Tech stocks continue to lead the list of new buys by the best mutual funds, led by semiconductor stocks. Lam Research (LRCX), Applied Materials (AMAT), Teradyne (TER), Taiwan Semiconductor (TSM) and Micron Technologies (MU) are just some of the chip stocks that made the cut.
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While semiconductor stocks dominated, farming machinery giant Deere (DE) topped the list, with 14 funds harvesting an estimated $560 million worth of shares.
Datadog (DDOG), PayPal (PYPL), Square (SQ), Etsy (ETSY) and Shopify (SHOP) were also among the 16 top stocks to buy and watch garnering at least $100 million each in new investments.
The rebound in tech stocks, particularly the semiconductor sector, since March 2020 has been remarkable. From the lows in March through the end of last year, the iShares PHLX Semiconductor ETF (SOXX) rose as much as 152%, reflecting the big moves made by chip stocks like LRCX, AMAT and TSM stock.
Note: Be sure to check these Excel files to see all the stocks on the latest list of new buys and list of new sells by the best mutual funds.
Best Mutual Funds Eye Stocks To Watch Near Buy Points
Many of the semiconductor stocks and other names on the list, such as Etsy, PayPal and Deere stocks have climbed beyond buy range. But several are forming chart patterns or near new buy zones.
Earnings season can provide the catalyst for stocks to soar — or sink. Prepare ahead of time by building an earnings season action plan and checking the earnings calendar every Friday.
DDOG Stock
Datadog stock has cleared a 11.59 entry from a second-stage cup with handle. The provider of cloud-based security software is set to report Q4 earnings on Feb. 11. Consensus analyst estimates for the 2019 IPO stock call for a second straight quarter of triple-digit earnings growth. After reporting a 400% EPS increase in the third quarter, analysts expect Datadog to fetch a 100% gain in Q4.
Sales growth ranging from 61% to 87% over the last eight quarters has the best mutual funds wagging their tails as 141 funds with an A+ rating from IBD have reported a position in DDOG stock.
PANW Stock
Cybersecurity leader Palo Alto Networks (PANW) is trying to secure a sustained breakout past a 375.10 breakout from a flat base. PANW stock gapped up to clear that entry on Feb. 2 and found support at the buy point the next day. PANW stock remains in buy range. In a sign of stock market leadership, the relative strength line for PANW has hit a 52-week high.
RNG Stock
Cloud-based communication software provider RingCentral (RNG) is also testing a breakout from a flat base. The buy point is 405.56. With three quarters of rising EPS growth behind it, the company is set to report Q4 earnings on Feb. 16. Analysts expect RingCentral to deliver a fourth-straight quarter of rising earnings growth with a 23% gain.
In addition to making the latest list of new buys by the best mutual funds, RNG stock is owned by 285 funds with an A+ rating from IBD.
TTD Stock
Trade Desk (TTD) is also setting up. TTD stock has been consolidating as it tests resistance at its 10-week moving average. The provider of a self-service platform for ad buyers has earned a spot on three of IBD’s top-performing stock lists. TTD stock is on the IBD 50, IBD Big Cap 20 and Sector Leaders, IBD’s most stringent screen.
Trade Desk is expected to report Q4 and full 2020 earnings in late February, with analysts looking for 26% EPS growth for the quarter and a 35% increase for the full year.
JD Stock
Chinese e-commerce giant JD.com (JD) and rival to Alibaba (BABA) continues to test its new buy range from a 92.87 buy point after breaking out in early January.
Last April, JD.com teamed up with cloud and AI technology stock Cloudflare (NET) to build a faster and more secure internet — and step up its competition with Alibaba. Cloudflare is working with JD.com’s JD Cloud and AI subsidiary.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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