Albemarle (ALB) and Arista Networks (ANET) rank among the top five stocks this week to watch as they outperform near buy points in a volatile market.
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Energy Cheniere (LNG), Enphase Energy (ENPH) and UnitedHealth (UNH) also makes a difference, with earnings volatility also out of the way for all five companies.
With the market recovery under pressure and subject to wild swings, investors can reduce some uncertainty with stocks that have already reported.
LNG stocks and several other energy stocks are climbing up the IBD rankings, amid high commodity prices and the Russian-Ukrainian war. ALB, ANET and ENPH shares belong to the rating watch list. ANET stock briefly entered a buy point on Friday.
Albemarle, Friday’s IBD stock, is poised for an early buy point.
UNH stock belongs to the IBD 50 list of highest growth stocks. Healthcare stocks, seen as a defensive play, are gaining traction in today’s market as fears of a global recession mount.
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All of the major stocks this week have relative strength lines up near the highs. This means they are outperforming the S&P 500. The RS lines for Arista, Albemarle and UnitedHealth stocks are reaching new highs on the MarketSmith weekly chart, marked by a blue dot at the end of this strength indicator.
This is a positive technical sign ahead of a possible breakout. But no one was spared some very bad days – a cautionary tale about buying stocks in an uncertain market. However, now is a good time to create your stock watchlist.
ALB Action
Shares of the lithium producer rose 3.8% to 284.99 in Friday’s trading. Albemarle ended with a weekly gain of 1.7% after finding support at the 50-day moving average after strong third-quarter results.
This follows a large tremor earlier in the week. ALB stock fell below its 50-day line on Wednesday amid the market’s sell-off and mixed results from the lithium producer Livent (LTHM). Shares then skidded into the day on Thursday after Albemarle’s own results, before rebounding
ALB stock has been consolidating since mid-September and chart analysis of the rankings shows a buy point of 308.34. Stocks are well below entry at the moment, but the buy zone would extend to 323.76 if this lithium stock breaks out.
ALB shares are highly ranked in terms of IBD key ratings. He scores an IBD composite rating of 98, an EPS rating of 91, and a relative strength rating of 93, all out of a best 99.
The 93 RS rating means that the ALB stock has outperformed 93% of all stocks in IBD’s database over the past 12 months.
In the third quarter, Albemarle’s profits soared 615% as sales soared 152%, the company disclosed Nov. 3. This marked the fourth consecutive quarter of accelerating profits and sales. But this leading lithium miner and refiner gave slightly muted guidance after raising targets sharply several times this year.
Albemarle Stock is a play on the global adoption of electric vehicles. Lithium is an essential component of EV batteries. Lithium prices have soared as demand is expected to outpace supply for years to come.
Albemarle charts decade-long lithium charge with demand outstripping supply
ANET Share
Arista Networks climbed 7.2% to 131.07 on Friday, well above the 50-day average. ANET stock is poised for a 7.5% gain for the week, having jumped around 10% in each of the previous two weeks.
Arista easily topped Q3 views on Nov. 1. On November 3, Arista gave a bullish forecast for 2023 at an Investor Day.
Friday’s powerful move lifted ANET stock briefly above a traditional buy point at 132.97 as well as an early entry, a penny above the November 2 high at 130.13.
Volume has been strong over the past three weeks. In the September quarter, Arista Networks’ profits soared 69% as revenues jumped 57%, the fourth straight quarter of accelerating growth for both. He got big orders from Facebook owner Meta (META).
In the longer term, this cutting-edge technology stock should benefit from the growth of data centers. ANET’s high-end Ethernet switches speed up communications between computer server racks.
The cloud networking software and hardware provider has a perfect 99 Comp rating, an EPS rating of 97, and an RS rating of 77.
LNG inventory
Shares of the U.S. liquefied natural gas giant fell 3% to 171.78 on Friday but rebounded from the 50-day line. Cheniere Energy ended with a weekly loss of 1.55% after a surprise third-quarter loss on Nov. 3.
This energetic play was even more sharply down Friday morning before paring gains. Wild moves are common in today’s market and could be a welcome upheaval for a top energy stock like Cheniere. It also serves to remind investors that the market needs to improve.
LNG stock is less than 4% below a buy point of 178.69 from a cup-handle base. If Cheniere stock breaks out, the buy zone would extend to 187.63.
For the third quarter, Cheniere Energy announced on November 3 a growing net loss of $9.54 per share. Analysts had predicted Cheniere Energy’s earnings would climb to $5.58 a share. The LNG giant linked third-quarter losses to derivatives and settlements.
However, quarterly sales soared 175% to $8.8 billion. It was the seventh consecutive quarter of accelerating revenue growth and the fifth consecutive quarter of triple-digit gains.
The LNG stock carries a Comp rating of 76, an EPS rating of 25 and an RS rating of 97.
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UNH stock
Shares of health insurance giant Dow Jones fell 1% to 538.17 on Friday but rebounded from the 50-day line. It lost 2.4% for the week, the first decline in four.
UNH stock is 3% lower at a buy point of 553.23 cup with handle after briefly breaking above that entry on Oct. 31.
On Oct. 14, UnitedHealth raised its earnings outlook after beating quarterly earnings estimates. In the third quarter, UnitedHealth’s revenue grew 28%, with revenue growing nearly 12%. That marked the second straight quarter of faster EPS growth, but the second quarter of a slight slowdown in revenue gains.
The UNH stock has a Comp 97 rating, an EPS 94 rating and an RS 90 rating.
ENPH action
Shares in the solar energy game fell 4.6% to 282.44 on Friday but rebounded to close pennies below the 50-day average but above the 10-week line. Enphase Energy stock slipped 7.5% for the week, causing upheaval. ENPH stock the previous week soared 21% on strong earnings to reclaim the 50-day line.
For now, ENPH stock remains well below a buy point of 324.94 since a consolidation that began in early September. If this solar-related stock recovers and grabs the entry, the buy zone would move to $341.19. It can also form a bottom handle entry.
On a weekly basis, ENPH stock has a handle with a buy point of 316.97. This handle needs one more day on a daily chart.
As the past few days and weeks have shown, Enphase stock is volatile. This is true even when the broader market is relatively orderly, which is not currently the case.
Enphase Energy’s earnings more than doubled in the third quarter, the company announced Oct. 26. Quarterly revenue soared 81%, according to FactSet.
Enphase is a leading supplier of solar microinverters. Microinverters boost solar power generation, improve the reliability of solar power systems, and support intelligent energy management.
The company also makes software to monitor power generation and battery systems. It focuses on residential markets.
Enphase Energy scores perfect Composite and EPS ratings of 99, and a near-perfect RS rating of 97 out of 99.
For more quality stocks with strong RS lines, check out IBD’s list of Relative Strength At New High stocks. Our MarketSmith stock research platform also has a stock picker with RS lines hitting new highs.
For other great stock ideas, check out IBD’s exclusive watchlists, like the IBD 50 and IBD Big Cap 20.
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