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7 Stocks to Buy on the Verge of Double-Digit Breakouts

The broader market is fighting tooth and nail for every point, but these seven stocks are about to enjoy big, easy gains

By Johnson Research Group

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The stock market has spent much of the early summer months “melting higher” as investors have been hesitant to push their cash into a market that refuses to budge from all-time highs. Of course, we know there are always quality stocks to buy out there, regardless of what the market is doing.

7 Stocks to Buy on the Verge of Double-Digit Breakouts
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Breakout stocks, comeback stocks, you name it — the market always provides ways to pad our accounts with fast profits.

What’s on our radar right now? The recent pullback in the market, which has a large number of tech stocks sitting pretty according to a number of things — our scoring models, longer-term technicals and, naturally, fundamentals. Specifically, we’ve recently identified a list of about 15 stocks that have seen short-term weakness, but now appear ready to shift back into breakout mode.

Today, we want to focus on the seven best stocks of the bunch.

Here’s a look at seven stocks, all clustered in the tech sector, to buy for some early summer rally returns.

Stocks to Buy for Double-Digit Breakouts: Xilinx (XLNX)

Stocks to Buy for Double-Digit Breakouts: Xilinx (XLNX)3-Month Upside Potential: 11%

When you think of hot semiconductor companies, you think of Advanced Micro Devices, Inc. (NASDAQ:AMD), Nvidia Corporation (NASDAQ:NVDA) or Micron Technology, Inc. (NASDAQ:MU).

Xilinx, Inc. (NASDAQ:XLNX) hasn’t provided the same caliber of returns over the past year, but it’s still up by more than 45% in 52 weeks to easily outpace every major market index.

Xilinx’s last earnings report helped trigger a breakout above $64. Now, traders are looking at the stock as another bullish prospect with earnings just about a month down the road.

XLNX shares have been stuck in a range between $64 and $68, which has been great for the chart watchers as they have been able to collect a lot of profits in this well-defined range. I expect this to change.

Stocks to Buy for Double-Digit Breakouts: Xilinx (XLNX)

As July’s earnings slowly begin to approach, we’re going to see more participation in the technical bounce from $64. That added participation will help XLNX break through $68 this time around and drive even more of a breakout.

Our models like Xilinx shares to cross $73 before the company’s next announcement.

Stocks to Buy for Double-Digit Breakouts: International Business Machines (IBM)

Stocks to Buy for Double-Digit Breakouts: International Business Machines (IBM)
Source: Shutterstock

3-Month Upside Potential: 20%

International Business Machines Corp. (NYSE:IBM) has been a market laggard for most of the year, down 4% versus an S&P 500 that has gained more than 8% year-to-date. On a slightly longer 12-month basis, IBM shares are only up 2% compared to the S&P 500’s returns of 17%.

Needless to say, IBM stock hasn’t been a winner.

Yet.

IBM shares just spent the past month trading at a consolidation level of $150. If you look at historical charts, you’ll find that this is actually a key level for IBM, and should serve as a long-term bottom.

IBM stock chart

A rally won’t be without its challenges. A break below $150 will bring about a new round of selling pressure. Meanwhile, IBM’s 50-day moving average — just overhead at $156 — is declining and preparing to apply its own downward force.

However, a break above this mark will take IBM stock to a challenge at their 20-month trendline, and a break above that will put shares back into a bull market for the first time in three months.

That’ll attract the long-term buyers and really get IBM into gear. We see prices as high as $180 in IBM’s future.

Stocks to Buy for Double-Digit Breakouts: Fastenal (FAST)

Stocks to Buy for Double-Digit Breakouts: Fastenal (FAST)
Source: Shutterstock

3-Month Upside Potential: 12%

Fastenal Company (NASDAQ:FAST) shares have suffered following the company’s most recent earnings report, which failed to impress. However, political uncertainty has also affected industrial companies such as Fastenal, whose shares are trading 4% lower for the year and flat for the past 12 months.

Despite this, our models are forecasting a technical breakout for FAST shares over the next few weeks that have the potential to change the stock’s direction into a breakout.

Stocks to Buy for Double-Digit Breakouts: Fastenal (FAST)

The stock is currently fighting its 50-day moving average — in my opinion, the most important trendline for any stock. A break above this trendline, currently at $44.81, will immediately put the shares in position to challenge their 200-day moving average at $45.43.

