For your watchlist this week are five hot stocks with explosive growth in the early stages of forming new buy points: Trade Desk (TTD), Shopify (SHOP), Twilio (TWLO), Zoom Video Communications (ZM) and Beyond Meat (BYND).
Hot Stocks To Watch
Shopify stock, Trade Desk stock and Zoom stock have all more than doubled this year, while Twilio stock is up some 60% in 2019. Beyond Meat stock has had a staggering debut, rising more than 560% since its May 2019 IPO.
IBD’s investing methodology recommends buying stocks that are already in uptrends. But it’s important to see those stocks in a proper buying area before jumping in. Given the powerful moves by these five stocks this year, investors should keep them on their radar for when they break out again.
New Buy Points Taking Shape
It’s key to point out that Trade Desk, Shopify, Twilio, Zoom Video and Beyond Meat have only been consolidating for about four weeks. Proper flat bases take a minimum of five weeks to form. The cup base takes six weeks, while the cup-with-handle and double-bottom bases take at least seven weeks to form.
If any of these hot stocks break out to new highs before consolidating long enough to shape a proper base, they could potentially be buyable for short-term holders or aggressive traders.
Trade Desk Stock
Trade Desk stock has popped 109% in 2019. Shares are 5.4% below a potential buy point at 258.10 for a third-stage base. The strong move this year comes even amid a nearly 15% one-day drop on the digital advertising platform’s last earnings report.
The relative strength line for Trade Desk stock is below recent highs as shares consolidate, but it has moved sharply higher this year.
Shopify stock, in the hot enterprise software industry group, is trading 8.6% below a potential buy point at 339.04. Shares of the e-commerce platform have found support at the key 50-day moving average along their explosive run, sparked by strengthening earnings growth.
Shopify stock has surged 122% so far this year. Like Trade Desk, the relative strength line for Shopify stock has spiked in 2019.
Enterprise software peer Twilio has been hugging its 50-day moving average along its climb. It’s now 5.9% below a 151.10 buy point. But the stock’s last two breakouts from proper bases quickly failed, triggering sell signals.
That means Twilio stock has likely been difficult for CAN SLIM-style traders to handle, despite the big move higher.
Trade Desk, Shopify and Twilio did not reset their base counts during the 2018 correction, making their new bases later-stage ones. Those have a higher chance of failing vs. early-stage bases.
But recent IPOs Zoom Video and Beyond Meat are by definition in the early stages of growth. Zoom stock is up more than 160% from its April 2019 IPO price of 36 a share. The stock broke out of a narrow IPO base with a 74.27 entry early on in its run.
Zoom stock then staged a breakout over a 91.56 entry, but pulled back after a quick run-up to trigger a sell rule. A new buy point is emerging at 107.44, and shares are trading 13% below that level.
Beyond Meat Stock
Beyond Meat stock has had a massive run that began with an IPO-base breakout over the 85.55 mark. Shares are now trading 17.4% below a potential entry at 201.98. The action for Beyond Meat stock shows how investors can make massive profits with IPO stocks in a short time period. But buying out of an IPO base is key.
Zoom stock is already profitable, while Beyond Meat stock is expected to turn a profit in 2020. Both boast triple-digit sales growth.