Meta platforms (META) and JPMorgan Chase (JPM) tops this weekend’s watch list of five stocks near buy points as the S&P 500 heads into the second half of 2024, up 14.5% year-to-date and within half a percent of a record high. Joining Meta and JPM is an enterprise software company monday.com (MNDY), supplier of work supplies and uniforms Cintas (CTAS) and discount clothing retailer Burlington stores (BURL).
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Nasdaq returns after hitting 18,000; Uber, JPMorgan, Hilton in the spotlight
Meta is part of the IBD Leaderboard portfolio of elite stocks. SwingTrader, which aims to take advantage of short-term trends to collect some singles and doubles, also has a meta position. MNDY is part of the IBD 50 list of leading growth stocks. Cintas is on the watchlist for the IBD Long-term leaders list of stocks with a track record that allows them to take action in the event of a constructive pullback.
Meta-inventory
After a dramatic recovery back into the trillion-dollar club and joining the Magnificent Seven, Meta has been consolidating since early April but has braced for a potential rally. The recent respite came as investors weighed Meta’s dominance in the social media advertising space against expectations of moderate revenue growth versus tough year-ago comparisons and hefty AI-related spending.
But some analysts find more reasons to be optimistic. On June 20, KeyBanc raised its price target on Meta stock from 475 to 540, maintaining an outperform rating. The analysts cited rising Meta ad prices in Q2, which should see quarterly revenue close to the high end of guidance. As of June 12, Citi Buy Meta was listed as a top pick. The analysts noted that an increasing percentage of Reels’ short-term videos now contain ads, which is one reason they believe Meta’s share of ad spend is growing.
Meta entered a buy zone on Thursday before falling 3% to 504.22 on Friday as shares moved lower. Still, according to a MarketSurge analysis, Meta is within 2% of a 514.01 buy point for a cup with handle.
Amid mixed signals, this remains; 3 May 7 stocks in buy zones
JPMorgan stock
Following news this week that it had passed the Federal Reserve’s stress test and still had plenty of excess Tier 1 capital left, JPMorgan announced Friday that it would increase its quarterly dividend from $1.15 to $1.25. In addition, the board authorized the repurchase of JPM shares worth $30 billion.
The expanded buyback follows CEO Jamie Dimon’s comment at the May 20 investor day that JPMorgan “isn’t going to be buying back a lot of shares at these prices.” During the investor day, the company raised its 2024 net interest income forecast to $91 billion from $90 billion.
Net interest spreads typically benefit when the Treasury yield curve steepens, or inverts less, as long-term yields rise more than short-term yields. That happened on Friday, when the 10-year Treasury yield surprisingly rose despite the most muted inflation report since late 2020. Markets were apparently reacting to former President Donald Trump’s convincing debate victory over President Biden.
Strategists believe financial stocks are likely to benefit from a second Trump term.
JPM shares rose 1.55% to 202.26 in Friday’s market action. Friday’s move lifted JPM past an early entry point, making it actionable now. The buy signal flashed as JPM shares broke convincingly above their 50-day and 21-day moving averages while breaking a trend line that has extended from their May 20 high.
JPM has an official flat-base buy point of 205.88.
Monday.com Stocks
Monday.com, a 2021 IPO, continues to expand beyond its roots providing project management software to small businesses. Featured as an IBD Stock Of The Day on May 28, the company’s cloud-based solutions now include customer relationship management and product development.
Revenue grew 34% to $216.9 million in the first quarter, while larger accounts with at least $50,000 in annual recurring revenue grew about 50%, William Blair analyst Arjun Bhatia wrote in a May 15 note.
MNDY stock posted a 21.4% gain over its first-quarter results as it raised full-year revenue guidance by $16 million on better-than-expected reception of the price hike and healthy demand, noted Bhatia, although he characterized the outlook as conservative.
Monday.com saw record adoption of its newer products and is set to launch another IT service and support software later this year.
The company’s net retention rate was 110%, and William Blair is seeing that rate increase as it sells products to each other and the price increase is gradually rolled out to customers with annual contracts.
Last week, as software stocks outperformed, MNDY stock rose 7% to 240.76, rebounding from the 10-week line. On Thursday, shares broke a downtrend in a short consolidation that is fractionally too deep to be a flat base. It looks like a condensed double bottom base with a buy point of 239.54. On Friday, shares broke that entry, roughly coinciding with a 239.22 buy point from a previous base.
On Friday, as software stocks continued their recent outperformance, MNDY stock rose 1.9% to 240.76. That capped a weekly gain of 7%, a recovery from the 10-week line.
According to IBD Stock Checkup, MNDY stock has an excellent IBD Composite Rating of 97, based on a range of technical and fundamental factors.
Trump’s victory in the debate boosted the S&P 500. Then this happened.
Cintas shares
Cintas reported third-quarter results on March 27, showing revenue up 10% to $2.41 billion, including organic revenue growth of 7.7%. Earnings growth accelerated for the second quarter in a row, rising 22% to $3.84 per share.
Gross margin as a percentage of sales rose to 49.4% from 47.2% a year earlier, as continued efficiency efforts paid off.
Cintas sees strong double-digit percentage growth in its First Aid and Fire businesses, with ample runways, RBC Capital said in a research note following the Q3 report. RBC raised its price target from 675 to 725 and maintained an outperform rating.
The date for reporting fourth-quarter results has not yet been announced, but it fell on July 13 last year.
CTAS lost 1.6% to 700.26 on Friday, falling below its 704.84 buy point after a flat base dating back to late March. CTAS found support at the 21-day exponential average.
Cintas announced a 4-for-1 stock split on May 2, effective in September.
Burlington Stores Stock
Burlington Stores was IBD Stock Of The Day on June 14, with the off-price clothing retailer gearing up for a new entry after BURL stock rose 17.6% on May 30 on the back of beat-and-raise Q1 results and -expectations. That entry came on June 20, when BURL broke the trendline running down what could be considered a high-handle formation.
Since then, BURL has risen within the buy zone from the previous Cup base, which had a buy point of 232.69.
Following the first-quarter report, Evercore ISI raised its BURL price target to 274 from 270, maintaining an outperform rating. The research firm said Burlington’s 10.5% revenue growth was encouraging, but analysts were even more enthusiastic about the improvement in margins.
During the earnings call, Burlington CFO Kristin Wolfe provided an update on supply chain initiatives to “streamline operations, reduce handling, shorten time to process goods and ultimately save labor dollars” in distribution centers. “In the first quarter, we found that we were able to realize these savings a little faster than we originally expected.”
Thanks in part to these efforts, Burlington is targeting margin expansion of 400 basis points over five years, from a baseline of 6% in 2023. BURL has an IBD Composite Rating of 97 out of a possible 99.
After each trading day, be sure to read IBD’s The Big Picture column for the latest on current stock market trends and what they mean for your trading decisions.
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