These stocks, Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN), D.R. Horton (DHI), and Eli Lilly (LLY), are considered top choices for investment. Despite concerns about inflation and aggressive Federal Reserve actions, the market has shown strong performance in 2023. To identify the best stocks, the CAN SLIM system is recommended, emphasizing factors like recent earnings growth, innovative products, and services. This strategy, with a proven track record of outperforming the S&P 500, involves monitoring stock supply and demand, focusing on leading industry stocks, and seeking strong institutional support.
When selecting a stock, use stock charts to identify a suitable entry point, waiting for the stock to form a base and buying during a buy point, ideally in heavy volume. The M (market) factor in CAN SLIM highlights the importance of investing during a confirmed uptrend and moving to cash during a market correction. The current market is in an uptrend, presenting opportunities for investors to make purchases or add to existing holdings.
However, caution is advised, with attention to sell signals, such as a stock falling 7% or 8% from the purchase price or sharp breaks below moving averages. Ongoing headline risks include inflation concerns, the Russia-Ukraine conflict, and uncertainties in Israel.
The best stocks to buy or watch include Microsoft, Nvidia, Amazon, D.R. Horton, and Eli Lilly, all demonstrating impressive relative strength. Here’s a detailed look at each:
- Microsoft (MSFT): MSFT stock is actionable, having cleared a cup base buy point of 366.78. With a perfect IBD Composite Rating of 99, Microsoft has shown impressive earnings growth and strong institutional support.
- Nvidia (NVDA): Trading above a double-bottom buy point of 476.09, NVDA stock boasts a near-perfect IBD Composite Rating of 98. Earnings have grown significantly, with recent impressive growth highlighted.
- Amazon (AMZN): Despite being extended past a short double-bottom base, Amazon is actionable from various entry points. With an IBD Composite Rating of 88, it has reported substantial EPS growth and revenue.
- D.R. Horton (DHI): DHI stock is closing in on a cup-with-handle base entry point of 132.30. While the base is a bit lopsided, the stock has strong relative strength and increasing revenue in recent quarters.
- Eli Lilly (LLY): With a new flat base, Eli Lilly stock has an ideal entry point of 629.97. LLY boasts a strong IBD Composite Rating of 92, and recent developments, such as FDA approval for its diabetes drug, indicate growth potential.
