This morning’s sea of green marked a nice change of pace for traders tiring of bloody opens. While ardent bears will view this as the umpteenth rally born to be sold (and indeed, it has been tempered throughout the day), optimists are eyeing bull trades in hopes of upside follow-through. It is the latter group that will find today’s gallery citing three of the strongest stocks to buy helpful.
Relative strength has been easy to spot if for no other reason than stocks still boasting uptrends are so rare right now. The few resilient charts reside in the usual suspect sectors that traders consider “defensive.” We’re talking consumer staples, utilities, telecoms and the like.
All three of today’s highlights flexed their muscles during recent earnings announcements and were rewarded with strong up-gaps. The setups that have since formed provide clean entries for spectators looking to get in on the action.
Without further ado, here are three strong stocks to buy.
Walmart (WMT)
The bullish narrative for Walmart (NYSE:WMT) is easy to craft. First, it’s the poster child for a defensive stock. As the kingpin of the consumer staples sector, WMT stock isn’t near as economically sensitive as other retailers. Second, it blew the doors off with its earnings numbers last quarter and was rapidly rewarded with a 10% overnight price jump.
Third, after basing for two months to digest the swift gain, WMT is now breaking above resistance and the psychologically significant $100 level. Fourth, and final, it has had more up-days than down-days since mid-October while the rest of the market has been getting trounced.
The next upside target is $105, then $110.
Verizon (VZ)
While fellow telecom AT&T (NYSE:T) has been wallowing in the mud, Verizon (NYSE:VZ) shares have been notching new 52-week highs. Like Walmart, VZ stock also rests in a defensive sector with a business model that isn’t as sensitive to economic strength. Thus, if it’s concerns about a downshifting economy ailing the broader market, then VZ shouldn’t be hurt too bad.
The relative strength in VZ is shining bright this month. Last week’s earnings-induced breakout popped the stock to its highest levels since 2000. And the two-day pullback that ushered it into the weekend delivered a clean pullback to potential support.
Today’s 2% jump is confirming that buyers want in and suggesting the time to deploy bullish trades is now.
McDonald’s (MCD)
McDonald’s (NYSE:MCD) is another standout this earnings season. With the number of stocks that are being summarily punished post-earnings, the few jumping higher are worth watching.
Last week’s rally resulted in a retest of all-time highs. Though it was initially rebuffed, I suspect a breakthrough is simply a matter of time. The uptrend for MCD stock looks solid, with a rising 20-day and 50-day moving average. The series of higher lows also confirms buying aggression continues to increase when pullbacks present themselves.
While the stock may need some further backing and filling to allow the moving averages to catch up, MCD is a definite buy into any weakness.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want insightful education on how to trade? Check out his trading blog, Tales of a Technician.
