of the entire market or more on a rolling 12-month basis, then you’re truly focusing on stocks that have the potential to break out to new highs and make major price runs.
A Key Third Layer Of Analysis
Third, get on the side of institutional investors that are actively accumulating shares over months and even years. Their long-term power on Wall Street can never be overstated. IBD’s Accumulation/Distribution Rating will help investors in NYSE stocks in that regard. Monitor the quantity and quality of institutional ownership; this helps you assess the I in CAN SLIM.
To select five NYSE stocks to watch, MarketSmith screener allows users to pick companies within IBD’s database that rate highly in terms of Earnings Per Share Rating, Relative Strength Rating and SMR letter grade, which stands for sales, profit margins and return on equity. A simple screen set up on MarketSmith demands that stocks show an 85 EPS score or higher, at least an 85 for RS, and an A grade (on a scale of A to E) for SMR.
Plus, stocks that did not have either an A or B for Accumulation/Distribution Rating didn’t make the cut. This rating analyzes price-and-volume action in a stock over the past 13 weeks. An A or B grade indicates fund managers are net buyers of the stock. A C grade points to a neutral amount of institutional buying vs. selling.
Finally, each stock had to hold at least a 90 Composite Rating, which combines all of IBD’s key ratings with recent price action.
A total 23 NYSE stocks made the cut on Friday, down from 28 earlier in the week.
In market cap, they range from as small as NL Industries (NL) (with a $450 million market value) to Leaderboard portfolio mainstay Eli Lilly (LLY) ($307 billion). We feature five here.
NYSE Stocks To Watch: No. 1
AbbVie (ABBV): 94 Composite Rating, 96 Relative Strength. The stock is constructing what may become the right side of a new base. For now, the stock still trades more than 13% away from the base’s left-side peak.
Watch to see if the stock, having retaken the 10-week moving average recently, holds above this key technical level. If it does, then ABBV is successfully getting through an overhead supply of disgruntled, willing sellers who bought at 160, 170 and higher.
AbbVie is a megacap pharmaceutical play. The market value exceeds $260 billion. The Chicago-based drug giant excels in the fields of immunology, cancer, virology and other areas.
Earnings and sales grew at a blistering pace from the third quarter of 2020 through the second quarter of 2021. So, one could expect some deceleration in the pace of current growth.
The bottom line at AbbVie grew just 4% vs. a year ago in the second quarter of 2020, then rose 21%, 32%, 19%, 33%, 18%, 13% and 9% over the next seven quarters through Q1 of this year.
Sales rose 26%, 52%, 59%, 51%, 34%, 11%, 7% and 4% over the same time frame.
A C+ Accumulation/Distribution Rating fell from a more positive grade of B-. So, it could use some improvement.
Mutual funds owning shares of ABBV jumped sharply in Q1 this year, to as high as 3,913 vs. 3,749 in Q4 of 2021 and 3,636 in Q2 2021.
Stock No. 2: Another Drug Firm
Bristol Myers Squibb (BMY): 96 Composite, 96 RS. Another giant in IBD’s ethical drug industry group, BMY attempted a breakout from a flat base-style construction that goes back three months.
Arguably, the stock is trying to clear a 78.23 entry point. However, Bristol Myers has lately faced a strong headwind of sellers.
The 94 EPS Rating reflects solid earnings growth over the past three to five years.
In 2017, the New York-based firm earned $3.01 a share. This year, analysts forecast the bottom line to rise just 1% to $7.56 a share, but then accelerate to 7% growth in 2023. Sales growth has cooled off in recent quarters, going from 16% in Q2 2021 to increases of 10%, 8% and 5%.
Watch to see if the stock can continue holding above its 10-week moving average.
According to MarketSmith, BMY shows a 5-year Earnings Stability Factor of 4 on a scale of zero (ultra stable) to 99 (ultra wild). The 2.8% annualized dividend yield makes Bristol Myers a growth-and-income play, too.
Inside Investors.com: These Stocks Are Dividend And Utility Leaders With Stable Earnings
Stock Numero Tres
PJT Partners (PJT): 93 Composite, 85 EPS, 89 RS. The specialist in global funds to enable investments in alternative assets posted an excellent first quarter. Profit rose 65% to $1.87 a share. That halted a two-quarter streak of year-over-year earnings shrinkage.
Sales rose 19% to $246.3 million. That marked the biggest revenue increase in five quarters.
The small-cap stock is working on a large cup with handle, revealing a 79.45 proper buy point. But it could take time for PJT to reach this entry. Right now, watch for signs of institutional buying support at the 50-day moving average.
Wall Street sees earnings easing 1% this year to $4.82 a share but then rebounding 15% in 2023.
PJT holds a $1.7 billion market value, 24.6 million shares outstanding and a float of 23.6 million.
5 NYSE Stocks To Watch: Final 2
Flex LNG (FLNG): The ship-based transport firm specializes in liquefied natural gas. The stock itself has become more wild as natural gas futures plunge from their May peak.
Nonetheless, the stock’s uptrend is still intact. Yet it will take weeks, if not months, for FLNG to create a new pattern that marks a new pivot point.
As a weekly chart shows, the stock tried to clear a new base at 32.87, but the breakout failed horribly.
One issue? Lukewarm profit forecasts. Wall Street expects earnings to fall 1% this year to $3.02 a share, then lift only 9% to $3.28 in 2023. But keep in mind that last year, earnings catapulted 1,926% to a record $3.04 a share.
In contrast, the top line has soared in recent quarters, partly as a result of huge demand for LNG in Europe. In the fourth quarter of 2020, Flex LNG’s sales increased 30% to $67.4 million. Then, starting with Q1 of 2021, sales jumped 113%, 156%, 147% and 70%.
No wonder, then, that sales actually fell 8% in the first quarter of 2022. Flex LNG faced a difficult comparison after seeing the top line more than double in the same quarter a year earlier.
The small cap has a market value of $1.4 billion, 53.1 million shares outstanding and a float of 28.7 million. Flex LNG pays a stout dividend that yields 11% annualized.
Food Plays In The NYSE: Still Solid
Last among NYSE stocks to watch, we come to Hershey (HSY). The stock boasts a 97 Composite Rating and a 95 RS. A key defensive play amid the bear market, Hershey is no doubt leading most NYSE stocks. A breakout past a 155.59 entry in a long flat base in March 2021 ushered a solid advance of 49%.
Now, a new 11-week flat base has emerged, presenting a new buy point of 231.70. or 10 cents above the pattern’s left-side high.
Analysts have recently boosted their profit estimates. Now, they see earnings rising 12% this year to $8.05 a share.
Mutual funds have been accumulating shares in the chocolate and sweets goliath of Hershey, Pa.
Total mutual funds owning shares have now broken the 2,000 barrier, up from 1,827 at the end of the second quarter in 2021 to 2,029 at the end of March. That’s the kind of fund sponsorship trend you wish to see among NYSE stocks to watch.
Please follow Chung on Twitter: @saitochung and @IBD_DChung
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Source: https://www.investors.com/research/nyse-stocks-to-watch-buy/?src=A00220&yptr=yahoo