MercadoLibre, SAP, StoneX Group, Build-A-Bear Workshop and Uber Technologies are stocks to watch this week as the S&P 500 and Nasdaq composite erased losses.
The S&P 500 made new highs this week for the first time since February, when a bear market took the index down as much as 21%. The Nasdaq sank nearly 27% from its prior peak on Dec. 16. At 131 days since the prior record close, the Nasdaq has made its fastest recovery from a bear market since 2020, according to Dow Jones Market Data.
This week's stocks to watch stretch across the consumer, technology and financial sectors.
With the S&P 500 and Nasdaq 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.
Uber A Stock To Watch As It Forms Base
Uber poked above the 93.60 buy point of a flat base Thursday, only to duck back into the base. That entry remains in play as shares trade 3% from new highs. The current base is third-stage, but the stock has gone through a couple of long price consolidations that theoretically should have cleared out weak holders. The stock found support at the 50-day moving average as it formed its base.
Uber shares fell Friday after Canaccord downgraded Uber and rival Lyft to hold from buy and reduced Uber's price target to 84 from 90. The stock currently trades around 91. The analyst sees the potential for a market controlled by a few autonomous-vehicle firms, TheFly.com reported.
Uber is already partnering with Alphabet's Waymo in Atlanta and Austin, Texas, and may expand to other cities.
On Wednesday, Cantor Fitzgerald raised its price target on Uber to 106 from 96 and kept an overweight rating. An analyst believes Uber "has plenty of irons in the fire" to help sustain mobility rides growth, according to TheFly.com.
Uber stock has a 3.26% ATR and a Composite Rating of 97, one of the highest in the leisure services industry group.
MercadoLibre Rises From Support
The Latin America online shopping service and payments giant is rising from support after pulling back to the 50-day moving average earlier this month. The stock is also forming a flat base with a 2,635.88 buy point.
The company was profiled in Time Magazine's 100 Most Influential Companies, the only one from Latin America on the list.
MercadoLibre has expanded into 18 Latin American countries. It has also become a fintech play with its Mercado Pago service, which processed nearly $200 billion in payments last year with over 60 million active monthly users.
Susquehanna raised its price target on the stock to 2,975 from 2,840 on Thursday, and maintained a positive rating.
The stock is one of four 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%.
MercadoLibre stock has an average true range of 2.60%.
SAP Stock Finds Support
SAP shares pulled back to the 50-day moving average in mid-June and have been rebounding from that support level. The stock is in a buy zone, although the relative strength line is lagging.
The company's 95 Composite Rating is fifth highest in the enterprise software industry group. That's not necessarily bad for a group with nearly 120 companies.
Germany's largest software firm has been turning its profit performance around. EPS fell 13% and 5% across two quarters before Q1's jump to 89% growth, per FactSet. For the current and next two quarters, analysts expect EPS to rise 35%-39%.
Sales rose 7%, 12%, 6% and 19% the past four quarters. A cloud-computing and AI push is driving growth.
This week, a Jefferies analyst cut the price target to 290 euros from 300 euros but kept a buy rating. Mild profit-taking was expected, and the analyst believes SAP remains "the best durable growth story in the sector," TheFly.com reported.
SAP has an ATR of 1.62%.
StoneX Group: A Cup Base
StoneX Group joins the stocks to watch as it forms a well-shaped cup base with a 97.17 buy point. Investors could have used the move above the 10-week line around 87 as an early entry. The current base is third stage, which means a breakout to new highs comes with higher risk than in earlier patterns. Its relative strength line has some catching up to do.
The company provides a range of financial services, including cross-border payments. It also handles commodity logistics and hedging, liquidity for fixed-income products plus futures and options processing.
"Since the beginning of this fiscal year, increased market volatility, coupled with our continued strong client acquisition and engagement, has helped offset the decline in short term interest rates," Executive Vice-Chair Sean O'Connor said in the May 7 earnings release. "If a period of sustained volatility is ahead of us, we believe this will be yet another positive driver for the continued growth in our business."
Earlier this year, StoneX acquired R.J. O'Brien, the oldest futures brokerage in the U.S., a deal that strengthens its position in global derivatives. It also agreed to acquire Plantureux et Associes, a Paris agricultural commodities brokerage, offering a strategic foothold in the French agricultural commodities market.
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The stock has an EPS Rating of 91. Earnings fell 15% in Q2 of 2024 the climbed 19%, 124% and 28% the next three quarters. For the current quarter, analysts' consensus estimate is an increase of 11% to $1.41 a share. Revenue is expected to edge up 2% to $927.9 million, according to FactSet.
StoneX stock has an ATR of 2.73% and a Composite Rating of 96.
Stocks To Watch: Build-A-Bear
Build-A-Bear Workshop is rebounding after receding from an all-time high. Investors could use Tuesday's high at 53.67 as an entry, although the stock appears to be forming a cup or cup-with-handle base. It would be a late-stage base, however. The Relative Strength Rating is a solid 95 and the RS line is near highs.
The stock is one of the most successful over the past five years despite lacking big growth. The company has a three-year EPS growth rate of 13% and three-year sales growth rate of 4%, according to the IBD Stock Checkup.
Analysts' consensus earnings estimates for the next three quarters are for an 8% increase, then declines of 18% and 11%, according to FactSet. Analysts forecast year-over-year growth of 2% to 4% the next four quarters.
The few analysts who cover the stock all have buy ratings on Build-A-Bear. Keegan Cox of D.A. Davidson raised his price target to 60 from 50 after the company beat fiscal first-quarter expectations on May 29. He cited a solid performance, "the right tariff levers in place, and upside from the natural margin uplift with increased commercial and franchising sales."
Build-A-Bear has a Composite Rating of 89 and an ATR of 4.81%.