Dow Giant Breaks Out; Tesla, Chipotle Boast Rising Profit Estimates


Tesla (TSLA), along with Dow Jones breakout stock Caterpillar (CAT,)

Wednesday’s stocks to buy and watch come from the “Rising Profit Estimates” screen, which finds issues attracting higher price targets and analyst upgrades. In addition to Tesla stock, the latest screen has also highlighted Chipotle Mexican Grill (CMG) and Dow Jones member Caterpillar.

Tesla Stock

Tesla stock continues to trade about 30% above a 207.79 buy point in a double bottom following a June 1 breakout move. Shares rose 1.5% midday Wednesday, still on pace to finish the week with modest losses.

The EV giant is an IBD Leaderboard stock.

On April 19, Tesla reported a big first-quarter earnings decline while revenue missed views. Profit margins for the global EV giant also fell below 20% as the company executes an aggressive price-slashing strategy.

But in early July, the EV leader reported record global deliveries, as price cuts and discounts propelled demand well above Wall Street forecasts. Tesla deliveries ran to 466,140 in the second quarter, sprinting past Q1’s record 422,875 and Q4’s 405,278. That easily beat Q2 estimates of around 445,000, according to FactSet.

For 2023, Tesla earnings are expected to fall 17% before climbing 44% in 2024.

Amid strong fundamentals and big price gains since early January, Tesla stock boasts a near-perfect 98 out of 99 IBD Composite Rating, according to IBD Stock Checkup.

Dow Jones Giant In Buy Range

Dow Jones machinery giant Caterpillar is breaking out past a 250.89 buy point in a cup with handle, according to IBD MarketSmith chart analysis. The 5% buy area goes up to 263.43. Shares tacked on 0.1% midday Wednesday, on pace to add to Tuesday’s breakout gains.

CAT stock started 2023 on a tear as investors followed the money — more than $1 trillion in federal outlays directed toward mining, manufacturing and infrastructure thanks to three big legislative packages signed by President Biden. And that doesn’t include perhaps another $1 trillion in private investment incentivized by federal support.

Caterpillar is an IBD SwingTrader stock and was Tuesday’s IBD Stock Of The Day.

Chipotle Tests Key Level

On June 30, Chipotle stock broke out past a flat base’s 2,139.88 buy point. But shares quickly reversed course and are about 4% below their buy point in today’s stock market.

This week, the stock is testing its key 50-day moving average. Further weakness would send CMG stock deeper below its 50-day line and would likely trigger the 7% sell rule from the latest buy point.

In the latest quarter, Chipotle earnings rocketed 84% to $10.50 per share on a 17% revenue jump to $2.36 billion. Wall Street expected Chipotle to earn $8.95 per share on 16% revenue growth to $2.34 billion.

This year, Chipotle earnings are expected to jump 35%, with a 21% rise in 2024.

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.

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