Stocks are starting the week with a bang with the S&P 500 and Nasdaq Composite jumping almost 1% this morning. Small-caps are following suit with a rally of their own to continue last week’s buying binge. I’ve scoured the market and found three rock-solid stocks to buy this week.
The bullish case for equities into year-end is compelling. Seasonality, bullish technicals and optimism surrounding the trade deal are all pointing to higher prices. That doesn’t mean we won’t see some backing and filling along the way, but make no mistake — any weakness is a buy.
Fortunately, the number of strong stocks to buy continues to grow. Today’s trio includes companies that boast low-risk breakout patterns heading into the new week.
Rock-Solid Stocks to Buy This Week: Target (TGT)
Year-to-Date Gain: 93%
The retail sector has been a story of hits and misses this year. But those who used Target (NYSE:TGT) as their vehicle for exposure hit a bullseye. Its weekly chart is a veritable rocket ship and the stock has come close to doubling shareholders’ money. The lion’s share of the gains are compressed into the days following each of the last quarterly earnings reports.
Since last month’s announcement, TGT stock has been consolidating in a narrow range. But with the 20-day moving average now caught up, and the stock testing the upper end of the base, an upside breakout looks imminent. During the pause, momentum has remained strong, with the RSI hanging near 70.
Implied volatility is low, favoring long option plays here.
The Trade: Buy the Feb $130/$135 bull call spread for around $1.80.
YTD Gain: 28%
October’s response to earnings marked a turnaround point for PayPal (NASDAQ:PYPL). The prior quarter had seen PYPL stock fall as much as 22% after releasing underwhelming quarterly results. Fortunately, the company delivered numbers worth celebrating this go around. Ever since October, PYPL has been carving out higher swing lows to finally turn its trend higher.
It ended last week, knocking on the door of an upside breakout. For months, the ceiling at $108 has held firm, halting several rally attempts. But with seasonal tailwinds supporting stocks and a phase one trade deal on the books, the current attempt should succeed.
The Trade: Buy the March $110/$115 bull call spread for around $2.10
YTD Gain: 59%
Fiserv (NASDAQ:FISV) has a history of rewarding breakout buyers. Especially this year. And it’s knocking on the door of another one as I type. The bullish setup is buttressed by a gorgeous weekly trend that has risen ten-fold in ten years. With such consistency at its back, I see little reason to second-guess the current setup.
The trend of low implied volatility continues with FISV stock. At the 5th percentile of its one-year range, premiums are almost at the lowest level of 2019. This increases the appeal of long calls or call spreads.
The Trade: If FISV takes out this morning’s high ($118), then consider buying the March $120/$125 bull call spread for around $1.85.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. For a free trial to the best trading community on the planet and Tyler’s current home, click here!