S&P 500 Biotech Giant Vertex Leads 5 Stocks Showing Strength

Your actions to watch for next week are Cheniere Energy (LNG), S&P 500 biotech giant Vertex Pharmaceuticals (VRTX), cardinal health (CAH), steel dynamics (STLD) and genuine parts (GPC).


While the market remains in a correction, with analysts and investors wary of an economic downturn, these five stocks are worth adding to watch lists. S&P 500 medical giants Vertex and Cardinal Health have held their ground, as healthcare-related plays tend to do well in down markets.

Steel Dynamics and Genuine Parts are posting solid profits as both the steel and auto parts industries report upbeat outlooks. Meanwhile, Cheniere Energy saw sales boom in the second quarter as demand for natural gas in Europe continues to grow.

Major indices have been making recovery attempts with the Dow Jones and S&P 500 testing weekly support on Friday. With the market uncertain, investors should be prepared for the follow-up day breakouts and keep an eye on these stocks.

Cheniere Energy, Cardinal Health and VRTX stocks are all on the IBD leaderboard.

Cheniere Energy Stock

Shares of LNG rose 1.1% to 175.79 during market trading on Friday. For the week, the stock was up 3.1% off highs, bouncing off its 21-day and 10-week lines earlier in the week.

Cheniere Energy has been consolidating since mid-September but needs another week to carve out a proper base, with a potential buy point of 182.72 formed on 10th August.

Houston-based Cheniere Energy was IBD’s stock of the day on Thursday as the largest US producer of liquefied natural gas forecasts strong demand in Europe.

Even though natural gas prices are plummeting in the US and Europe, investors still see strong demand for LNG for Cheniere and others.

The UK government confirmed last week that it is in talks for an LNG purchase agreement with a number of companies, including Cheniere.

In the first half of 2021, less than 40% of Cheniere’s LNG shipments landed in Europe. That jumped to more than 70% during the second quarter of this year, even as the company increased its export capacity. The urgency of Europe’s natural gas shortage intensified last month. That’s when an explosion disabled Russia’s Nord Stream 1 pipeline that once supplied 40% of the European Union’s natural gas.

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In the second quarter, sales increased 165% to $8 billion and LNG earned $2.90 per share, versus a net loss of $1.30 per share in the second quarter of 2021. The company will report earnings. of the third quarter on November 3, and investors will see earnings booming for the coming quarters. .

Cheniere Energy has a Composite Rating of 84. It has a Relative Strength Rating of 98, an IBD Stock Checkup proprietary indicator of stock price movement with a score of 1 to 99. The rating shows how a stock’s performance over the past 52 weeks is compared to all other stocks in the IBD database. The EPS rating is 41.

vertex stock

VRTX shares rose 3.4% to 300 on Friday, recovering from a test of its 50-day moving average. Shares rose 2.2% for the week. Vertex shares have formed an adjusted flat base with an official buy point of 306.05, according to MarketSmith analysis.

The stock has held steady in recent weeks, while the relative strength line has trended higher. The RS line tracks a stock’s performance against the S&P 500 index.

Vertex’s third quarter earnings are due Oct. 27. Analysts see EPS rise 1% to $3.61 per share on sales up 16% to $2.2 billion, according to FactSet.

The Boston-based global biotech company dominates the cystic fibrosis treatment market. Vertex also has other products in late-stage clinical development targeting sickle cell disease, type 1 diabetes and certain genetically caused kidney diseases. That includes a gene-editing association with Crisp Therapeutics (CRSP).

In early August, Vertex reported better-than-expected second-quarter results and raised full-year sales targets.

Vertex’s S&P 500 shares rank second in the Medical-Biomed/Biotech industry group. VRTX has a composite rating of 99. Its relative strength rating is 94 and its EPS rating is 99.

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cardinal health action

CAH shares advanced 3.2% to 73.03 on Friday, topping a buy point of 71.22 from a shallow cup-and-handle base and hitting an all-time high. But the volume was light on the breakout. CAH shares rose 7.3% for the week.

Cardinal Health’s stock relative strength line has also been trending higher for months.

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The cup base with a handle is part of a base-on-base pattern, which forms just above a clear cup base on August 11.

Headquartered in Dublin, Ohio, Cardinal Health offers a wide variety of health care services and medical supplies to hospitals, laboratories, pharmacies and long-term care facilities. The company reports that it serves about 90% of hospitals and 60,000 pharmacies in the US.

S&P 500 stock Cardinal Health will report first-quarter 2023 earnings on Nov. 4. Analysts forecast earnings to fall 26% to 96 cents a share. Sales are expected to rise 10% to $48.3 billion, according to FactSet.

Cardinal Health shares rank No. 1 in the medical wholesale drug/supply industry group, ahead of McKesson (MCK), which is also showing positive action. CAH shares have a composite rating of 94 out of 99. It has a relative strength rating of 97 and an EPS rating of 73.

Steel dynamic stock

STLD shares soared 8.5% to 92.92 on Friday and soared 19% for the week, following a surge in Steel Dynamics earnings on Wednesday night.

Stocks spiked above a consolidation buy point of 88.72 on Friday after breaking above a trend line on Thursday. STLD shares are 17% above their 50 day line, definitely extended from that key average.

Steel Dynamics’ latest consolidation could be seen as part of a larger foundation going back six months.

Steel Dynamics led the third-quarter earnings views with earnings per share up 10% to $5.46, while revenue grew 11% to $5.65 billion. The prospects for the steelmaker are optimistic despite the fall in the price of flat rolled steel. STLD reports that its order activity and pending orders remain strong.

The Fort Wayne, Indiana-based company is among the largest producers of carbon steel products in the US. It engages in metal recycling operations alongside steelmaking and produces countless steel products.

How Millett grew Steel Dynamics from a three-employee business

STLD shares rank first in the industry group of steelmakers. STLD shares have a composite rating of 96 out of 99. They have a Relative Strength Rating of 90, an IBD Stock Checkup proprietary indicator for stock price movement that tops out at 99. The rating shows how the performance of a stock over the past 52 weeks is compared to all other stocks in the IBD database. The EPS rating is 98.

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Stock of original spare parts

Shares of GPC rose 2.8% to 162.35 on Friday after the company beat earnings forecasts with its third-quarter results on Thursday. For the week, GPC advanced 5.1% as the stock held its 50-day line and is on a flat base.

GPC has an official flat-based buy point of 165.09 after a three-week rally, according to MarketSmith analysis.

The relative strength line of original parts stocks has risen sharply to highs in recent months.

On Thursday, the Atlanta-based auto parts company raised its full-year growth guidance on its auto and industrial sales.

Genuine Parts earnings per share increased 19% to $2.23 and revenue grew 18% to $5.675 billion in the third quarter. Full-year GPC guidance now calls for an EPS of $8.05-$8.15, up from $7.80-$7.95. The company now forecasts revenue growth of 15% to 16%, up from 12% to 14% previously.

During the Covid pandemic, supply chain constraints caused major turmoil in the auto industry, driving new and used car prices to record highs. This has increased the likelihood that consumers will hold on to their existing vehicles for longer, increasing mileage and increasing the demand for auto parts.

Auto Stock Peers O’Reilly Auto Parts (ORLY) and auto zone (AZO) have also rallied near buying points amid the struggling market. O’Reilly reports Oct. 26.

IBD ranks Genuine Parts first in the retail/wholesale auto parts industry group. GPC shares have a composite rating of 96. Its relative strength rating is 94 and it has an EPS rating of 89.

Follow Kit Norton on Twitter @KitNorton for more coverage.


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