Stocks scored a rousing comeback rally Tuesday. The S&P 500 climbed 1.05% as buyers returned to a market they were fleeing in droves just last week. And while nervous Nellies continue to cite weakness from small caps and seasonality as reasons to sit on the sidelines, a growing number of leaders remain at or near all-time highs.
It is from this patch that we will select today’s list of stocks to buy.
These seven stock picks possess relative strength in spades. Their muscle-flexing was on full display during this month’s swoon. And if Tuesday’s rebound is a sign of things to come — and I believe it is, despite Wednesday’s quiet lull — I suspect big gains are in the offing.
What’s more, all but one of these featured stocks are flashing low-risk trade setups. And that’s a good thing since stop-loss levels will rest close, allowing for a swift exit if the market sours.
Enough with the pitch, on to the picks. Behold, seven muscle-flexing stocks to buy right now:
The Strongest Stocks to Buy: Apple (AAPL)
We begin with Apple Inc. (NASDAQ:AAPL). And appropriately so. The technology titan remains the largest company on the planet and has protected shareholders from the recent ravages of this month’s market drop.
And, yes, I realize a 2.8% peak-to-trough decline in the S&P 500 hardly qualifies as a “market drop,” but work with me here.
Currently, AAPL sits just a couple percentage points below its all-time high.
While the Nasdaq Composite fell below its 50-day moving average, AAPL stock was able to remain above its 20-day. The four-day retracement in Apple shares is about as garden variety as it gets. And in contrast to the tech-laced Nasdaq, which suffered a spate of distribution days over the past month, the volume during down days in AAPL has been quite benign.
Couple that with its relative strength, and there’s no reason not to be an AAPL bull here. Consider using a break of $154.50 as your stop-loss.
The Strongest Stocks to Buy: PayPal (PYPL)
We continue our tech theme with PayPal Holdings Inc (NASDAQ:PYPL). The online payments system operator has been an absolute beast in 2017, rising 54% so far. Like AAPL, the August stock drop barely left a scratch on PayPal’s uptrend. And with Tuesday’s 2.4% pop, it looks like PYPL is itching to kick off its next advance.
PayPal also is just a couple points below all-time highs.
The consolidation over the past month has allowed PayPal to digest its gains and build a base for the next advance. Breakout setups like this attract chart watchers across the globe. No doubt they’re flocking to the stock as I type. The relative strength in PYPL stock has been off the charts, and impressively, sellers have lacked any conviction whatsoever.
Throw it all together, and PayPal is a buy with a stop-loss below $57.60.
The Strongest Stocks to Buy: McDonald’s (MCD)
Another area with relative strength has been large caps. And that’s where our next three selections come from.
McDonald’s Corporation (NYSE:MCD) has had a banner year, climbing roughly 30%. Its recent pullback did breach the 20-day moving average, but the 50-day held firm.
Currently, MCD stock sits less than a buck below its all-time high.
Here’s a situation where buying the dip earlier in the month was the better play, but if you missed it, a breakout setup is in the offing. The action over the past few weeks has taken on the form of a small cup-and-handle formation. A break above $160 will send MCD into virgin territory and hopefully bring buyers rushing in.
Like its predecessors, the relative strength for MCD has been a thing of beauty. The stock is a buy with a stop-loss below $153.25.
The Strongest Stocks to Buy: Boeing (BA)
Our next big-cap beauty is Boeing Co (NYSE:BA). The market gods threw lighter fluid on the stock following earnings, roasting bears in the process. Since then, BA has been in consolidation mode. The respite allowed the 20-day moving average to catch up, working through overbought conditions in the process.
Now, the stock — which sits 3.5% from its all-time high — boasts one heck of a breakout setup. As for relative strength … well, Boeing has that too. Planes full, in fact.
BA is a buy with a stop-loss below $230.
The Strongest Stocks to Buy: Caterpillar (CAT)
Heavy equipment kingpin Caterpillar Inc. (NYSE:CAT) has perhaps one of the cleanest plays on the board — especially following Tuesday’s surge, which carried the stock to within 1% of its all-time high set back in 2011. If CAT ends up taking out this resistance level, watch out above!
Since gapping higher on earnings last month, Caterpillar shares have been locked in a very narrow range for weeks. Every dip was quickly bought resulting in little give-back. And now, with the 20-day moving average caught up, a new advance has begun.
Volume patterns lend further support to a bullish bias here. Distribution days have all but dried up showing an utter lack of any conviction by sellers for weeks now. And, yes, like all its predecessors, Caterpillar carries some serious relative strength.
CAT is a buy with a stop-loss below $112.
The Strongest Stocks to Buy: Baidu (BIDU)
For our final two picks, we’re heading to China.
First up is Baidu Inc (ADR) (NASDAQ:BIDU) which is known by traders as the “Chinese Google.” Call it what you want, but BIDU has been one of the best-performing stocks on the planet over the past two months. As is usually the case, the catalyst for its newfound strength was a better-than-expected earnings release.
Since then, Baidu shares have been digesting their gains and working through the overbought conditions. With the 20-day moving average now caught up, and the broader stock market seeming to find its footing, the time for Baidu’s next advance is at hand.
Currently, BIDU sits 11% away from its all-time highs notched in 2014.
The stock is a buy on a breakout over $230 with a stop-loss below $216.
The Strongest Stocks to Buy: Alibaba (BABA)
Alibaba Group Holding Ltd (NYSE:BABA) shares soared 3.08% Tuesday to a new all-time high. For a stock like BABA, the relative strength is a given. And check out this stat: Alibaba has scored six accumulation days in a row.
Buyers are flocking to the stock faster than NASA nerds to a solar eclipse viewing party. And for a good reason — the e-commerce giant just reported stellar earnings, justifying its recent rise and giving plenty of reasons for more gains to come.
So while Alibaba’s price trend is incredibly strong, it’s not like we have a low-risk entry here. I think there’s a case for buying right now, but if you’re not a fan of chasing, consider waiting for a pullback. Any and all dips should be viewed as a gift.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities. Want to learn how to master the art of option selling for high-probability cash flow? Check out Tyler’s recently released video series through Tackle Trading on how to systematically sell iron condors for monthly income.