Investing in stocks may seem straightforward, but selecting the right stock at the opportune moment without a proven strategy is a daunting task. So, which are the top Robinhood stocks to buy or monitor now?
Currently, Nvidia (NVDA), Microsoft (MSFT), and Amazon (AMZN) are outshining others.
Unlike meme stocks such as GameStop (GME) and AMC Entertainment (AMC), these stocks offer a blend of robust fundamental and technical performance. The best Robinhood stocks for investors will be those that provide a mix of earnings and stock market performance.
The CAN SLIM system offers clear guidelines on what to look 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.
Most stocks, even the best ones, 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 is back in a confirmed uptrend, making it a good time for investors to make stock purchases and add to existing holdings at follow-on opportunities.
Investors should be careful to invest in high-quality stocks. The selections below are among the best stocks to buy or watch now. The IBD 50 is also a rich hunting ground. Despite the market going back into a confirmed uptrend, 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 averages.
There is still significant headline risk. Inflation remains a key issue while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market while 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.
Now let’s look at Nvidia stock, Microsoft stock, and Amazon stock in more detail. An important consideration is that these stocks are solid from a fundamentals perspective, while institutional ownership is also strong. They are also part of the Robinhood Top 100 Stocks, the platform’s most popular stocks among traders.
Nvidia
Nvidia is in a buy zone above a double-bottom entry of 476.09. It has also retaken the 21-day line. The 5% buy zone here tops out at 499.89. Volume has trended lower than average for most of the base. The relative strength line also sits near highs.
Its new pattern began after the specialty chip and AI stock hit a then all-time high on Aug. 24. 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 227%.
Earnings 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 of 334%. This is well clear of CAN SLIM requirements for 25% growth. Earnings have also been accelerating for the past five quarters.
In the most recent quarter, Nvidia’s earnings per share surged 593% to $4.02. Revenue soared more than 200% to $18.12 billion. “Our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI,” CEO Jensen Huang boasted following his firm’s quarterly report.
Nvidia also offered strong guidance once again, though it wasn’t as strong as some “whisper” numbers. Meanwhile, Reuters reported that Nvidia will push back until early 2024 an AI chip for the China market that complies with U. S. restrictions.
Nvidia stock is a member of the prestigious IBD 50 list. This is an objective, computer-generated list based solely on time-tested criteria.
Nvidia leads in artificial intelligence chips, but competition is rising. Key customer Microsoft (MSFT) is among firms developing its 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 this month, Nvidia introduced its HGX H200 AI computing platform and GH200 Grace Hopper Superchip.
The H200 is the first AI accelerator to use an advanced memory technology called HBM3e. The system provides nearly double the capacity and 2.4-times more bandwidth compared with its predecessor, the Nvidia A100.
Rival chipmakers Advanced Micro Devices (AMD) and Intel (INTC) promoted their own AI products at SC23. Intel showcased its Data Center GPU Max Series, Gaudi 2 AI accelerators and Xeon processors while AMD touted its Epyc server processors and Instinct AI accelerators. Earlier in December AMD touted its Instinct MI300 Series accelerator family at a special launch event.
Microsoft
MSFT stock is trading just above a cup base buy point of 366.78, MarketSmith analysis shows. The stock has also formed a four-weeks tight pattern, which offers a higher buy point of 384.30. This pattern is usually used as an opportunity to add more shares rather than starting a new position. Investors also could use the Dec. 13 high of 377.65 as another entry.
The stock is testing support at the 21-day exponential moving average. MSFT stock is now about 4% above its 50-day line, which means it is no longer extended.
The relative strength line has backed off highs. Microsoft stock is in the top 13% of issues in terms of price performance over the last 12 months.
Overall impressive performance is reflected in its strong IBD Composite Rating of 94 out of 99.
The firm has seen EPS grow by an average of 19% over the past three quarters. In addition, earnings grow by an average of 16% over the past three years, impressive growth for such a large firm.
Big Money has been standing pat of MSFT stock of late, with its Accumulation/Distribution Rating coming in at C-.
