You are currently viewing Vertex makes a bullish move on earnings, leading 5 stocks to watch

Vertex makes a bullish move on earnings, leading 5 stocks to watch

Your five stocks to watch this week come from a variety of sectors, amid signs of broadening market leadership: Lithium giant Chemical and mining company (SQM), semiconductor designer Monolithic power systems (MPWR), Trade metals (MCC), Vertex Pharmaceuticals (VRTX) and Chinese electric vehicle manufacturer BYD (I’M GOING).


The stock market is in a confirmed uptrend, with major indexes showing resilience on Friday despite a hot jobs report that suggested a more aggressive Federal Reserve.

VRTX stock is on IBD Leaderboard and SwingTrader.

Stock of m²

Chile-based chemical manufacturer Sociedad Quimica Y Minra is involved in the production and distribution of fertilizers, potassium nitrate, iodine and lithium. Lithium is now SQM’s core business, with increasing production.

SQM’s exposure to lithium makes it a key player in the electric vehicle boom, amid insatiable demand for lithium-ion batteries. The price of lithium has skyrocketed this year, making it a major contributor to SQM’s revenue. S&P Global Commodity Insights forecasts that the CIF price of lithium carbonate in Asia will average $41,708 per ton in 2022, more than triple that of 2021.

SQM’s fertilizers are also in high demand, although prices are far from their peaks. Its specialty plant nutrition products accounted for 31% of sales in 2021. Analysts believe SQM is the world’s largest producer of potassium nitrate. Potassium nitrate is considered an ideal fertilizer for fruits and vegetables in rapidly changing climatic conditions.

SQM stock is consolidating with an official buy point of 115.86, according to MarketSmith. It’s formed a handful around its 50-day line, but it’s a little too low in the base to be appropriate. Still, investors can use 99.84 as an early entry.

SQM stock fell 5.6% to 92.79 last week, closing just below its 50-day line.

The relative strength line for SQM stock is trending lower, but still near multi-year highs. His RS rating is 98 out of 99, the best possible. Its EPS rating is 84. The company has posted five consecutive quarters of profit and revenue growth.

SQM publishes its results on August 17. FactSet analysts expect EPS of $3.12 versus 31 cents in the year-ago quarter. Revenue is expected to grow 288.6% year-over-year to $2.285 billion.

Peers Albemarle (ALB) and Livent (LTHM) posted strong earnings last week, with the former again raising its forecast sharply. But their actions did not reflect the positive news. ALB stock, which has a cup-with-handle buy point of 273.78, fell 2.6% for the week. LTHM stock fell 0.9%, trading around its 50- and 200-day lines.

Monolithic Power Stock

Monolithic Power, based in Kirkland, Washington, manufactures semiconductor-based electronic power control systems.

MPWR shares rose 9.4% on Aug. 2 after the company smashed analyst estimates for the second quarter and raised its outlook for the current period.

Monolithic Power achieved adjusted EPS of $3.25, an 80% jump from the same period last year. Sales rose 57% year over year to $461 million in the June quarter.

This is the third straight quarter of accelerating growth in sales and earnings for the company.

For the current quarter, Monolithic expects revenue of $480 million to $500 million. The midpoint of $490 million is well above consensus for $458 million.

MPWR stock had a long consolidation with an official buy point of 580.10.

Shares jumped nearly 15% to 532.33 for the week. But after running for five straight weeks straight from the bottom, MPWR stock might need a break. Ideally, stocks would form a decent handle, forging a lower buy point and letting the moving averages catch up a bit.

The RS line of the MPWR stock is at its highest. Its RS rating is 94, while its EPS is the best possible 99.

Stock of commercial metals

Commercial Metals, based in Irving, Texas, manufactures, recycles and markets steel and metal products in North America and Europe. Its North American segment accounted for 84% of its total revenue in the last quarter.

Major infrastructure spending projects in the United States fueled higher steel inventories earlier this year as the price of steel surged. However, shares of CMC and other members of the group fell in May. More recently, CMC stock and some of its peers have rebounded.

CMC stock is trading just 6% below a double bottom 42.99 buy zone. The shares rose 2% last week to 40.43.

One more day and the trading metals will have a handle on a daily chart, giving it a new buy point of 41.35. But no handle will appear on a weekly chart just yet.

The company posted six consecutive quarters of profit growth and seven consecutive quarters of revenue increases. It has a class-leading 92 RS rating and 99 EPS rating.

Summit Stock

VRTX stock rebounded off its 50-day line on Friday, breaking a trendline after strong earnings and higher expectations. Shares rose 4.8% to 288.03 on Friday, moving in heavy volume

It earned an EPS of $3.60, topping views for $3.47. Sales rose 22% to $2.2 billion, also above estimates of $2.13 billion.

The company increased its full-year sales outlook by $200 million. It now expects $8.6 billion to $8.8 billion in sales of its cystic fibrosis drugs.

Cystic fibrosis drug Trikafta, Vertex’s biggest moneymaker, had sales of $1.89 billion. Analysts were expecting $1.81 billion to $1.86 billion.

VRTX stock is actionable from Friday’s move. Its relative strength line has increased with its share price over the past week. It has an RS rating of 95 and an EPS rating of 99.

Tesla vs. BYD: China’s booming electric vehicle giant is going global

WILL Stock

China-based BYD more than tripled its electric vehicle sales in July after more than tripling second-quarter sales year-over-year. The Warren Buffett-backed electric vehicle maker sold a record 162,530 new-energy vehicles in July, up 222% from a year earlier and 21% from June.

In the first seven months of 2022, BYD sold 803,880 NEVs, up 292% from a year ago.

The You’re here (TSLA) rival will begin deliveries of the BYD Seal, a Model 3 challenger, later this month. The automaker is also launching a major overseas expansion. It will begin deliveries to Australia and New Zealand in the coming weeks and plans to sell electric passenger vehicles in Germany and Sweden before the end of the year, among many other countries in Asia and Europe. It recently laid out plans to enter the Japanese market early next year.

BYD stock is working on further consolidation. Shares edged higher for a second straight week, but fell back below the 50-day line after peeking above it on Aug. 4. early entry.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.


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