This week, the S&P 500 stocks Tesla and DexCom are highlighted along with Fluence (FLNC), Wingstop and Extreme Networks.
Late in the week, the market rally gained momentum. The breadth also improved, but market leadership remains concentrated in the artificial-intelligence space. There are still a number of stocks that have started to flash buy or are on the verge of doing so.
The market was likely buoyed by the recent approval of the debt ceiling legislation and the Fed's announcement that it would pause rates in June.
The U.S. economy created 339,000 new jobs in May, a number that was far higher than the Wall Street estimates of 190,000. The unemployment rate increased to 3.7%. This is above the estimate of 3.5%. The average hourly earnings increased 4.3% from a year ago, which is just a little below expectations.
While the action may seem to be picking-up, this is only a small sample, and the market has a confirmed upward trend. Investors must be patient and wait for many stocks to settle before jumping in. These five stocks, which include two S&P 500 giants this week, offer investors options until a general market rally begins.
IBD Leaderboard features TSLA, a S&P 500 company, and Wingstop. IBD 50 also includes Fluence Energy and Wingstop. Last week, Fluence Energy stock, Wingstop stock and EXTR stocks were all selected as IBD Stock Of The Day.
S&P 500: Tesla stock
Tesla stock rose 3.1% on Friday to 213.97, capping off a weekly gain of 10.8%. Tesla stock has risen more than 24 percent in May, and is now more than 100 percent higher than its January low.
S&P 500 has formed a cup-shaped base, with a buy point of 207.89. The pattern can also be interpreted as a double bottom base, however the buy point is the same. This week the base formed below 200-days, which was not ideal. The 200-day line is now below the 200 level, and therefore below the buy point.
TSLA has seen its stock rise on a volume above average for five consecutive sessions. This is a significant change from the previous three months, when there were few days like this.
The global EV giant has once again reduced its prices for U.S. stock vehicles in order to attract consumers this week.
IBD's industry group for automakers ranks the S&P 500 at seventh. TSLA is rated 75 out of 99. Tesla stock has 39 Relative strength Rating. Tesla's EPS rating is 93.
Fluence Energy Stock
FLNC fell 2.6% on Friday to 23.57. Fluence Energy's stock rose 2% on the week. According to MarketSmith, FLNC shares have fallen below the 24.87 handle buying point but remain above the early entry level from breaking the downward trend of the handle.
FLNC is up more than 50% from its low of 15,82 on 4 May. Fluence Energy's stock has risen by more than 37% since May 2022 and 39% in the last year. Fluence Energy's Q2 financials for 2o23 were better than expected on May 11 and the shares rose around 7%. The strong volume was a result of a surge in trading in early May, around earnings.
Fluence Energy, a Virginia-based company, offers grid-scale energy storage services and products similar to Tesla Megapack. Fluence, like Tesla, uses batteries made by China's CATL. Fluence also develops artificial intelligence applications for renewable energy storage. Fluence Energy was founded in June 2021 by Siemens (SIEGY), AES (AES), and AES as a joint venture.
Fluence Energy is yet to post a profit. Analysts predict that this will change soon, as the Inflation Reduction Act (IRA) is expected to provide a boost for U.S. Renewable Energy Projects in the coming years. The IRA provides large subsidies for battery storage as the number of renewable energy projects increases.
FLNC posted a 14-cent loss per share in the second quarter. This was lower than expected, and down from the loss of 31 cents in the previous year. The Q2 revenue surged by 103%, to $698 millions.
FLNC has a Composite Rating of 83 out of 99. The shares also have a Relative strength Rating of 97. The stock of Fluence Energy has an EPS rating of 55 out 99.
WING fell 0.5% on Friday to 197.77, down 1.5% in the past week. Wingstop's stock has risen nearly 44% in 2023.
WING found Friday support at its 10-week and 50-day moving lines, which are close to the previous 193.84 buying point for consolidation. A move above the high of Wednesday, which was 202.43, could provide an opportunity to enter early. WING would then break a downward trend by moving above its 21-day-line, and still trade close to its 50 day/10 week lines.
Wingstop stock now also has a flat base, with a buy point of 223,87.
Addison's restaurant chain in Texas has seen its earnings increase by 75.5% over the last four quarters, while sales have increased by an average of 35.8%.
Wingstop easily exceeded Q1 expectations on May 3. The earnings soared by 74%, to 59 cents a share. Revenue jumped 43% to $108,7 million. Wingstop, a 44-state company, reported a 20.1% increase in domestic same-store sales during the third quarter. Digital sales reached 65.2%, a record.
Analysts expect earnings to jump 14.5%, to $2.12 a share, on a sales increase of 18.6% to $424 millions.
Wingstop has a Composite Rating of 95 out of 99. WING's strong earnings growth has earned it a 98-EPS rating. The stock is rated 97 relative strength, which is near perfection.
S&P 500 Stock: DexCom
DexCom's stock rose by 2.5% on Friday to 122.57, a 6.5% gain for the week. S&P 500 stock broke above its 50-day average, reversing an early entry into a downward trend.
According to MarketSmith, DXCM formed a flat basis with a buy point of 126.54. This is right next to another two consolidations that date back to early November.
DexCom's ranges have risen to their highest levels in the last seven months only to drop back to 50 days or lower.
DexCom is a company that specializes in continuous glucose monitoring systems (CGMs) for people with Type 1 and 2 diabetes. The sensor sends real-time readings from a smart device to a smart wearable without the need for finger pricking.
DexCom's stock dropped for five days, in high volume, after the company reported better-than expected first-quarter earnings. However, some of these losses were modest and off lows.
DexCom's earnings grew 113%, while sales increased 18%. DXCM executives raised the company’s full-year guidance for revenue to $3.52 Billion, up from its previous estimate of $3.4 Billion.
S&P 500 Stock DCXM is ranked third in IBD’s Medical-Products Industry Group. DexCom has a Composite Rating of 98 out of 99. S&P 500 has a Relative Strength rating of 91. S&P 500's EPS rating is 98 of 99.
Extreme Networks Stock
EXTR surged 16.4% in one week and 4.9% on Friday, with a volume above average. Extreme Networks' stock moved up above the 21.13 purchase point after a six-month consolidation.
Extreme Networks is up 49% from its intraday low on April 19, which was 14.67. Extreme Networks offered an early entry around the 20-level earlier this week. EXTR has now risen 22% above the 50-day moving mean. Although still in the buy zone, it would be beneficial to take a break around current levels.
Extreme concentrates on cloud-managed network solutions, automation and analytics, as well as artificial intelligence, to optimize performance. The company has overcome supply-chain challenges and is now working to clear an order backlog, which could boost revenue growth even in the event of a weakening U.S. economic climate.
Extreme Networks acquired Aerohive, a wireless networking equipment maker, in 2019, and Ipanema by 2021. Extreme Networks entered the SD WAN market with the Ipanema acquisition. SD-WAN technology manages cloud computing applications centrally and accelerates them. Software-defined networks reduce the need for expensive private data networks that are leased from telecom providers.
Extreme Networks has a Composite Rating of 99. EXTR has an EPS rating of 91. The stock is near perfect with a Relative Strength rating of 95.