AI-tied software stocks Atlassian (TEAM) and HubSpot (HUBS) lead five top companies to watch near buy points this week. Nuclear energy play Vistra (VST) also makes the cut, along with Deckers Outdoor (DECK) and Burlington Stores (BURL).
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Software Stocks Show Strength Near Buy Points
TEAM stock eyes a buy point while HubSpot stock briefly broke out. Shares of Vistra are consolidating near highs. Deckers is in buy range. Burlington cleared an early entry.
Further, DECK stock earns a spot on IBD Leaderboard. HubSpot stock is on the IBD Big Cap 20, Other lists for the best stock ideas include the IBD 50 list of top growth stocks as well as Long Term Leaders and SwingTrader.
The relative strength lines for Atlassian and HubSpot are bolting higher after a dive. The RS lines for the other top stocks to watch are near highs or improving. A rising RS line, the blue line in the charts shown, signals outperformance vs. the S&P 500 index.
The stock market stumbled last week, especially on Friday, following the prior week’s big gains on Donald Trump’s election win. So investors should be cautious about new buys in the short run.
Atlassian Stock
Shares of the Jira software maker rallied in November on earnings and elections. Atlassian stock is now 7% below a 258.69 buy point from a cup-without-handle base. The base is 48% deep. It includes a 19% earnings gap-up on Nov. 1.
TEAM stock is greatly extended from its 21-day and 50-day moving averages. Ideally, TEAM stock would forge a handle, with some depth and length, letting key moving averages catch up.
The RS line for the software stock is spiking after a slide over the first half of this year, according to the MarketSurge chart. It shows longer-term weakness since the fall of 2021.
Atlassian earns a near-perfect IBD Composite Rating of 98 out of 99. It holds a superior EPS Rating of 95. TEAM stock flourishes an RS Rating of 91, meaning it has outperformed 91% of all stocks in IBD’s database over the past year.
TEAM shows one quarter of earnings and sales acceleration. On Nov. 1, the company posted a stronger-than-expected 18.5% earnings increase for the September quarter, an uptick from 16% in the prior quarter. That came amid Atlassian’s shift to a subscription, cloud-based business model, integrating artificial intelligence (AI) features.
For the full year, analysts expect Atlassian earnings to grow 11% as sales rise 17%. That would compare with a 53% earnings jump last year. The fiscal year ends in June.
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HubSpot Stock
Shares of the web marketing software provider also surged on earnings in November. HubSpot stock briefly seized a 693.85 buy point from a 37%-deep cup base, but it’s now below the entry.
A pause around the buy point, perhaps a high handle, might provide a better entry for investors, while letting moving averages catch up.
HubSpot stock owns a Composite Rating of 99, EPS Rating of 99 and RS Rating of 87.
On Nov. 7, HubSpot topped earnings and revenue estimates for the third quarter. It issued conservative guidance. Earnings jumped 37% in Q3 as revenue climbed 20%. Growth slackened slightly on both the top and bottom lines from the prior quarter.
The company is benefiting, in part, from improved execution with its new pricing model. It aims to improve and optimize customer websites, so that visitors turn into paying customers. That includes an artificial intelligence (AI)-powered platform.
Analysts project a 36% earnings leap for the full year and a further 9% gain in 2025. Hubspot’s earnings more than doubled in 2023, vaulting 112%.
Vistra Stock
An earnings rally in November helped utility play Vistra shape a short consolidation, near highs. Clearing that would offer an entry. Ideally, investors would wait for the 21-day exponential moving average to catch up with the stock, or for shares to drift down to that level, before VST takes off.
Vistra stock owns a Composite Rating of 97, EPS Rating of 48 and RS Rating of 99.
The S&P 500 utility company topped third-quarter revenue expectations earlier in November. Earnings fell 43% despite a 54% revenue jump, FactSet shows, though GAAP earnings spiked 326%. Vistra also raised a key EBITDA target.
Electric utilities, especially those with nuclear power plants, have seen demand and prices soar amid the rise of AI data centers, which consume vast amounts of energy. Vistra has power purchase deals with Amazon (AMZN) and Microsoft (MSFT).
Analysts now expect the Texas-based utility to deliver a 25% earnings surge for the full year. Vistra earnings exploded 169% last year.
Deckers Outdoor Stock
Shares of the Ugg and Hoka shoes maker rallied on earnings in late October. Deckers stock cleared a handle buy point of 172.57 on Nov. 7. Shares are in range from that entry. Investors could also use the top of the base, 184.48, as an alternate entry.
Deckers stock holds a Composite Rating of 91, EPS Rating of 99 and RS Rating of 86.
On Oct. 24, Deckers posted a 39% EPS increase for its second quarter on a 20% revenue jump. Both beat estimates.
Analysts expect Deckers to deliver a roughly 14% gain on both the top and bottom lines for the full year. Last year, Deckers earnings surged 50.5% per share. The fiscal year ends in March.
Despite a difficult retail environment, the Hoka sneakers maker continues to perform. Telsey Advisory Group added Deckers to its top picks for the 2024 holiday season.
Burlington Stores Stock
The off-price retailer neared a 282.49 cup-shape buy point last week. It’s now 5% below that level.
Burlington earnings are due on Nov. 26. Further, rivals TJX (TJX) and Ross Stores (ROST) report next week.
Ideally, Burlington stock would forge a handle and then make a move on earnings.
Off-price retailers are benefiting from the consumer hunt for value amid stubborn inflation.
Burlington holds a Composite Rating of 91, EPS Rating of 86 and RS Rating of 91.
In the July quarter, Burlington’s earnings nearly doubled, year over year. That top-line growth accelerated sharply for the second straight quarter. The company also hiked its outlook.
Analysts expect a 31% earnings jump for the full year and a further 22% gain next year. Burlington Stores saw earnings rebound 42% last year. The fiscal year ends in January.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
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