cardinal health (CAH), Eli Lilli (LLY) and shock wave medicine (SWAV) are this week’s top stocks to watch when trading in a challenging market. World Wrestling Entertainment (WWE) and Arista Networks (ANET) also do the editing.
Many medical stocks, including Cardinal Health and Eli Lilly, are on defensive or growing defensive. They often do better in weak or choppy markets, but there’s no guarantee of that.
SWAV stock is on the IBD leaderboard. Shockwave stock is also included in the IBD-50 list of top growth stocks alongside WWE stock. The ANET share is in the IBD Big Cap 20.
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All of this week’s top stocks have strong RS lines. The rising relative strength lines mean they are outperforming the S&P 500.
The five stocks are all near buy points. But some had a very bad Friday — a cautionary tale about buying stocks amid an unproven rally attempt in a bear market.
However, it’s a good time to start making your investing watch list.
Cardinal Health Stock
The healthcare stock fell 1.8% to 68.22 in Friday trading but its RS line made a new high. CAH stock was up 2.3% on the week and found support at the 10-week moving average.
Cardinal Health stock shows a flat base with a buy point of 72.38, a cent above the Sept. 2 high. The drug dealer could offer an early entry above Wednesday’s high 70.25.
Stocks peaked in early September after successfully breaking out in August. They’ve since pulled back, but CAH stock is down just 6% from its 52-week high. In comparison, the S&P 500 is down 24.5% from its peak.
CAH stock has a composite IBD rating of 90 out of 99. It also has a relative strength rating of 96, meaning it has outperformed 97% of all stocks in the IBD database over the last 12 months.
Cardinal Health receives a mediocre EPS rating of 74 out of 99.
But Cardinal’s earnings returned to growth in the most recent quarter. On a per-share basis, Cardinal Health’s earnings should recover 3% for the year and grow 18% in fiscal 2024.
Shares of Eli Lilly fell 1.9% to 326.66 on Friday, trimming gains for the week to 1%. The RS line for LLY stock continues near highs.
The drug giant is retesting a buy point of 335.43 from a flat base. LLY stock is holding up after a gap-up on Sept. 28 where shares briefly touched the flat-based buy point.
Two pieces of news have boosted drug stocks. His gap-up came after that biogenic (BIIB) reported on a surprising, successful study for an investigational drug to treat Alzheimer’s disease. Eli Lilly has a similar drug.
And Eli Lilly himself said on Oct. 6 that an experimental anti-obesity drug, which is being viewed as a possible massive blockbuster, is being accelerated.
LLY stock is assigned a comp rating of 87, an RS rating of 93 and an EPS rating of 86.
Shockwave shares plunged 5.4% to 263.99 on Friday, accounting for the entire weekly 5.1% loss. SWAV shares undercut the 10-week moving average, but volume underperformed. Its RS line is just below the highs.
On Thursday, Shockwave stock touched a trend line and then turned down.
It now has a reasonable basis with a buy point at 315, which is 10 cents above the August 29th high. But first it must repeat the 50-day moving average.
SWAV shares have a Comp rating of 95, an RS rating of 97 and an EPS rating of 78.
Medical device maker gains recognition for catheters that target calcium accumulation in blood vessels. It is similar to an existing technology used to break up kidney stones.
Sales have been growing in the three-digit range for several quarters. Shockwave earnings are projected to grow 38% in 2023. Annual earnings per share will be achieved this year.
World Wrestling Entertainment was down 0.7% on Friday to 72.73 but was still up 3.65% for the week. The RS line for WWE stocks made a bullish new high, indicated by a blue dot at the end of this line.
WWE stock cleared an early entry at 70.72 on Sept. 30. It hit a traditional cup-shaped buy point of 75.33 on October 5th and then declined. Stocks are in early entry territory and could form a handle.
World Wrestling Entertainment receives a 96 comp rating, a 96 RS rating, and a 97 EPS rating.
The company beat earnings forecasts in August on an increase in viewership of its premium live content. Former CEO Vince McMahon resigned following misconduct allegations.
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Arista Networks was down 4.5% on Friday to 116.41 but was up 3.1% on the week. The RS line for ANET stock also hit a new high.
ANET stock traded above a downward sloping trendline entry on Wednesday and Thursday but fell back below it on Friday. Shares also fell back below their 50-day and 200-day moving averages.
The provider of software and hardware for cloud networks carries a perfect 99 Comp Rating, 90 RS Rating and a 95 EPS Rating.
It shows three-quarters of the earnings acceleration, capped with a 59% surge in the most recent quarter. Over the same period, revenue growth ranged from 27% to 49%.
This top tech stock is expected to benefit from data center growth. ANET’s high-end Ethernet switches accelerate rack-to-rack communications of computer servers.
For more quality stocks with strong RS lines, see IBD’s Relative Strength At New High stock list. Our stock research platform MarketSmith also has a screening tool for stocks with RS lines making new highs.
For more great stock ideas, check out IBD’s proprietary watchlists, such as the IBD 50 and the IBD Big Cap 20.
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