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Stock market history shows that the best stocks to buy and watch often hail from the top-ranked industry groups. Having teamed up with Nvidia (NVDA), global tech leader Super Micro Computer (SMCI) has powered a 98 Composite Rating, earning top billing in the computer hardware industry, which ranks in the Top 5 of the 197 groups IBD tracks.
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SMCI stock is one of 21 highly rated companies found in the Top 20 industries. HubSpot (HUBS), Cadence Design Systems (CDNS), Synopsys (SNPS), Bentley Systems (BSY) and Ansys (ANSS) also make this stock screen from the tech world.
Other notable names include Crocs (CROX), ELF Beauty (ELF) and Texas Roadhouse (TXRH).
Homebuilders PulteGroup (PHM), Lennar (LEN), Tri Pointe Homes (TPH), Taylor Morrison (TMHC), Meritage Homes (MTH), KB Home (KBH) and Skyline Champion (SKY) have also earned a spot on the list.
Gold stocks DRDGOLD (DRD) and Gold Field (GFI) have also mined their way onto this screen.
SMCI Stock Soars On AI, Investor Demand And Nvidia Partnership
Having made last month’s list of new buys by the best mutual funds, Supermicro continues to soar. SMCI stock gapped up in heavy volume after reporting earnings on May 2. The stock now trades right around an all-time high.
In March, Supermicro announced the first in a line of powerful and power-efficient Nvidia-powered artificial intelligence development platforms.
The new AI development platform is an application-optimized system that excels when developing and running AI-based software. A self-contained liquid-cooling feature addresses the thermal design power needs of various Nvidia graphics processing units (GPUs).
As Supermicro continues its ascent, NVDA stock continues to close in on a new all-time high of its own.
Top Stocks To Watch In Top Industry Groups
To make this screen of top stocks to watch in the top-ranked industries, each company must meet the following criteria:
Best Stocks To Watch In Top-Ranked Industries
| Company | Symbol | Comp Rating | EPS Rating | RS Rating | SMR Rating | A/D Rating |
|---|---|---|---|---|---|---|
| Crocs | CROX | 99 | 98 | 95 | A | B- |
| ELF Beauty | ELF | 99 | 94 | 99 | A | A- |
| HubSpot | HUBS | 99 | 99 | 95 | B | B |
| Lantheus | LNTH | 99 | 89 | 97 | A | B+ |
| ResMed | RMD | 99 | 94 | 82 | A | B |
| Skyline Champion | SKY | 99 | 98 | 95 | A | B- |
| Ansys | ANSS | 98 | 87 | 90 | B | B- |
| Cadence Design Systems | CDNS | 98 | 95 | 93 | A | B+ |
| PulteGroup | PHM | 98 | 98 | 97 | A | A- |
| Super Micro Computer | SMCI | 98 | 99 | 99 | A | B- |
| Texas Roadhouse | TXRH | 98 | 85 | 92 | A | B |
| Tri Pointe Homes | TPH | 97 | 90 | 97 | B | B+ |
| DRDGOLD | DRD | 96 | 84 | 99 | B | A+ |
| Gold Field | GFI | 96 | 94 | 99 | A | A+ |
| KB Home | KBH | 96 | 92 | 95 | A | B+ |
| Lennar | LEN | 96 | 88 | 94 | B | B |
| Synopsys | SNPS | 96 | 91 | 89 | A | B |
| Taylor Morrison Home | TMHC | 96 | 97 | 96 | B | B+ |
| Bentley Systems | BSY | 95 | 80 | 86 | B | B+ |
| Meritage Homes | MTH | 95 | 87 | 96 | B | B |
| West Pharmaceutical Services | WST | 95 | 81 | 96 | B | B |
Data as of May 5, 2023
Build Your Watchlist With Stock Ratings And Stock Lists
Running stock screens with the IBD Stock Screener or MarketSmith is an effective way to streamline your research.
You can also zero in on the best stocks to watch using IBD stocks lists based on a wide range of preset filters. You’ll find top-rated stocks meeting the criteria of the IBD 50, IBD Sector Leaders, IBD Big Cap 20, IPO Leaders and more.
In the screen above for the best stocks to watch in the top industries, you’ll find PHM and HUBS stock on the IBD 50 list of top growth stocks. HubSpot joins IBD Long-Term Leader CDNS on the IBD Big Cap 20.
Once you’ve put together potential stock picks for your watchlist, you’ll want to evaluate your ideas with IBD Stock Checkup. With pass, neutral or fail ratings for each of your stocks, IBD Stock Checkup provides a detailed look at both the fundamental and technical health of the companies on your watchlist.
Based on the CAN SLIM system, the Composite Rating provides an overall score, taking into account each of the IBD ratings. The single score considers how a company and its stock are performing in terms of annual and quarterly earnings growth as well as its relative strength vs. the rest of the market. The score also accounts for sales, profit margins and institutional demand.
But note that you should not buy a stock solely on its ratings or placement on one of IBD’s stock lists. No matter how compelling a company’s story may seem, savvy investors will always check the technical action in the stock chart before buying.
Check The Chart To Know When To Buy Stocks
Using stocks lists helps you zero in on the best stocks to watch. Stock ratings look under the hood to diagnose a company and its stock’s fundamental and technical health. Both stock lists and stock ratings help you understand what to buy. But to fully understand when to buy stocks, take a look at the stock chart.
It’s also critical to understand what type of environment you’re currently in. Is it a bull market when most stocks go up? Or a bear market when most stocks go down? Or is it a volatile, choppy and uncertain time when the market indexes tend to fail to make any sustained headway? That was the case for much of 2022.
Use stock charts to evaluate both the market indexes and individual stocks. Charts will help you pinpoint the best time to buy stocks by identifying support and resistance, as well as buy points and buy zones. Using charts also helps you identify warning signs and when to sell stocks.
So when searching for potential stock picks and stocks to watch like SMCI, HUBS and others, always check the charts. They provide the most unbiased diagnosis of a stock’s health.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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