Clearing these two technical hurdles in a short period of time will change the trajectory of Fastenal’s price trend. Our models indicate a price target of $50.

Stocks to Buy for Double-Digit Breakouts: Netflix (NFLX)

Source: Via Netflix

3-Month Upside Potential: 11%

Streaming giant Netflix, Inc. (NASDAQ:NFLX) has suffered a 10% decline of late. However, this massive pullback has set up a perfect buying opportunity for nimble chart watchers.

See, the 10% correction took NFLX stock to an almost perfect test of the 100-day moving average. Currently, this trendline is sitting at $148 — just below today’s lows. A hold of this trendline will maintain an intermediate-term bullish outlook.

That decline has also taken Netflix shares to an oversold reading for the first time since April.

There’s a group of technical traders that are always looking for the opportunity to get into Netflix on a pullback. The recent drop has put the ball on the tee, and our models suggest these traders will hit it out of the park — good for a breakout to $170.

Stocks to Buy for Double-Digit Breakouts: Alibaba (BABA)

Stocks to Buy for Double-Digit Breakouts: Alibaba (BABA)
Source: Shutterstock

3-Month Upside Potential: 12%

Calling for a breakout in Alibaba Group Holding Ltd (NYSE:BABA) might seem silly or cliche, depending on your viewpoint. After all, that’s all Alibaba has been doing of late.

Still, our models indicate that BABA stock will remain a leader throughout the rest of 2017.

The opportunity for Alibaba at this point is the “buy the dip” breakout. Shares have seen a crowd of traders sell the news after their earnings release a few weeks ago. The stock dipped from about $148 to a base at $135 where it started its most recent rally.

BABA stock chart

The technical crowd is grabbing these shares on this dip, and at strong volume no less. In other words, this rally will set a course for prices above recent highs.

For now, our model is suggesting prices between $150-$155, which moves Alibaba back into new high territory.

Stocks to Buy for Double-Digit Breakouts: Garmin (GRMN)

3-Month Upside Potential: 12%

Garmin Ltd. (NASDAQ:GRMN) is one of those companies that has been putting up numbers that traders have just been ignoring. But that’s an opportunity for those of us willing to front-run the moment everyone else figures out they should own this stock.

Right now, Garmin shares are matching the market’s performance as they trade above 8% higher year-to-date, but the stock has been stuck in a range that looks ready to release and allow shares to rally significantly.

We just watched the stock get support from the 50-day again, and shares are now heading toward $53 again on rising volume. This indicates that the crowd is starting to take note of the potential breakout.

GRMN stock chart

Our model loves the fact that 0% of the analysts covering the stock have it ranked a buy, which means there is room for upgrades to drive a breakout. In addition, there are still some shorts that are trying to get out of the shares, which helps fuel the rally.

A break above $53 is going to target a breakout above $55, likely to the $57-$58 level, as Garmin sill then be trading in a technical bull market!

Stocks to Buy for Double-Digit Breakouts: Adobe Systems (ADBE)

Stocks to Buy for Double-Digit Breakouts: Adobe Systems (ADBE)
Source: Shutterstock

3-Month Upside Potential: 11%

Last is Adobe Systems Incorporated (NASDAQ:ADBE), which you’ll need to keep an eye on very soon, as it’s set to announce earnings on Tuesday afternoon.

A crowd of traders are scooping up ADBE on a strong “buy the rumor” rally since bouncing off its 50-day moving average last week. In all honesty, there was a great technical trade there for those who were looking at this pre-earnings strength.

And normally, short interest on the stock is much higher than its current 1.5 days to cover, which suggests to us that we won’t see as much of a shot higher in the immediate response to earnings.

Still, our historical data shows that Adobe is a strong performer around earnings season. And the stock is lightly recommended by the analyst community, with just 79% of those covering ADBE — which is up 45% over the past year! — ranking it a buy.

ADBE stock

Here’s how our models see this breakout playing out:

Adobe should see a little selling pressure after its Tuesday announcement. This will set things up for a buyable dip that will allow nimble traders to grab this stock at a bargain.

From there, the models are targeting a move above $155.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/06/7-stocks-to-buy-double-digit-breakouts/.

©2017 InvestorPlace Media, LLC