Your five stocks to watch this week come from a variety of sectors, amid signs of expanding market leadership: the lithium giant Chemical Society I Minra (square meters), semiconductor designer Monolithic feeding systems (MPWR), Commercial metals (CMC), Vertex Pharmaceuticals (VRTX) and electric vehicle manufacturer from China BYD (I WILL DO).
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The stock market is in a confirmed bullish trend, with major indexes showing resilience on Friday despite a tepid jobs report suggesting a more aggressive Federal Reserve.
VRTX shares are on IBD Classification Board and SwingTrader.
Stock of square meters
Chile-based chemical manufacturer Sociedad Quimica Y Minra is involved in the production and distribution of fertilizers, potassium nitrate, iodine and lithium. Lithium is SQM’s core business now, with production on the rise.
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 risen this year, making it a major contributor to SQM’s revenue. S&P Global Commodity Insights forecast CIF Asia lithium carbonate price to average $41,708 per tonne in 2022, more than triple 2021.
SQM fertilizers are also in high demand, although prices are below their peaks. Its specialty plant nutrition products accounted for 31% of sales in 2021. Analysts estimate that SQM is the world’s largest producer of potassium nitrate. Potassium nitrate is considered an ideal fertilizer for fruits and vegetables amid rapidly changing climatic conditions.
SQM shares are in consolidation with an official buy point of 115.86, according to MarketSmith. A handle has formed around its 50-day line, but it is a bit too low at the base to be adequate. Still, investors can use 99.84 as an early entry.
Shares of SQM fell 5.6% to 92.79 last week, closing just below its 50-day line.
The relative strength line for SQM stock is trending down, but still near multi-year highs. Its RS rating is 98 out of a possible 99. Its EPS rating is 84. The company has posted five consecutive quarters of profit and revenue growth.
SQM reports earnings on August 17th. FactSet analysts expect EPS of $3.12 versus 31 cents in the year-ago quarter. Revenue is seen rising 288.6% year over year to $2.285 billion.
The colleagues Albemarle (ALB) i Living (LTHM) posted strong gains last week, with the former sharply raising guidance again. But his actions did not reflect the positive news. ALB shares, which have a cup-with-handle buy point of 273.78, fell 2.6% for the week. Shares of LTHM fell 0.9%, trading around its 50-day and 200-day lines.
Monolithic energy stock
Kirkland, Wash.-based Monolithic Power makes semiconductor-based electronic power control systems.
Shares of MPWR rose 9.4% on Aug. 2 after the company crushed analysts’ estimates for the second quarter and raised its outlook for the current period.
Monolithic Power posted 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.
It marked the third consecutive quarter of accelerating sales and profit growth for the company.
For the current quarter, Monolithic expects revenue of $480 million to $500 million. The midpoint of $490 million is well above the consensus of $458 million.
MPWR stock has been in a long consolidation with an official buy point of 580.10.
Shares rose nearly 15% to 532.33 for the week. But after running straight off the bottom for five straight weeks, MPWR stock could use a breather. Ideally, the stock should form a decent handle, forging a buy point lower and letting the moving averages catch up a bit.
MPWR’s stock RS line is maxed out. His RS rating is 94, while his EPS is the best possible 99.
Commercial stock of 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 most recent quarter.
Major infrastructure spending plans in the US drove steel stocks higher earlier this year as the price of steel rose. However, shares in CMC and others in the group retreated in May. More recently, shares of CMC and some of its peers have recovered.
CMC shares are trading just 6% below a buy zone of the 42.99 buy point of a double bottom. Shares rose 2% last week to 40.43.
One more day and Commercial Metals will have a hold on a daily chart, giving it a new buy point of 41.35. But for now no ID will appear on a weekly chart.
The company has reported six straight quarters of profit growth and seven consecutive quarters of revenue increases. He has an RS rating of 92 and an EPS rating of 99 in the top tier.
Vertex stock
Shares of VRTX rallied from its 50-day line on Friday, breaking a trend line after strong earnings and higher guidance. Shares rose 4.8% to 288.03 on Friday, moving on heavy volume
It reported EPS of $3.60, beating views by $3.47. Sales rose 22% to $2.2 billion, also above estimates of $2.13 billion.
The company raised 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 money maker, earned $1.89 billion in sales. Analysts had expected between $1.81 billion and $1.86 billion.
VRTX stock is actionable from Friday’s move. Its relative strength line rose along with the stock price last week. He has an RS rating of 95 and an EPS rating of 99.
Tesla vs. BYD: Booming China EV Giant Going Global
WILL STOCK
China-based BYD tripled 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 up 21% from June.
In the first seven months of 2022, BYD sold 803,880 NEVs, up 292% from the same period last year.
The Tesla (TSLA) rival will begin delivering the BYD Seal, a Model 3 challenger, later this month. The automaker is also embarking on 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 has recently set plans to enter the Japanese market early next year.
BYD shares are working on a new consolidation. Shares rose slightly for the second week in a row, but closed below the 50-day line again after peeking above it on August 4. A strong move above the 50-day moving average, and above the July 29 high of 38.35, would offer an early entry.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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