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? Nvidia (NVDA), Abercrombie & Fitch (ANF), CrowdStrike (CRWD), KLA (KLAC) and KB Home (KBH) are prime candidates.
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Inflation 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. Negative action caused the S&P 500 and the Nasdaq to undercut the key 50-day moving average, but they are back above the most significant benchmarks once again and looking bullish.
The stock market has regained momentum. Now is a good time to make stock purchases, but this should be done in a measured fashion. IBD is currently recommending 80% to 100% market exposure.
Investors should be looking to buy high-quality issues with good growth prospects. The selections below are among the best stocks to buy or watch now. The IBD 50 is also a rich hunting ground.
Nevertheless, it remains 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
- Nvidia
- Abercrombie & Fitch
- CrowdStrike
- KLA
- KB Home
Now let’s look at Nvidia stock, Abercrombie & Fitch stock, CrowdStrike stock, KLA stock and KB Home stock in more detail. An important consideration is that these best stocks to buy and watch all boast impressive relative strength.
Nvidia Stock
Nvidia has cleared a cup-with-handle entry point of 922.20. The 5% buy zone here tops out at 968.31. This is a midstage pattern.
Shares flashed an early entry as they reclaimed the 50-day line in early May.
NVDA stock holds a perfect IBD Composite Rating of 99. It is also in the top 2% of stocks in terms of price performance over the past 12 months. So far this year it is up around 91%, building on previous strong gains in 2023.
Earnings growth is a key strength, with its EPS Rating coming in at 99. Recent impressive earnings growth is underlined by the Stock Checkup Tool.
Over the past three quarters, EPS has grown by an average 503%. This is well clear of IBD requirements for 25% growth. Earnings growth has been accelerating for the past five quarters.
In the most recent quarter Nvidia‘s earnings per share surged 486% to $5.16. Revenue soared more than 265% to $22.1 billion.
“Accelerated computing and generative AI have hit the tipping point,” CEO Jensen Huang boasted following his firm’s quarterly report.
Nvidia is seeing demand not just from large cloud-service providers, but enterprise software and consumer internet companies.
Note that Nvidia earnings for the April quarter are due May 22. That raises the risks of a new NVDA stock position.
NVDA stock is a member of the prestigious IBD 50 list. This is an objective, computer-generated list based solely on time-tested criteria. It is also a member of the IBD Leaderboard list.
Nvidia leads in artificial intelligence chips, but competition is rising. Key customer Microsoft (MSFT) is among firms developing their own solutions.
OpenAI, whose backers include Microsoft, reportedly is exploring its own AI chips as well.
But Nvidia is certainly not resting on its laurels amid rising demand. At the SC23 supercomputing conference in Denver back in November, Nvidia introduced its HGX H200 AI computing platform and GH200 Grace Hopper Superchip.
And in March, at Nvidia’s GTC conference for artificial intelligence developers, the AI powerhouse has already announced the HGX H200’s successor — the Blackwell platform.
Customers can also look forward to the next-generation B100 chip that analysts expect in coming quarters. B100 chips will have better performance and will likely have a higher average selling price.
Additionally, Nvidia has entered into an agreement to buy Run.ai. for $700 million. Run.ai helps developers use AI tools more efficiently and reveals Nvidia’s road map and priorities. Run.ai works with Nvidia’s Cloud AI product that helps businesses get “instant access to an AI supercomputer from a browser.”
Earnings are due next Wednesday, which adds risks. An approach highlighted by Investor’s Business Daily is to use options as a strategy to reduce risk around earnings. It’s a way to capitalize on the upside potential of a stock’s move around earnings, while reducing the downside risk.
Abercrombie & Fitch Stock
Abercrombie & Fitch formed a consolidation pattern with an ideal entry point of 140.28. This is still an early-stage pattern, which IBD research has found is more likely to net big returns for investors.
The stock made a bullish move by retaking the key 50-day moving average, offering an early entry, and has continued to make progress.
The relative strength line has also been rebounding after pausing following a huge run. It now sits at fresh heights on a weekly chart.
ANF stock has an IBD Composite Rating of 97 out of 99. This puts it in the top 3% of issues tracked by IBD.
Meanwhile, it holds an EPS Rating of 77 out of 99. This is not ideal, but EPS grew 267% in the most recent quarter. The stock is currently in turnaround mode.
Also in the most recent quarter, revenue jumped 21% to $1.453 billion, vs. FactSet predictions of $1.429 billion.
Abercrombie & Fitch guided 2024 sales to increase 4% to 6% from $4.3 billion in 2023, but the growth rate slows from the 21% jump last year.
Abercrombie reports fiscal Q1 earnings later this month.
The retailer holds the top spot in the competitive Retail-Apparel/Shoes/Accessories industry group.
Institutions are net buyers of the stock of late, with its Accumulation/Distribution Rating coming in at B-. In total, 72% of its stock is held by funds, according to MarketSurge data.
