S&P 500 stocks Tesla (TSLA) and DexCom (DXCM), along with fluence energy (FLNC), wing stop (WING) and Extreme networks (EXTR) are the focus this week.
Towards the end of the week, the market rally picked up speed. Breadth has also improved, although market leadership remains focused on the artificial intelligence space. Still, there are many other stocks that are giving, or are about to, give early buy signals.
The passing of the debt ceiling bill by Congress last week and the announcement of a rate pause by Fed officials should have boosted the market.
Meanwhile, the US economy added 339,000 jobs in May, well above Wall Street estimates of a 190,000 rise in employer employment. The unemployment rate rose to 3.7%, beating the estimate of 3.5%. The average hourly wage increased by 4.3% compared to the previous year and was thus just below the number of views.
However, while things appear to be picking up, this is a small sample as the market is in a confirmed uptrend. Investors should be patient and allow many stocks to build up before diving in. The five stocks in focus this week, including two S&P 500 giants, offer options until a broad market rally takes hold.
The S&P 500 stocks TSLA and Wingstop stocks are listed on the IBD Leaderboard. Fluence shares are now in the IBD 50 along with Wingstop. Fluence Energy, Wingstop and EXTR shares were all the IBD stocks of the day last week.
S&P 500: Tesla stock
Tesla shares rose 3.1% to 213.97 in Friday trade, for a weekly gain of 10.8%. Tesla stock is up more than 24% in May and is up more than 100% since its January low.
S&P 500 stock has formed a cup base with a buy point of 207.89. The pattern could also be read as a double bottom basis, however the buy point remains the same. The base has been below the 200-day mark up until this week, which is not ideal. But the 200-day moving average has fallen below the 200 level and below the buy point.
Notably, TSLA stock posted five straight sessions of above-average volume after seeing few such days in the previous three months.
Meanwhile, the global electric giant cut prices on US-stock vehicles again this week to lure consumers.
S&P 500 stock ranks seventh in the IBD industry group of automakers. TSLA has a composite rating of 75 out of 99. Tesla stock has a relative strength rating of 39. The EPS rating for Tesla stock is 93 out of 99.
Fluence Energy stock
FLNC fell 2.6% to 23.57 on Friday. Meanwhile, Fluence Energy stock is up 2% for the week. FLNC shares are below a buy point of 24.87 but are still trading above an early entry point after breaking the handle downtrend, according to MarketSmith analysis.
FLNC is up more than 50% since hitting a low of 15.82 on May 4th. Fluence Energy's stock is up more than 37% in May and is up 39% since the end of 2022. On May 11, Fluence Energy reported a better than expected second quarter. Financials and shares rose about 7% in 2o23. This came after a sharp increase in volume in early May as earnings increased.
Similar to Tesla's Megapack energy storage business, Virginia-based Fluence Energy is engaged in grid-scale energy storage products and services. As with Tesla, Fluence uses batteries from the Chinese manufacturer CATL. Fluence also develops artificial intelligence applications to maximize storage solutions for renewable energy. In a joint venture Siemens (Siegy) and AES (AES) formed Fluence Energy in June 2021.
Fluence Energy has not yet reported a profit. But analysts expect that to change soon as the Inflation Reduction Act will be a tailwind for US renewable energy projects in the years to come. Additional renewable energy projects increase the need for battery storage, while the IRA offers large subsidies for such storage.
In the second quarter, FLNC reported a loss of 14 cents per share. That was less than expected and less than a 31 cent loss a year ago. Meanwhile, second-quarter revenue soared 103% to $698 million.
Fluence Energy stock ranks second in the IBD Energy Alternative/Other industry group. FLNC has a Composite rating of 83 out of 99. The shares also have a Relative Strength rating of 97. The EPS rating for Fluence Energy stock is 55 out of 99.
WING was down 0.5% on Friday to 197.77, down 1.5% on the week. Wingstop stock is up nearly 44% so far in 2023.
WING found support at its 50-day moving average and 10-week moving average on Friday, near a previous buy point of 193.84 for consolidation. However, a move above Wednesday's high of 202.43 could provide an early entry. That would result in WING climbing above its 21-day moving average and breaking a downtrend while still trading near its 50-day/10-week moving average.
Wingstop stock also now has a new flat base with a buy point of 223.87.
The Addison, Texas-based restaurant chain has posted an average profit increase of 75.5% over the past four quarters, while revenue growth has averaged 35.8%.
Wingstop on May 3 significantly beat estimates for the first quarter. Earnings rose 74% to 59 cents a share, while revenue rose 43% to $108.7 million. Wingstop, which operates in 44 states, also reported that domestic same-store sales increased 20.1% in the quarter. Digital sales hit a record 65.2% of total sales.
For the year, Wingstop is forecasting “high single-digit” domestic same-store sales growth in 2023. FactSet expects same-store sales growth of 6.7%. Analysts expect full-year earnings to rise 14.5% to $2.12 per share on revenue up 18.6% to $424 million.
Wingstop stock has a composite rating of 95 out of the best possible 99. WING has an EPS rating of 98 based on its strong earnings growth. The stock has a near-perfect relative strength rating of 97.
S&P 500: DexCom Stock
DexCom shares rose 2.5% to 122.57 on Friday, up 6.5% for the week. S&P 500 stock surpassed an early entry into a downtrend when it broke back above its 50-day moving average.
According to MarketSmith, DXCM has formed a flat base with a buy point of 126.54. But that's happening right alongside two other consolidations that date back to early November.
Over the past seven months, DexCom has surged to the top of its recent ranges, only to fall back to the 50-day moving average or below.
DexCom specializes in a wearable, continuous glucose monitoring (CGM) system for people ages two and older with type 1 or type 2 diabetes. The sensor measures glucose levels just under the skin and sends the readings to a smart device in real time, without having to prick your finger.
DexCom stock endured a sharp five-day sell-off after reporting better-than-expected first-quarter earnings on April 27, though some of the losses were modest or hit lows.
DexCom reported earnings growth of 113% on an 18% increase in revenue. DXCM executives also raised the company's full-year revenue guidance to $3.52 billion from the previous estimate of $3.4 billion.
S&P 500 stock DCXM ranks third in the IBD Medical Devices industry group. DexCom stock has a Composite rating of 98 out of 99. The S&P 500 stock has a Relative Strength rating of 91. The EPS rating for S&P 500 stock is 98 out of 99.
Extreme Networks stock
EXTR jumped 4.9% to 21.87 on Friday and is up 16.4% for the week, with above-average volume throughout the week. Extreme Networks stock rose above a buy point of 21.13 on Friday after a six-month consolidation.
Extreme Networks is up 49% since its intraday low of 14.67 on April 19. Early last week, Extreme Networks stock was offering early buys around the 20 mark. But now, EXTR is 22% above its 50-day moving average. While the price is still in the traditional buy zone, a break near the current levels would be constructive.
Extreme focuses on cloud-managed network solutions, automation, analytics and artificial intelligence to optimize performance and security. The company has weathered supply chain bottlenecks and is now working on an order backlog that could spur sales growth even if the U.S. economy slows.
Extreme Networks bought wireless network equipment maker Aerohive in 2019 and Ipanema in 2021. Extreme entered the SD-WAN market with the purchase of Ipanema. SD-WAN technology centrally manages and accelerates cloud computing applications. With software-defined networking, businesses have less need for costly private data networks leased from telcos.
Extreme Networks stock has a composite rating of 99. EXTR has an EPS rating of 91. The stock has a near perfect relative strength rating of 95.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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