Nvidia Leads Five Top Stocks Near Buy Points In Coronavirus Stock Market Rally By Investors Business Daily
After a constructive week for the coronavirus market rally, several leading stocks showed resilience. Domino’s Pizza (DPZ), Nvidia (NVDA), Akamai Technologies (AKAM), Centene (CNC) and Monolithic Power Systems (MPWR) are all near buy points.
Domino’s stock, Akamai stock and Centene stock are all in buy range now. Nvidia stock and Monolithic Power stock are slightly extended from initial buy points, but are sizing up alternative entries.
Analysts see most of those companies enduring or thriving in the coronavirus crisis, as people reluctant to go outside eat up more food delivery and digital bandwidth. Akamai, Centene and Nvidia stock have also held steady as they hover in or close to buy zones.
Nvidia stock and Domino’s stock are on IBD Leaderboard. Domino’s stock is an IBD Long-Term Leader. Nvidia stock is on the IBD 50.
Keep in mind that Monolithic Power, Centene and Akamai earnings are due this week.
Domino’s Pizza Stock: A Delivery Leader In Coronavirus Shutdown?
Domino’s stock is within range of a 353.52 buy point of a cup-with-handle base. Shares dipped 0.4% in the stock market on Friday. The stock has a 92 Composite Rating and a 98 EPS Rating.
Domino’s stock hit a record high of 387.85 on Wednesday ahead of first-quarter earnings Thursday, then pulled back into the buy zone. While investors could buy on that pullback, they could wait until Domino’s stock shows renewed strength. Any solid up day would push DPZ stock out of the 5% chase zone, however. So a move above the old high could offer an alternate entry.
The relative strength line of Domino’s Pizza stock has trended higher, indicating it has outperformed the S&P 500 and broader market rally.
Analysts have kept favorable ratings on DPZ stock, betting that more people will order delivery as states force restaurants to close in an effort to combat the spread of the coronavirus pandemic.
Domino’s on Thursday said that, in the first four weeks of the second quarter, same-store sales in the U.S. were up 7.1% and overall sales up 10.1%. The same-store sales figure marks an acceleration from the 1.6% gain in the first quarter. Domino’s stock fell on the results, as international sales remained weak.
CEO Ritch Allison said that so far in April, weekday sales have jumped and order sizes increased, likely due to more families eating together. More people were ordering extra to have leftovers. But weekend and late-night sales were weaker, as people gather less and try to survive in a world without professional sports. He also said people were getting bored with cooking.
“As time goes forward, people start to get a bit tired of cooking and eating the same thing,” he said.
Nvidia Stock
Nvidia stock rose 2% to 289.59 on Friday, moving just out of range from a 275.50 buy point of a cup-with-handle base, according to MarketSmith analysis. However, NVDA stock has formed another handle, offering an alternate entry of 299.10.
The graphics-processing chipmaker has a best-possible 99 Composite Rating and a strong 93 EPS Rating. The relative strength line of Nvidia stock has trended higher.
In late February, Nomura downgraded Nvidia stock, arguing that disruptions to technology hardware production China could hurt Nvidia’s gaming chip business. However, a month later, Nvidia stock jumped after a Needham analyst said the company’s AI technology and graphics-processing capability could play a bigger role for people researching the coronavirus.
That analyst, Rajvindra Gill, predicted a “surge in demand for Nvidia’s GPUs in the medical field, particularly in DNA sequencing and drug development.” Gill also said Nvidia’s strong balance sheet and cash flow would make it more popular with investors seeking companies able to weather the pandemic’s impact on the economy.
Nvidia’s graphics processors are also used for PC gaming. Bank of America analysts, citing IDC, said this month that consumers were likely “upgrading to gaming PCs to keep themselves entertained while stuck at home,” with Nvidia stock and AMD (AMD) potentially benefiting. BofA has said demand for PC games “could fare better in an economic downturn” caused by the coronavirus shutdown.
While Nvidia earnings aren’t on tap, AMD earnings are due late Tuesday. So NVDA investors should pay close attention to that report. AMD stock, for its part, is just below a 58.73 cup-with-handle buy point.
Akamai Stock
Akamai stock has a variety of possible entries after Friday’s upside reversal for a 0.5% gain to 102.78. On a daily chart, AKAM stock is just within range of a 98.35 cup-with-handle buy point. On a weekly chart, Akamai stock is just below a cup base with a 103.44 buy point after pulling back this week from a record high. Investors could also buy AKAM stock at 108.35, just above its record high.
The company — which makes products intended to deliver digital media more reliably, as well as cloud and network security products — has a strong 97 Composite Rating. Its EPS Rating is 87. AKAM stock’s relative strength line has been choppy through March and April.
Akamai earnings are due on Tuesday. The company’s services help speed video streaming, e-commerce transactions and downloads. As more people stay at home amid the coronavirus shutdown, the company told IBD last month it is seeing media traffic increase.
“In fact, the peak traffic we have seen this month is more than double the peak in Q1 2019,” CEO Tom Leighton said in an email in March. “More people are seeking out online entertainment (media streaming and gaming, for example).”
Centene Stock
Centene stock rose 0.9% to 69.82 on Friday. The stock was within buy range of a cup base with a 68.74 buy point. On April 17, Centene stock hit a record 74.70, then reversed lower, undercutting the buy point a few days later. But CNC stock has rebounded back into the buy zone.
Shares of the health care insurer have a 98 Composite Rating. Its EPS Rating is 91. The stock’s relative strength line is close to all-time highs reached in 2018.
Centene stock and other health care stocks jumped earlier this month, after progressive Sen. Bernie Sanders, who vowed to overhaul the nation’s health care system, said he would drop out of the presidential race.
Meanwhile, while the coronavirus may have boosted medical costs, most Americans are deferring elective surgeries and nonemergency health care visits. But as the coronavirus crisis passes, health care utilization may rise.
Centene earnings are due Tuesday.
Monolithic Power Systems
Monolithic Power stock rose 2.6% to 186.04 on Friday. Shares of the chipmaker were just extended past a 174.93 buy point of a cup-with-handle base. But, like Nvidia stock, Monolithic Power stock has another handle, offering a 189.10 alternate entry.
MPWR stock has a 97 Composite Rating. Its EPS Rating is 85. The RS line for Monolithic Power stock has rattled sideways in recent weeks, indicating that it is moving in line with the S&P 500. Monolithic Power earnings are due Tuesday.
Analysts last month expressed worry about the coronavirus shutdown’s impact on the semiconductor industry’s recovery. Some areas, like consumer electronics, were more vulnerable to fallout from the pandemic and a possible recession. Others, like those in cloud-computing data centers, were still holding up.
Last month, SunTrust Robinson analyst William Stein said Monolithic Power Systems stock was among the better investments in the semiconductor industry, citing the need for greater connectivity as more people stay indoors.
“We continue to believe data center was already strong entering the year, and may (like notebooks) incrementally benefit from the current work/game/school-from-home trend,” Stein said in a note to clients.
