MercadoLibre, Credo Technology Group, Brinker International, Quanta Services and Sportradar Group are stocks to watch this week as the stock market remains in a positive trend.
Stocks fell Friday after Israel launched massive strikes against nuclear and military targets in Iran, with the latter responding with a missile barrage. Indexes fell roughly 1% in afternoon trading in a relatively restrained reaction, keeping indexes on their upward trends.
The stocks to watch this week are not directly affected by the conflict, and span the data center and consumer investing themes.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with a 21-day average true range of up to 8%, though they should be wary of being too concentrated in high-octane names.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
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MercadoLibre Finds Key Support
MercadoLibre shares are trying to bounce off the 50-day moving average and 10-week line after a two-week pullback sent the stock to that technical support level. The Latin America online shopping service and payments giant is a comfortable 15% above its 200-day moving average, which the stock has tested multiple times during its two-year ascent.
MELI stock could have a flat base in another week.
The company, often compared to Amazon.com, is one of five stocks in the internet retail industry group with a best-possible Composite Rating of 99. MercadoLibre also has a top EPS Rating of 99 after earnings increased 103%, 9%, 288% and 44% the past four quarters. Sales growth ranged from 35% to 42%.
Last week, MercadoLibre cut the amount shoppers need to spend to get free shipping in Brazil to 19 reals ($3.43) from 79.
A Citi analyst warned the move may pressure gross margins in Brazil, especially after MercadoLibre reduced shipping fees for sellers, TheFly.com reported. But a BofA analyst said the company is making a systemic push into low average selling prices, and is taking aim at Sea's Shopee and PDD's Temu and TikTok Shop.
MercadoLibre stock has an ATR of 2.48%. Its Composite Rating is a highest-possible 99.
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Credo Technology Is AI Data Center Stock
Credo stock is forming a cup-with-handle base with an 80.99 buy point. Shares broke the trend of the handle late last week, offering an early entry. The handle started forming after shares gapped up June 3 following another strong quarter.
Credo, this week's The New America profile company, is a major player in AI data centers with its high-speed connectors. The company is the global leader in SerDes, short for serializer/deserializer, which is how data gets onto the wires and off the wires.
Although the company has only a few customers, those include hyperscalers Amazon Web Services and Microsoft.
Analysts expect current-quarter sales to grow 218% and 174%, 53% and 26% in subsequent quarters. Current quarter earnings are expected to surge 775% to 35 cents a share.
The data center tech stock has an ATR of 6.94%.
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Brinker International Feasts On Chili's
Brinker stock is forming a cup-with-handle base with a 177.91 buy point. The base is third stage, which reflects an already robust gain of as much as 369% from an initial breakout at 40.98 in December 2023.
The parent company of the Chili's and Maggiano's Little Italy restaurant chains has one of the highest Composite Rating of 55 companies in IBD's restaurant industry group. Its EPS Rating and Relative Strength Rating are also among the group's best. The restaurant group ranks in the top 30, as worries about consumer spending fail to materialize.
The company is pursuing a value strategy, comparing its menu prices to fast-food rivals. Brinker is eating into McDonald's market share for burgers.
Earnings per share growth ballooned from 16% in Q2 of 2024 to 239%, 183% and 115% the most recent quarters. Sales growth accelerated from 12% to 26% and 27%.
The stock slid 15% when it reported March-quarter results April 29. Although the company beat analysts' estimates and increased guidance, investors raised questions about the company's ability to sustain fast growth. Management saw headwinds in the turnaround for its Maggiano's chain, and tariffs could force higher prices.
Today, the stock has more than made up the earnings sell-off, up more than 30% year to date.
Brinker has an ATR of 4.04%.
Quanta Services Is AI Stock Too
Since Quanta broke out of a cup-with-handle base on June 3, shares have largely held within the 5% buy range, which goes from the 348.90 buy point to 366.35.
Its previous base was a risky late-stage pattern that failed. But the next base (from late November to January) undercut the failed pattern, which reset the base count.
Like Credo, Quanta Services is an AI data center play, but from a very different industry.
The company specializes in construction services for utility companies and also works with renewable-energy providers.
Demand for electricity to power massive data centers is driving demand for power suppliers. And while other infrastructure services stocks should benefit, Quanta is a main beneficiary as the leader in transmission services.
IBD's heavy construction industry group has climbed to No. 19 out of 197 on a combination of demand for data centers, infrastructure and reshoring of factories.
Quanta has a 98 Composite Rating and an ATR of 2.45%.
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Sportradar Group Is Gaming Data Play
Sportradar is forming a shallow base with a 25.85 buy point amid several weeks of tight action. The May 16 high of 24.69 offered an early entry Thursday, though shares fell back Friday. It's possible SRAD stock could forge a handle.
The relative strength line is lagging, though it did show strong performance from early November to mid-May.
The company analyzes and provides sports data for bookmakers, sports federations and media companies. Its clients include 400 teams, leagues and federations such as the NBA, Major League Baseball and FIFA. Its partners include betting app DraftKings.
On Thursday, the company announced a partnership with sports streaming provider DAZN for exclusive rights to distribute betting data and nonexclusive media content for the FIFA Club World Cup 2025.
Although it is profitable, the Switzerland-based firm's earnings per share have been mainly in the single digits, according to FactSet. Analysts' consensus earnings estimate for the current quarter is 4 cents a share vs. a flat year-ago period.
Its sales performance has been much better, rising 20% to 30% the past four quarters. Sales are expected to climb 20% in the June-ending quarter to $365.7 million, per FactSet.
Sportradar has an 85 Composite Rating, which is below the 90 sought for growth stocks. Yet, it's the second highest of 30 stocks in the gaming industry group. A weak EPS Rating of 39 drags on the Composite score.
The stock has an ATR of 3.16%.
