Uber, as it braces for the Tesla robotaxi launch, and MercadoLibre, whose aggressive moves in Latin America draw comparisons to Amazon, lead this weekend's watch list of five stocks near buy points. Uber, MELI and the rest of the group all have seen tight trading action, producing flat bases, which have a good track record of producing substantial gains.
Restaurant software leader Toast, electricity provider NRG Energy, and UL Solutions, known for its UL product certification symbol, round out the list.
IBD Stock Lists, Market Take
MELI stock is part of the flagship IBD 50 list of leading growth stocks. Check here for new additions to IBD stock lists.
The S&P 500 slipped for the second week in a row, but the bull market trend is intact, allowing investors to have 80% to 100% exposure. Yet that's subject to change at any time.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
A stock's average true range, a metric available on IBD's MarketSurge, reflects its daily volatility. Higher numbers raise the risk of a shakeout that can trigger sell rules. Current market conditions are conducive for buying stocks with pretty high ATRs of up to 8%, but investors should be wary of being too concentrated in high-octane names.
All of these stocks have relatively modest ATRs.
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Uber Stock
In a May 29 note, Wedbush said it sees a long-term threat to Uber from Tesla's robotaxi launch, which is set for Sunday. The firm kept a neutral rating and 85 price target for Uber stock. That sent Uber shares sliding 4.5% to 84.30.
However, other recent analysis has been more positive, and Uber passed a test of its 50-day moving average on Wednesday.
On June 10, Stifel started coverage on the "super app" with a buy rating and 100 price target, predicting ultimate success for Uber's delivery business and highlighting the long runway for its advertising opportunity.
RBC Capital, with a 94 price target for Uber stock, said it would get more aggressive if there is a Tesla-fueled sell-off. RBC said it sees Uber's autonomous positioning as a positive, given its numerous partnerships.
Uber rose 0.4% to 83.78 in Friday stock market action. A move past Wednesday's intraday peak of 86.48 would see Uber break above the trendline sloping down from its 93.60 all-time high touched on May 20. That could provide an early entry point for aggressive investors near 87, the prior buy point that Uber first cleared on May 12.
Uber now has a new flat base forged around the top of a longer consolidation. The traditional buy point is 93.60, according to a weekly MarketSurge chart.
Uber has a modest 21-day average true range of 2.8%.
MercadoLibre Stock
MercadoLibre was IBD Stock Of The Day on June 16 after the top-rated e-commerce and payments giant rebounded from support at its 50-day and 10-week moving averages.
MELI stock came under pressure in early June after Reuters reported that the company was expanding free shipping to lower-value orders in an aggressive move to take market share in Brazil. Citi analysts, though bullish on MELI stock long term, warned of potential pressure on margins, "raising a yellow flag for the short-term," according to The Fly financial news site.
MELI has a 99 IBD Composite Rating out of a possible 99, based on technical and fundamental factors, according to IBD Stock Checkup.
MELI inched up 0.04% to 2,403.81 on Friday. A move past Tuesday's high, which would see MELI break its down-sloping trendline and reclaim its 21-day exponential average, could provide an early entry opportunity. The official buy point, from a five-week flat base that formed on top of a prior double-bottom consolidation, is 2,635.88.
MELI has an ATR of 2.6%.
Toast Stock
Toast's restaurant software offerings range from point-of-sale hardware, kitchen displays, payment processing, supplier and invoice management to payroll, delivery management, menu consultation and marketing programs.
TOST surged 11.4% to 40.84 on May 9, after its Q1 report the prior afternoon. In a note written as TOST was trading up 7%, William Blair analyst Stephen Sheldon wrote that investors should keep adding more shares of Toast "with its best-in-class solutions and growth profile, ramping profitability and meaningful upside to estimates over the rest of the year."
Sheldon highlighted Toast's largest win yet in April, serving 1,500 Applebee's locations, and a new Topgolf win "for a wide range of software along with payments."
AI initiatives, including its Sous Chef pilot that's off to a good start, "could meaningfully improve the ROI and competitive positioning of the Toast platform," Sheldon wrote.
TOST dipped 0.5% to 42.35 on Friday, closing a hair above its 21-day exponential average. A solid move off the 21-day on above-average volume could flash an early entry. TOST has an official 45.56 buy point from a five-week flat base that formed at top of several months of consolidation.
TOST has an ATR of 3.1%.
NRG Stock
NRG, the No. 2 S&P 500 stock this year, exploded higher on news of its $12 billion acquisition of LS Power Equity Advisors and 18 natural-gas-fired facilities on May 12.
The move doubles its energy-generation capacity to 25 gigawatts, leaving it better positioned to capitalize on booming demand for energy fueled by AI data-center demand. Following the deal, NRG hiked its five-year compound annual growth target for earnings per share to 14% from 10%.
NRG etched out a four-weeks-tight pattern after surging 26% on news of the deal. However, shares have backed down to the 21-day exponential average amid greater scrutiny. In particular, The Wall Street Journal has highlighted its big, unhedged commodities positions and some opaque financials.
NRG dipped 0.5% to 151.92 on Friday. The flat-base buy point is 161.78, though investors also could use 162.33.
NRG has an ATR of 2.6%.
ULS Stock
In a May 7 note following the testing, inspection and certification (TIC) leader's first-quarter earnings beat, William Blair reiterated an outperform rating, citing UL Solutions' leadership in the "large, growing product TIC market." Analyst Andrew Nichols said the market is supported by clear secular tailwinds, including "new emerging technologies, increased product proliferation, evolving global regulations" and more.
Further, management's commentary indicating limited impact from tariff policy "cements UL Solutions' position as a best-of-breed, defensive earnings compounder in the current environment," Nichols wrote.
ULS eased 0.4% to 70.61 on Friday, finding support over the last several sessions at the 21-day. The official five-week flat-base buy point is 72.81. The 6%-deep flat base has very tight trading.
ULS has a 21-day ATR of 2.1%.
