Broadcom is the IBD Stock Of The Day as the fabless chipmaker powers higher amid a down market for semiconductor stocks. AVGO stock is approaching a formal buy point.
AVGO stock has formed a cup-with-handle base with a buy point of 645.41, according to IBD MarketSmith charts. Aggressive investors could have bought Broadcom shares when the stock cleared a short trend line on Tuesday, based on IBD trading guidelines.
In a positive sign, AVGO stock jumped above its 50-day moving average line on Tuesday. Also, its relative strength line is hitting new highs as Broadcom outperforms the S&P 500 index.
On the stock market today, AVGO stock jumped 4.4% to close at 608.15
Semiconductor Stocks Called Oversold
Earlier on Tuesday, in a note to clients, Piper Sandler analyst Harsh Kumar changed his tone on semiconductor stocks. He moved to a positive stance from a cautious position on the sector after a sell-off in chip stocks this year. The Philadelphia semiconductor index, or SOX, was down about 26% as of Monday's close.
"We feel it is prudent to start buying great companies given the current pullback," Kumar said. "We are a bit baffled by the steep declines in semiconductor stocks as of late."
Kumar reiterated his overweight, or buy, rating on AVGO stock with a price target of 750.
AVGO Stock Ranks Second In Group
Broadcom ranks second out of 34 semiconductor stocks in IBD's fabless chipmaker industry group, according to IBD Stock Checkup. AVGO stock has an IBD Composite Rating of 92 out of 99. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
AVGO stock has an IBD Relative Strength Rating of 92. That puts it in the top 8% of stocks for performance over the past 12 months.
The next potential catalyst for Broadcom stock is the company's fiscal second-quarter earnings report, due June 2.
IBD added AVGO stock to its Leaderboard and SwingTrader lists on Tuesday.
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