New S&P 500 entrant Airbnb (ABNB) e DraftKings (DKNG), the online sports betting platform, leads this weekend’s watchlist of five stocks near buy points. If the S&P 500 rally can gain traction, these stocks could be ready to move. In addition to DKNG and ABNB, the list includes Costco Wholesale (COST), a biotech based in the Netherlands Argenx (ARGX) and enterprise software advocate ServiceNow (NOW).
DKNG, NOW and ARGX are all part of the IBD 50 top list of top growth stocks. The three stocks are all on the IBD Leaderboard portfolio watchlist of elite stocks. Airbnb will join the S&P 500 Index before the stock market opens on Monday.
S&P 500 setting
The S&P 500 index fell sharply on Friday, falling below its 50-day moving average. This is a sign that the powerful stock market rally has lost momentum and there is risk of a larger pullback. The return of the 10-year Treasury yield above 4.3%, near a 15-year high, looks like the biggest headwind for growth stocks right now.
The S&P 500 is down 3% from its 15-month closing high on July 31, but remains 24.4% above its October 12 bear market closing low.
Next week’s Federal Reserve meeting could be crucial. With no chance of a rate hike, attention will be focused on the Fed’s guidance on the path of interest rates for the rest of this year and into 2024. The chances of a soft landing for the economy have improved, the which is mostly great news. But interest rates could stay higher longer if the Fed doesn’t have to sweat a sharp downturn in economic activity.
Be sure to read IBD’s Big Picture every day to stay in sync with the direction of the market and what it means for your trading decisions.
DraftKings launched its Golden Nugget Online Gaming casino app in Pennsylvania on August 21, featuring more than 500 slots and table games like blackjack and roulette.
On Aug. 3, DraftKings reported its first profitable quarter, as revenue growth accelerated to 88% in the second quarter compared to 84% and 81% in the previous two quarters.
With more states legalizing sports betting and DraftKings gaining market share, Argus analyst John Staszak raised his price target for DKNG stock to 34 from 30 on Aug. 10.
On August 8, Truist analyst Barry Jonas increased his target for DKNG stock from 31 to 44, upgrading it to buy from hold. Jonas called DraftKings “the best flagship story in gaming today.”
DKNG shares fell 1.4% to 31.04 on Friday. Last week’s 2.5% decline created a 32.65 buy point from a cup-and-handle base.
According to MarketSmith, DKNG stock’s relative strength line signals market leadership, sitting right near its 52-week high. The RS line is the blue line in IBD charts that tracks its progress versus the S&P 500.
Vacation rentals are gaining lodging share over hotels, and Airbnb is once again the fastest-growing online travel agency, Bernstein analyst Richard Clarke wrote in an Aug. 29 note. He maintained an outperform rating and a 168 price target for ABNB shares.
Airbnb was named IBD’s Stock of the Day on Wednesday. Booking participations (BKNG) e Marriot International (MAR) are among other travel stocks near buy points.
On Aug. 4, Airbnb beat second-quarter estimates as the average daily rate customers paid for a stay rose 1% from a year ago to $166. Active adverts increased by 19% compared to a year ago, reaching over 7 million.
ABNB shares fell 0.95% to 142.75 on Friday, falling 2.1% on the week. ABNB has a cup-with-handle buy point of 151.16, according to a weekly chart from MarketSmith. The daily chart shows a 154.95 cup buy point, but with two more trading days a lower level should become available.
COST OF STOCKS
On Aug. 30, Costco reported that August sales were up 5% from a year ago. Same-store sales grew 3.4%, or 3.2% excluding gas and exchange rate differentials. The results indicate fiscal fourth-quarter revenue came in $500 million above expectations, analysts at Evercore ISI wrote. The firm raised its price target to 595 from 590 with an outperform rating.
August results marked two months of accelerating sales growth. In an Aug. 3 note, the UBS analyst highlighted Costco’s strong July sales, even as it struggled with competition from Amazon Prime Day and Target’s Circle Week. He maintained a buy rating, raising his price target from 550 to 640.
COST stock fell 1.5% to 556.36 on Friday, but rose 0.9% for the week. Costco has a 571.16 buy point from a flat base. The latest flat base is just seven weeks out, but it’s pretty much an extension of Costco stock’s long consolidation through August 2022.
Argenx was the IBD stock of the day on Friday, as it continues to make strides with its Vyvgart drug.
On Friday, a European Commission advisory panel recommended full approval for an under-the-skin version of Vyvgart to treat an autoimmune condition called generalized myasthenia gravis (gMG).
Argenx shares caught fire on July 17. The biotech released a study showing better-than-expected results for Vyvgart in preventing a relapse of patients with a progressive nerve disorder, chronic inflammatory demyelinating polyneuropathy, or CIDP.
Douglas Tsao, an analyst at HC Wainwright, called Vyvgart a “game changer,” noting that rival therapies have intolerable side effects and long infusion times. The FDA approved Vyvgart subcutaneous injection in June.
Numerous analysts increased their price targets for ARGX shares in July, with a couple citing Vyvgart’s $3 billion CIDP revenue opportunity. However, ARGX is not expected to reach profitability until 2025.
ARGX shares rose 0.9% to 527.98 on Friday and 3.6% for the week. ARGX is building the right side of a cup base with a 550.76 buy point. The stock found support at its 21-day exponential moving average.
ServiceNow was featured Thursday in an IBD 50 Stocks To Watch article, which covered consistent sales and earnings growth and recent artificial intelligence initiatives.
NOW stock is ranked #1 by IBD Stock Checkup in the Enterprise Software industry group, based on technical and fundamental factors.
HSBC began coverage of ServiceNow with a Buy rating and price target of 704 on Friday. While the timing of large AI revenue remains uncertain, HSBC favors companies like ServiceNow that already benefit from strong demand from spending for the cloud and the digital transformation of business practices.
NOW shares fell 1.8% to 579.58 on Friday and 3.4% for the week. Software stocks fell sharply last week on the back of lackluster earnings and guidance Oracle (ORCL) e Adobe (ADBE).
NOW has a 607.90 buy point from a cup-and-handle base, which can be seen on a weekly chart from MarketSmith. That handle will appear on a daily chart after Monday.
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