I dig through stock charts more than any human being probably should. I spend most of my workday looking for opportunities and monitoring the market. Then when my girlfriend finally pulls me away from the computer I find myself checking charts on my phone. I’ve even watched charts while I had two feet in the ocean. I admit it, I’m obsessed.
While obsessing last week, I noticed some very bullish patterns developing in individual stocks. Stocks that started to break higher while volume started to pick up. After seeing these patterns on individual stocks I then started seeing the same bullish patterns develop on indexes. First the small caps, then the mid-caps, then the large caps and now, it’s an all-out breakout across the board.
Don’t for one second think that you’ve somehow missed the boat. I distinctly remember writing an article about stocks to buy at all-time highs that a few commenters ridiculed, telling me how stupid I was to be chasing valuations like that in a post-QE world. I wrote that article in August 2014 with the Russell 2000 at 1,161. This morning, the Russell topped 1,410.
The market is breaking out right now. The news from McDonald’s and Caterpillar this morning only added fuel to the fire. The technical picture is very strong right now and this earnings season looks like it’s going to be a winner. That could lead to an epic combination that takes this thing surging on through the next level.
But you don’t want to run out there and blindly buy the first thing you get your hands on. You can lean on the power of the Zacks Rank to find the right stocks to buy in any market. Stocks that are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks have seen increasingly bullish earnings estimate revisions from analysts. These are the stocks that analysts are becoming more positive on each and every day. Find a few of these names that are breaking higher and you will find yourself in a position to benefit immensely from this breakout.
I’ve done the heavy lifting for you. Here are four ideas for you buy on this breakout.
Lam Research (LRCX - Free Report)
Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing systems used in the fabrication of integrated circuits. This Zacks Rank #1 (Strong Buy) is part of an industry that ranks in the Top 3% of our Zacks Industry Rank.
Lam Research has found support at the 50-day moving average several times over the course of the last year. The last time it came close to touching that level was early last week with the 50-day down in the $123 handle. The recent push higher now puts the top end of the gap as support. Stops can be placed within this level.
MasTec (MTZ - Free Report)
MasTec, Inc., an infrastructure construction company, provides engineering, building, installation, maintenance, and upgrade services for communications, energy, and utility infrastructure primarily in the United States and Canada. It operates through five segments: Communications, Oil and Gas, Electrical Transmission, Power Generation and Industrial, and Other. MasTec is a Zacks Rank #1 (Strong Buy) with a Value, Growth and Momentum Style Score of B, giving it a VGM Composite Score of B.
MasTec shares formed a wedge just under resistance at $42. Buying pressure has remained strong since mid-March and the stock finally broke out last week. Stops can be placed under the $42 level where previous resistance was.
Unilever (UL - Free Report)
Unilever PLC operates in the fast-moving consumer goods market. The company operates through Personal Care, Foods, Home Care, and Refreshment segments. UL is a Zacks Rank #1 (Strong Buy) in an industry that ranks in the Top 5% of our Zacks Industry Rank.
UL has the choppiest of the four charts here. Most of the push higher happened in mid-February with the stock going from $41 to $49 in one week. Since then it’s continued to trickle higher, gapping over the previous 52-week highs yesterday. The early April swing low just under $49 should provide support on a downside move if $50 doesn’t hold up.
Yum China (YUMC - Free Report)
Yum China Holdings, Inc. operates as a restaurant company in China. The company operates primarily through KFC and Pizza Hut Casual Dining segments. It operates approximately 7,500 restaurants in approximately 1,100 cities. It holds right to operate and sub-license the KFC, Pizza Hut, and Taco Bell brands in China, as well as owns the East Dawning and Little Sheep concepts. It’s also a Zacks Rank #1 (Strong Buy) with a Growth Style Score of A.
I don’t believe investors have properly priced YUMC yet. This company was a spin-off from Yum Brands here in the US. China is a huge driver of growth for Yum and this spin-off puts this stock in a great position to succeed. A huge gap up on earnings to the other side of $30 will probably be the last time the stock is under $30 for a long while.
The breakout is happening all around you. You may be nervous about jumping into stocks right now but if you lean on the proven power of the Zacks Rank you can gain an edge in any market. All these stocks have earnings estimates moving in the right direction. These names can take your portfolio to the next level.
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