Cardinal Health (CAH), Eli Lilly (LLY) and Shockwave Medical (SWAV) are this week’s top stocks to watch as they navigate a challenging market. World Wrestling Entertainment (WWE) and Arista Networks (ANET) also make the cut.
Many medical stocks, including Cardinal Health and Eli Lilly, are defensive, or defensive growth. They often perform better in weak or choppy markets, but there is no guarantee that they will.
All of this week’s top stocks have strong RS lines. The rising relative strength lines mean that they are outperforming the S&P 500.
The five stocks are all near buy points. But several had a very bad Friday — a cautionary tale about buying stocks amid an unproved rally attempt in a bear market.
However, it’s a good time to build your investing watchlist.
Cardinal Health Stock
The health stock fell 1.8% to 68.22 in Friday’s stock market trading but its RS line made a new high. CAH stock rose 2.3% on the week, finding support at the 10-week moving average.
Cardinal Health stock shows a flat base with a buy point at 72.38, a dime above the Sept. 2 high. The drug distributor may offer an early entry above the Wednesday high of 70.25.
Shares peaked in early September after successfully breaking out in August. They have pulled back since, but CAH stock is just 6% below its 52-week high. By comparison, the S&P 500 is 24.5% below its high.
CAH stock shows an IBD Composite Rating of 90 out of 99. It also bears a Relative Strength Rating of 96, meaning it has outperformed 97% of all stocks in IBD’s database over the past 12 months.
Cardinal Health earns a mediocre EPS Rating of 74 out of 99.
But Cardinal earnings returned to growth in its latest quarter. On a per-share basis, Cardinal Health earnings are seen rebounding 3% for the full year and growing 18% in fiscal 2024.
Shares of Eli Lilly shed 1.9% to 326.66 Friday, trimming gains for the week to 1%. The RS line for LLY stock continues near highs.
The drug giant is retesting a 335.43 buy point from a flat base. LLY stock is holding up after a gap-up Sept. 28, which saw shares briefly seize the flat-base buy point.
Two bits of news have buoyed the drug stock. Its gap-up came after Biogen (BIIB) reported a surprise, successful trial for an experimental drug to treat Alzheimer’s disease. Eli Lilly has a similar drug.
And Eli Lilly itself said Oct. 6 that an experimental obesity drug, seen as a possible massive blockbuster, is being fast-tracked.
LLY stock earns a Comp Rating of 87, RS Rating of 93 and an EPS Rating of 86.
Shares of Shockwave plunged 5.4% to 263.99 Friday, accounting for all of the 5.1% weekly loss. SWAV stock undercut the 10-week line but volume was below average. Its RS line is just below highs.
On Thursday, Shockwave stock touched a trendline, then turned lower.
It now has a proper base with a buy point at 315, which is 10 cents above the Aug. 29 high. But first it must retake the 50-day line.
SWAV stock has a 95 Comp Rating, 97 RS Rating and 78 EPS score.
The medical device maker is winning acclaim for catheters that target calcium buildup in blood vessels. It’s similar to an existing technology used to break up kidney stones.
Revenue has been growing at a triple-digit clip for several quarters. Shockwave earnings are seen bounding 38% in 2023. It will see its annual profit on a per-share basis this year.
World Wrestling Entertainment shed 0.7% to 72.73 Friday but still rose 3.65% on the week. The RS line for WWE stock made a bullish new high, indicated by a blue dot at the end of that line.
WWE stock cleared an early entry at 70.72 Sept. 30. It came up to a traditional cup-shape buy point of 75.33 on Oct. 5, then backed off. Shares are in range of the early entry and could form a handle.
World Wrestling Entertainment earns a Comp Rating of 96, RS Rating of 96 and an EPS Rating of 97.
The company beat earnings views in August amid an uptick in viewership across its premium live content. Its former CEO Vince McMahon stepped down after misconduct allegations.
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Arista Networks shed 4.5% to 116.41 Friday but rose 3.1% for the week. The RS line for ANET stock also made a new high.
ANET stock moved above a downward-sloping trendline entry on Wednesday and Thursday, but tumbled back below it on Friday. Shares also fell back below their 50-day and 200-day lines.
The provider of cloud networking software and hardware carries a perfect 99 Comp Rating, 90 RS Rating and a 95 EPS Rating.
It shows three quarters of earnings acceleration, capped with a 59% gain in the latest quarter. Over the same period, revenue growth ranged between 27% and 49%.
This top tech stock is expected to benefit from the growth of data centers. ANET’s high-end ethernet switches speed up communications among racks of computer servers.
For more quality stocks with strong RS lines, check out IBD’s Relative Strength At New High stocks list. Our stock research platform MarketSmith also has a screening tool for stocks with RS lines making new highs.
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