As often happens amid stock market volatility, recent choppiness has brought an upwelling of new names into the IBD 50. This presents potential new growth stocks to watch. Just remember that with the stock market uptrend under pressure, it’s best to move with caution.
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On Thursday alone, 15 new names elbowed their way on the IBD 50. Only stocks that show the strongest fundamental and technical metrics the stock market has to offer get on the list. That makes them growth stocks to watch.
Growth Stocks To Watch: Oil and Resources?
You’ll notice more oil and natural resources stocks are getting on the list, as these days they show more growth prowess than the usual fare of tech stocks. Many tech names that have led the bull market have descended into corrections and their ratings have weakened.
Several of the new entries on the IBD 50 that are setting up in new base patterns are Northern Oil & Gas (NOG), SSR Mining (SSRM), O’Reilly Automotive (ORLY), Sonic Automotive (SAH) and Boston Properties (BXP).
O’Reilly Automotive has several strong traits you like to see in a stock that’s approaching a buy point. For one, while it’s forming a new base, its relative strength line is already at new highs.
ORLY stock is forming a cup base that started seven weeks ago, when it peaked at 710.86. That set up a buy point at 710.96, according to MarketSmith chart analysis.
Fundamentally, the auto parts retailer and wholesaler is on sound footing, too. It has an Earnings Per Share Rating of 94, putting it among the top 94% of stocks in the market based on recent quarterly and annual earnings. Earnings rose 17%, 14% and 41% in the past three quarters, which averages out to about 24%.
A weak point is that analysts estimate just a 4% gain in the current quarter and 6% for the full year. Time will tell if the auto parts seller can surprise Wall Street as it did in the last quarter, in which EPS was 26% above views.
Another strong point that makes it a growth stock to watch: O’Reilly ranks No. 1 its industry group, according to IBD’s Stock Checkup.
In the same auto parts group, Sonic Automotive is working on a long consolidation. The past week it bounced decisively off its 50-day moving average and got within about 11% of a 58.10 buy point.
Northern Oil Forms Base
In the more cyclical area of the market, Northern Oil is forming a cup-with-handle base. The entry is 25.57. Trading near 24 Friday, the stock is about 6% below that buy point. Amid a sharp rise in oil prices, Northern Oil’s earnings growth has been on fire, climbing 41%, 338% and 65% in the past three quarters.
SSR Mining is working on a cup base and is about 8% below a 20.15 entry. With gold prices on the upswing, the stock’s RS line is near a high as well. Earnings are due Wednesday.
Property REIT Boston Partners is six weeks into a potential new base after caving 16% from its 52-week high of 128. Its RS line is also in a strong uptrend.
Other bases to check out for names that have been on the list longer are miner Franco-Nevada (FNV) (which poked above its entry Thursday), metal products maker Mueller Industries (MLI), Commercial Metals (CMC) and computer networking firm Arista Networks (ANET).
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