Microsoft (MSFT), one of the Magnificent Seven stocks that performed well this week despite the stock market slump, appears on this weekend’s watch list of five stocks that are approaching buy points. All five stocks, including IBM (IBM), Walmart (WMT), UnitedHealth Group (UNH), and Amgen (AMGN), are part of the Dow Jones Industrial Average. MSFT is also listed as one of the leading growth stocks on the IBD 50 list. Both MSFT and UNH are part of the IBD Long Term Leaders list, indicating consistent earnings growth and making them attractive investment options during market pullbacks. However, the current market conditions suggest that investors should remain cautious. The S&P 500 and Nasdaq have entered a traditional correction, while the Dow Jones has held up relatively better, although it has also experienced a decline. Given the uncertain geopolitical situation and an increase in Treasury yields, it is not advisable to attempt to predict the bottom of the market. Investors should wait for several days of positive performance and a follow-through day before making any investment decisions. Stay updated with the market’s underlying trend and its implications for trading decisions by reading IBD’s daily afternoon column, The Big Picture.
MSFT stock experienced a 3.1% increase after Microsoft’s Q1 earnings report was released on Tuesday. Both earnings and sales growth have been consistently improving over the past three quarters, with EPS up 27% to $2.99 and revenue increasing by 13% to $56.5 billion. Azure, Microsoft’s cloud platform, saw a growth rate of 29%, surpassing Google and Amazon. Microsoft’s Copilot AI tool has also reached a milestone of 1 million paid users. The company has provided positive guidance for Q2 revenue, forecasting another quarter of accelerated growth at 16%. Analysts have raised their price targets for MSFT stock, citing margin expansion and heavy investments in AI as positive signs for the company’s future prospects. As of Friday, MSFT stock closed at $329.81, up 1% for the week. The official buy point for MSFT stock is $366.78, which can be achieved through a move past Wednesday’s high of $346.20.
IBM announced Q3 results this week, with earnings rising 22% to $2.20 and sales growing 5% to $14.8 billion. Software and consulting revenue offset a decline in infrastructure revenue. IBM’s CEO, Arvind Krishna, stated that generative AI revenue was in the low hundreds of millions of dollars and has the potential to significantly impact future earnings. IBM stock increased by 3.9% to $142.52 for the week, subsequently breaking above the 50-day line. Its flat-base buy point is $151.93, and a move above Friday’s high of $144.70 indicates a potential opportunity for investment. The relative strength (RS) line for IBM is at a nine-month high, indicating the stock’s leadership position.
Walmart, recognized as the IBD Stock of the Day on Thursday, is gaining market share despite challenging retail conditions. Tigress Financial increased its price target for WMT stock, highlighting its position in the market with convenient offerings, expanding grocery options, and digital initiatives. Walmart is expected to release its Q3 earnings on November 16, with analysts predicting flat earnings of $1.50 compared to the same period last year, and a 4% growth in revenue to $159 billion. WMT stock rose 1.5% to $161.17 for the week, with its RS line reaching a 52-week high. The buy point for WMT stock is $165.85, based on a six-week cup base.
UnitedHealth, the IBD Stock of the Day on Wednesday, has rebounded after a warning in June about the impact of Medicare Advantage customers undergoing more elective surgeries. The Q3 earnings report showed positive results with lower medical costs than estimated. UNH earnings increased by 13% to $6.56, and revenue rose by 14% to $92.4 billion. Both the UnitedHealthcare and Optum divisions experienced double-digit growth. Bank of America increased its price target for UNH stock, praising the company’s ability to grow earnings regardless of the macroeconomic environment. UNH stock dipped by 0.45% to $524.66 for the week. It has formed a handle on the end of a long consolidation period and has a buy point of $546.78. The RS line for UNH has continued to climb during the consolidation period, indicating its strength.
Amgen received several price target hikes over the past week, but this did not prevent a decline in AMGN stock price by 6.2% to $261.57. Analysts are encouraged by the progress of Amgen’s oncology pipeline and its potential for late-decade launches. AMGN stock is currently trading below the cup-with-handle buy point of $268.24, as well as the 50-day moving average. It is expected that the stock will need some time to recover. Despite the recent decline, the RS line for AMGN is still trending upwards. Earnings for the biotech giant will be released on Wednesday.
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