Amazon.com, Netflix, Shopify, Capital One and Elbit Systems are stocks to watch this week, as the stock market trades near all-time highs.
All five stocks are near new highs as they climb back from pullbacks.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with a 21-day average true range (ATR) of up to 8%, though they should be wary of being too concentrated in high-octane names. 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.
Although IBD continues to recommend 80%-100% exposure, the main indexes reversed lower Friday and could be meeting resistance. The Nasdaq and S&P 500 piled up a half-dozen distribution days over the past several weeks, indicating some caution is smart.
Amazon Stock Clears Buy Point
Amazon stock was active Thursday, when shares rose above a trendline within a flat base with a 236.53 buy point. The trendline offered an entry around 231.
JetBlue became the first airline to sign up for its in-flight Wi-Fi. The carrier will begin using Project Kuiper, Amazon's low Earth orbit satellite network, in 2027.
News that Amazon-backed AI startup Anthropic completed a $13 billion fundraising round also boosted the stock. The offering gives Anthropic a $183 billion valuation. Amazon Web Services provides most of Anthropic's cloud capacity, and it uses Amazon's Trainium and Inferentia chips.
Amazon's earnings growth has slowed from triple-digit gains (or even better) in the second half of 2023 and early 2024, to gains of 94%, 52%, 86%, 62% and 33% the past several quarters. Analysts expect full-year earnings of $6.55 a share, up 18.4% according to FactSet.
Still, the stock has a solid 95 Composite Rating. Sales growth ranged from 9% to 14% the past eight quarters.
Amazon remains one of the largest online retailers in the world. But cloud computing has been a growing part of the company. The explosive growth of AI data centers is fueling that business. The share of sales for Amazon Web Services has grown every year, to 16.9% in 2024. Online stores accounted for 38.7% and third-party seller services 24.5% last year, according to FactSet.
Amazon has an ATR of 2.03%, according to MarketSurge.
Market Wavers At Highs; Apple iPhone 17 Event, Inflation Reports Due
Netflix One To Watch, Literally
Netflix on Thursday edged above an early entry at 1,251.16 just as the stock cleared resistance at its 50-day moving average. At the same time, Netflix stock also cleared a trendline entry around 1,228. Meanwhile, the stock is forming a cup base with a buy point at 1,341.15. Shares closed the week slightly below the 1,251.16 entry but above the 50-day.
That's a lot to work with, as Netflix holds tightly to its No. 1 spot in the Leisure-Movies & Related industry group. The stock's 97 Composite Rating is by far the best of 21 companies in the group, according to MarketSurge.
The company has reinvented itself multiple times, and its latest vision is to become an entertainment hub. The company is branching out into video games, live sports and other live programming. Netflix has set an ambitious goal of doubling revenue by 2030 and it's aiming for a $1 trillion market cap. Today, it's about $528 billion.
Netflix dominates the subscription streaming video market with a global subscriber base of 301.6 million at the end of 2024. A crackdown on password sharing helped drive new subscriptions, but that growth stalled. It also rolled out a lower-priced plan supported with ads.
Now, Netflix wants Wall Street to focus on revenue and margins as it expands its offerings. The company also has plans to open theme parklike attractions that leverage its popular shows like "Squid Game" and "Stranger Things."
Netflix stock has an average true range of 2.25%.
Shopify Stock
Shopify appears to be forming a new base as shares consolidate following an earnings gap-up on Aug. 6. The stock broke above a trendline Thursday, making the stock actionable.
On Tuesday, the chart made bullish action as shares made a positive price reversal from just above the 10-week moving average and held the 21-day exponential moving average. On the weekly chart, Shopify has formed a three-weeks-tight pattern with a 153.32 buy point, although 144 seems to be an acceptable entry.
Shopify has a Composite Rating of 94, the second highest of 121 stocks in the enterprise software industry group. Only Palantir has a higher rating. Shopify provides cloud software to help companies sell online.
The stock shot up 22% after its most recent earnings report, which beat analysts' expectations. Shopify's current-quarter sales outlook was above estimates, too.
Growth in Europe helped the company increase gross merchandise volume from merchant customers by 30% to $87.84 billion. Enterprise customers also contributed to the strong quarter as the company added major clients in Q2, including Starbucks.
Shopify has an EPS Rating of 95, following earnings gains of 50%, 29%, 25% and 35% the past four quarters. Sales climbed 26%, 31%, 27% and 31%.
Although not directly impacted by tariffs, analysts at Cantor said the company likely has exposure to risks from the end of the "de minimis" trade exemption. The rule, which ended Aug. 29, exempted shipments worth $800 or less to avoid U.S. duties and border checks.
Shopify stock has an ATR of 3.27%.
Capital One Another Stock To Watch
Capital One stock has a cup base with a 232.45 buy point. It now has a handle on a weekly chart, offering a lower 228.16 entry. The relative strength line is near new highs.
The credit card and banking company has turned itself around after a bumpy 2023-24 that saw several quarters of declining EPS. In the past three quarters, however, EPS jumped 38%, 26% and 75%.
Analysts expect full-year earnings of $16.93 a share, an increase of 35%, per FactSet. That's a big improvement over EPS declines of 35% and 29% in 2022 and 2023, and the 11% increase last year.
Analysts are largely bullish on the stock, with 19 of 25 making buy recommendations. The rest have hold ratings on Capital One stock. The consensus price target is 255.52, indicating a 15% potential upside. With the stock setting up in a bullish chart pattern, that goal seems attainable.
On May 18, the company completed its acquisition of rival credit card firm Discover, which included portfolios of personal and home loans. The deal, first announced in February 2024, put Capital One among the 10 largest U.S. banks in terms of assets. Discover continues to serve its customers under its own brand.
In the July 22 earnings call — the first after the acquisition's closing — Capital One said its combined domestic card business was strong, with year-over-year purchase volume growth of 22%. Excluding Discover, purchase volume growth was about 6%.
Capital One — a holding of Warren Buffett's Berkshire Hathaway — has a 95 Composite Rating. Its ATR is 2.28%.
Stocks To Watch: Defense Play Elbit
Elbit Systems is forming an ascending base with a 494.32 buy point. Traders looking for an early entry could draw a trendline from the Aug. 27 high; the stock is poking above that entry. The weekly chart offers a slightly different chart interpretation, with Elbit having cleared the 476.04 buy point of a flat base and already actionable to 499.84.
Elbit is an Israel-based maker of weapons and munitions, and it is a key supplier for Israel's multifront conflict. In last month's earnings report, the company highlighted a "material increase" in buying from the Israel Defense Ministry, and could win additional orders.
A few analysts raised their price targets on Elbit stock over the past couple of weeks. One of them was BofA Securities, which raised Elbit to 540 from 500 on Aug. 26. The firm reiterated a buy rating, citing financial benefits from increased defense spending not just in Israel, but also NATO countries and the U.S.
"Demand for weapons restocking remains robust," analysts said in a report.
Elbit, analysts noted, has partnerships in the U.S. and Europe, and has increased its manufacturing footprint via European subsidiaries. That business gives Elbit a strategic advantage, one likely to benefit from growing global defense spending.
Just last month, the company said it won a $1.635 billion contract for a range of defense products for an unnamed European country. This year, Elbit shares are tracking the Select STOXX Europe Aerospace & Defense ETF. Both are up roughly 80% year to date.
Elbit stock had been stuck below the 225 level for years until it climbed to new highs in November. The stock has an ATR of 3.38 and a Composite Rating of 95.