Telsey Advisory lifted its price target on ANF stock on its Q1 results, noting the Abercrombie & Fitch brand remains healthy with a resilient customer base
With three home offices in Columbus, Ohio; London and Shanghai, Abercrombie & Fitch is a global retailer. It offers apparel and accessories for men, women and kids. In addition to its namesake brand, the company also owns the Hollister, Gilly Hicks and other labels.
In total, Abercrombie operates more than 750 stores across North America, Europe, Asia and the Middle East.
Looking For The Next Big Stock Market Winners? Start With These 3 Steps
CrowdStrike Stock
Cybersecurity play CrowdStrike was actionable as it crossed the 50-day moving average. It is also in the buy zone from an early entry of 338.45.
As if that wasn’t enough, the stock has also formed a cup base with an ideal entry point of 365. This is a second-stage pattern, which still counts as early. A handle could also go on to form, which would offer a lower entry.
The relative strength line for CRWD stock is moving higher on its weekly chart as it forms the right side of its base. This line gauges a stock’s performance vs. the benchmark S&P 500.
Overall performance is very strong for the recent IBD Stock of the Day. This is reflected in its IBD Composite Rating of 98 out of 99. It is in the top 4% of stocks in terms of price performance over the past 12 months.
The stock has been on a tear so far in 2024. Year to date it has jumped around 33%. It is up about 12% in the past four weeks alone.
Earnings performance is also impressive for the stock. EPS growth averages 104% over the past three quarters.
The Street expects profits will continue surging for the cybersecurity stock. Wall Street sees earnings soaring 27% this year and increasing 24% in 2025.
Part of this growth is due to the demand surge for artificial intelligence. The firm has stood out amid industry buzz over the potential of generative AI.
CrowdStrike has upgraded security operations center (SOC) services with automation capabilities provided by generative AI technology. Among the improvements, customers use a conversational user interface rather than a computer dashboard to monitor computer networks for threat detection and response.
The company itself has boasted it is the “cybersecurity platform consolidator for the AI (artificial intelligence) era.”
CrowdStrike has also been making moves in the acquisition space as it competes with other cybersecurity companies building cloud-based service platforms.
In early March, CrowdStrike acquired Flow Security. The company’s earlier purchases include SecureCircle, Pre-empt, Humio, Bionic and Reposify.
KLA Stock
KLA is in a buy zone after clearing a flat base entry of 729.15. The 5% buy zone here runs as high as 765.61.
Investors could have also used the April 30 high of 717.73 as an early entry.
This pattern is a third-stage base for the semiconductor equipment stock. This counts as midstage.
It has rallied back above the 50-day moving average, a key technical benchmark. In addition, the relative strength line remains at highs.
Overall performance is strong, if not quite ideal, with its IBD Composite Rating sitting at 91.
The expert in process control and yield management equipment for chipmakers has been a strong performer over the past 12 months. It is in the top 8% of issues in terms of price performance during that period.
Earnings performance is solid, with its EPS Rating coming in at 79 out of 99. Earnings are seen slipping 8% in 2024 before rebounding to grow 23% next year.
The stock got a boost after it beat estimates for its fiscal third quarter and guided higher than views for the current quarter.
For the current quarter, KLA forecast adjusted earnings of $6.07 a share on sales of $2.5 billion. Analysts had been looking for earnings of $5.73 a share on sales of $2.43 billion in the fiscal fourth quarter. In the June quarter last year, KLA earned an adjusted $5.40 a share on sales of $2.36 billion.
“Market conditions have stabilized and we expect our business levels to improve as we progress through the year,” Chief Executive Rick Wallace said.
Institutions have been holding steady on the stock, with 57% of shares currently held by funds. Notable holders of the stock include the MFS Growth Fund and the Janus Henderson Enterprise Fund.
This Tesla Rival Joins Nvidia In Buy Area As Market Rally Holds Tough
KB Home Stock
KBH is in a buy zone after clearing a cup-with-handle base’s ideal buy point of 72. The 5% buy zone here tops out at 74.11.
The stock recently moved back above the key 50-day moving average, which was an early indicator a breakout was about to commence.
KBH stock and other homebuilders have held up well even amid rising Treasury yields. Overall performance is strong, with its IBD Composite Rating coming in at 89 out of 99.
Both earnings and technical performance are strong. KBH is in the top 9% of stocks in terms of price performance over the past 12 months.
Its performance in 2024 is solid, with the stock rising nearly 17% so far this year. This is comfortably clear of the benchmark S&P 500’s gain.
Big Money has been snapping up this stock too of late, with its Accumulation/Distribution Rating coming in at B-.
KB Home snapped a four-quarter streak of earnings declines in the most recent quarter.
Earnings per share surged 21% to $1.76. In addition, revenue climbed 6% to $1.47 billion. After-tax margins also improved slightly.
The stock is a member of the Building-Residential/Commercial industry group, one of the best performers among the 197 IBD Industry Groups at the moment.
Housing stocks surged in late 2023 as mortgage rates tumbled. With a chronic ongoing housing shortage in the U.S. the potential remains for further gains.
Please follow Michael Larkin on X, formerly known as Twitter, at @IBD_MLarkin for more analysis of growth stocks.
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