Your stocks to watch for the week ahead include the China-based online search engine giant Baidu (BIDU), subcontractor of the electricity company Quantum Services (PWR), British pharmaceutical company Astra Zeneca (AZN), health insurance and managed care company UnitedHealth Group (UNH) and the game of solar energy Enphase Energy (ENPH).
The stock market rally continued to gain strength over the weekend, with solid to solid gains for the major indices. However, the uptrend remains under pressure. With job creation remaining strong, the Federal Reserve will likely continue to aggressively raise interest rates for at least the next two meetings.
There are still good reasons to be cautious.
Medical care is the leading sector, as indicated by UnitedHealth and AZN stocks. But a growing number of actions by other groups are showing strength. This is a positive sign for the market recovery.
The UNH stock is on the IBD ranking. PWR, Enphase Energy and UnitedHealth stocks are on the IBD 50. Quanta Services and ENPH stocks are both on the IBD Big Cap 20.
Baidu shares fell 1.5% to 152.40 during Friday’s trading at 151.90. Over the week, BIDU stock edged up 0.6%, holding above its 200-day line. Starting with its peak in mid-February as the start of a base, investors could use 156.87 as a benchmark buy point.
Baidu, with alphabetical Google (GOOGL) is one of the major players in the global Internet search market. Baidu holds more than 70% of search engine market share in China, according to market research.
As coronavirus lockdowns and regulatory clampdowns ease and Beijing considers significant new stimulus, Chinese stocks look poised to rise, but they come with additional risk.
BIDU stock has a composite rating of 70. It has a relative strength rating of 89, an IBD stock proprietary check gauge for stock price movement with a score of 1 to 99. The rating shows how a stock’s performance over the past 52 weeks is consistent with all other stocks in IBD’s database. The EPS rating is 49.
Quanta Service Stock
PWR stock fell 0.2% on Friday to 131.26. But shares rose 4.6% on the week. Quanta stock was Thursday’s IBD stock of the day as it issued buy signals in declining volume.
Quanta is working on a buy point of 138.56 from a clumsy handle cup base, according to MarketSmith analysis. In the deep handle, PWR stock broke a trendline and broke past last week’s high at 129.86 on Thursday, albeit on light volume. Quanta stock is 9.9% above its 50-day line.
The relative strength line of PWR stock is also at a new high. The RS line, the blue line in the charts provided, tracks a stock’s performance against the S&P 500 Index.
Analysts predict the Houston-based engineering and construction services contractor will see EPS increase 28% in 2022 and 10% in 2023, according to FactSet.
Quanta specializes in infrastructure projects for the energy and communications sectors, and its services include the design, installation and repair of networks, networks and power generation facilities. PWR lists operations in Canada, Australia, Latin America and the United States
The PWR stock has the best possible composite rating of 99. It has a relative strength rating of 96. The EPS rating is 97.
AstraZeneca shares rose 0.1% to 66.98. For the week, the pharmaceutical giant was up 1.6%, having rebounded from a 50-day online test on Tuesday.
AZN stock is just below a buy point of 67.50 from a double bottom basis. The base started when the stock peaked at 71.70 after a 14% gain from its previous breakout in March.
Since the April 8 peak, the drug stock has corrected twice. First at its 200-day moving average, then below during the second pullback.
The UK-based company makes a wide variety of treatments, including a Covid vaccine and cancer drugs Tagrisso, Imfinzi and Lynparza.
Revenue rose 57% in the fourth quarter of 2021 and 16% in the first quarter of 2022. That’s after falling 7% and then rising just 6% in the previous two periods.
AstraZeneca will release its second quarter results on July 29. Analysts predict earnings will climb 98% to 81 cents a share from 41 cents a year earlier. Annual EPS is expected to rise 34% to $3.34 from $2.49, according to FactSet.
AZN stock has a composite rating of 98, an EPS rating of 83 and a relative strength rating of 93.
UNH was up 0.8% on Friday at 518.63. During the day, shares moved to 528.37, giving off a buy point of 518.80 from a double bottom or cupped base. UnitedHealth stock rose 0.2% for the week after testing its 50-day line on Tuesday.
The RS line has also reached new heights.
In general, the managed care group showed good relative strength, with centene (CNC), humane (hum) and Cigna (CI) has reached buy points in recent days.
More than its competitors, UNH showed a better long-term uptrend, according to IBD Leaderboard analysis.
UnitedHealth’s model aims to contain healthcare costs for its managed care arm, in part by insourcing healthcare services to its own profitable locations. In April, UnitedHealth announced first-quarter results that beat expectations. The company also raised its earnings outlook for the full year. Its 14% annual EPS growth forecast for 2022 and 2023 outpaces most industry peers.
The results are expected on Friday, July 15 to declare its results. This creates a potential risk for potential new investors.
UNH has a composite rating of 96. Its Relative Strength Index is 95. It has an EPS Index of 89.
Enphase Energy was up 4.65% at 216.45 on Friday, briefly clearing a buy point of 217.33 on a double bottom basis. However, ENPH stock jumped 10.6% for the week and is nearly 20% above its 50-day line.
The solar energy company issued buy signals on Thursday as it broke a downtrend in the handle. It was probably a better entry, given the big swings in ENPH stock. Investors may want to wait for Enphase shares to consolidate again, if only for a week or two, to let the big averages catch up a bit.
California-based Enphase is one of the world’s leading suppliers of microinverters for solar energy. First-quarter profits rose 41% and revenue 46%. Second quarter results are likely expected at the end of this month.
The Enphase Energy stock ranks first among its peers in the Solar-Energy industry group. The company has a best possible composite rating of 99. Its relative strength score is 97. Its EPS score is also 96.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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