Late last month the Redmond, Wash.-based reported earnings per share had popped 27% to $2.99 as revenue climbed 13% to $56.5 billion for the quarter ended Sept. 30.
Microsoft Cloud revenue rose 24% year over year to $31.8 billion in the September quarter. That was better than expected. That also outpaced the growth at Google Cloud and Amazon Web Services, which came in below views.
Earnings and sales growth have accelerated for the past three quarters.
Microsoft Chief Executive Satya Nadella boasted about the firm’s artificial intelligence initiatives following the results.
“We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers,” Nadella said in a news release. “With copilots, we are making the age of AI real for people and businesses everywhere.”
Microsoft has been announcing its latest AI advancements at its Ignite 2023. The company unveiled its own AI chip, the Azure Maia AI Accelerator, to ease its dependence on Nvidia GPUs. It is designed to run generative AI and other AI workloads, including large language model training and inference. The firm plans to roll out Maia to its data centers early next year.
It remains to be seen whether moves to adopt a vertical integration approach by firms such as Microsoft and Apple (AAPL) could be a longer-term threat to chip makers such as Nvidia and Advanced Micro Devices (AMD) remains to be seen.
Earlier this year Microsoft showed off its new Bing search engine and Edge web browser that use AI technology. Microsoft hopes the OpenAI-based technology can help Bing chip away at Google’s dominance in the internet search market. Microsoft stock was given a flurry of price-target hikes from analysts after the presentation.
The firm kept up the momentum by adding artificial intelligence tools to its popular Office productivity applications.
It comes after the Microsoft announced an investment, reportedly worth $10 billion, in artificial intelligence startup OpenAI.
The software giant is providing its Azure cloud computing infrastructure for OpenAI. It also is adding OpenAI models to its consumer and enterprise software products.
Microsoft may have strengthened its OpenAI position after the AI startup ousted and then brought back CEO Sam Altman in a five-day span.
The mega cap is extended past a short double-bottom base ideal entry point of 134.48. It can also be interpreted as a cup base, which offers a higher entry point of 145.86. It is currently actionable above this level.
Either way, the base is first stage. This means it has a better chance of netting big gains. Like MSFT, recent sideways action has seen its 21-day line fill in some of the gap on the stock, a good sign.
Shares have been moving sideways for a few weeks. That has let the 21-day line catch up, with the 50-day line also bending higher.
Overall strong performance is reflected in its IBD Composite Rating of 90 out of 99. It is the top 9% of stocks in terms of price performance over the past 12 months.
Amazon
For the quarter ending in September, Amazon reported EPS had grown 236% to 94 cents. Revenue increased 13% year over year to $143.1 billion. Analysts expected Amazon to post adjusted earnings of 59 cents per share on revenue of $141.5 billion.
For its closely-watched Amazon Web Services Cloud business, Amazon posted a 12% year-over-year sales increase to $23.1 billion. That missed analysts’ expectations for sales of $23.2 billion.
Amazon said it expects sales between $160 billion and $167 billion for the current fourth quarter. Analysts were looking for $167.1 billion, according to FactSet.
CEO Andy Jassy acknowledged that companies were still undertaking “cost optimizations” to lower their cloud software spending. But he added that deal-making for AWS had picked up late in the quarter and this month.
“Companies have moved more slowly in an uncertain economy in 2023 to complete deals,” he said. “But we’re seeing the pace and volume of closed deals pick up. We’re encouraged by the strong last couple of months in new deals signed.”
Jassy highlighted that customers are using its generative AI products—an important point given that top cloud rival Microsoft is spending big on the buzzy technology.
“In our best estimation, the amount of growth we’re seeing and the absolute amount of generative AI business we’re seeing compares very favorably with anything else I’ve seen externally,” Jassy said.
Amazon struck a deal in September to invest up to $4 billion in Anthropic, a rival to ChatGPT-creator OpenAI. Further, Amazon in April launched Amazon Bedrock, a service that allows users of Amazon’s AWS to build generative AI applications.
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