General Motors (GM) leads your stocks to watch for the upcoming week as the S&P 500 auto giant plans to produce 2 million EVs annually by 2025. MercadoLibre (MELI), Shift4 Payments (FOUR), Pure Storage (PSTG) and On Semiconductor (ON) also make the list.
GM stock and these others flashed buy signals recently that quickly fizzled amid a brief market pullback this past week. But these names aren’t broken and could set up again. If that happens investors, don’t dismiss the new buying opportunity out of hand.
Meanwhile, the market is in a confirmed uptrend as the Nasdaq reclaimed its 50-day moving average and the S&P 500 cleared its highs from earlier this month.
PSTG stock and On Semiconductor are on the IBD 50.
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General Motors updated its electric vehicle forecast and raised its 2022 cash flow guidance on Thursday. GM expects to produce 400,000 EVs in North America from 2022 to mid-2024 as its five assembly plants ramp up. By the end of 2025, General Motors plans to produce 1 million EVs annually in both North America and China. Notably, it expects those EVs to be profitable.
GM estimates it will sell 44,000 electric vehicles in the U.S. this year for a loss, but predicts its EV portfolio will be profitable by the end of 2025. It now expects adjusted automotive free cash flow between $10 billion and $11 million, up from its earlier guidance of $7 billion to $9 billion for the year.
GM snapped its four-quarter streak of declining earnings with its Q3 results from late October. GM earnings jumped 45% to $2.25 per share, beating analyst estimates of $1.88 per share. And revenue rebounded 56% to $41.89 billion, just light of expectations.
General Motors stock fell 3.9% to 39.77 last week, trading just below the 40.20 buy point for its cup-with-handle base on a daily chart after skidding below the entry level on Wednesday, MarketSmith data shows. On a weekly chart, GM now has a handle with a 41.68 buy point. But a downward-sloping trendline would likely form, giving another “early” entry around the still-valid 40.20 buy point on a daily chart.
General Motors stock reclaimed its 200-day moving average on Friday, rising in above-average volume for a second straight day. Meanwhile, the stock’s relative strength line is rising after a recent slip, but its still well off its highs from June.
Buenos Aires-based MercadoLibre is the largest e-commerce services provider in Central and South America, rivaling giant Amazon (AMZN) in the region.
MELI stock has advanced since its third-quarter earnings beat in early November as the e-commerce and payments giant continues to improve profitability while expanding across Latin America. MercadoLibre earnings jumped 33% to $2.56 per share, topping estimates of $2.31. Revenue leapt 61% to $2.7 billion, in line with analyst views.
MELI stock cleared a 1018.10 cup-with-handle entry on Tuesday, but then fell back over the next two sessions to test its 21-day exponential moving average and 200-day line. Shares rebounded on Friday to close the week down just 1.3% at 962.08.
A buy point of 1,039.49 is shaping up to be the better entry, with the new handle apparent on a weekly chart now. In that case, the buy zone extends to 1,091.46. MELI stock’s RS line is near its peak for the year.
Pure Storage Storage
Pure Storage supplies high-speed storage systems for business and cloud services using all-flash chip technology. The Mountain View, Calif.-based company has 10,500 customers worldwide, including 56% of Fortune 500 companies, Pure Storage says. And its one of the big beneficiaries of the billions of dollars Meta Platforms (META) is investing to build its metaverse.
For its Q3 results on Nov. 30, Pure Storage earnings are expected to rise 13% to 25 cents per share. And analysts see revenue jumping nearly 20% to $672 million. However, investors should be cautious about adding positions with earnings right around the corner.
Pure Storage stock edged down 0.1% to 30.75 last week, but after trading as high as 32.45 and as low as 29.67. That’s modestly below a 32.07 buy point for its cup-with-handle base after briefly clearing the entry level on Monday. The 32.07 level also serves as an entry for a four-weeks tight pattern. PSTG stock has been finding support at the 21-day in recent weeks.
Share’s RS line hit a 52-week high at the beginning of November. PSTG stock currently has an 91 RS Rating out of a possible 99, indicating strong performance against its peers in the S&P 500. It has a perfect 99 EPS rating, indicating exceptional earnings growth. As well as an impressive 93 Composite Rating, which combines a number of technical indicators into one easy to read score.
Shift4 Payments Stock
Payments processor Shift4 Payments has reported positive earnings and revenue growth for the past six quarters since first listing in June 2020. For its Q3 results Nov. 7, Shift4 reported a 65% spike in earnings to 44 cents per share on 33% revenue growth to $196.7 million, both just beating analyst forecasts.
For full-year 2022, Shift4 Payments expects EBITDA to range from $275 million to $280 million, up from the previous guidance of $255 million to $265 million.
FOUR stock is a bit more volatile.
Shares had an early entry for its bottoming base above its 200-day line around 47-48. But it cleared the official buy point of 51.52 on Tuesday before coming back down to test its 200-day line again on Thursday. FOUR stock rebounded from the 200-day line and early entry on Friday. An investor could still buy Shift4 here, but it would be aggressive.
FOUR stock is on the IBD Leaderboard list.
On Semiconductor Stock
Chipmaker On Semiconductor ranks among the exclusive IBD 50 list of top growth stocks. The company manufactures various semiconductors, power control and image sensing chips. And its technology is geared to bringing more efficient, lower-cost EVs to market faster, Onsemi says. And it’s set to benefit with the rapid demand growth for electric cars.
ON stock is very volatile. On Semiconductor surged past its downward sloping trendline entry on Nov. 10. Shares briefly topped the 76.88 buy point on Nov. 14, though it was greatly extended from the 50-day line Onsemi reversed and wiped out the early entry gains by intraday Thursday.
ON stock rebounded from its 21-day line by Thursday’s close and rose again on Friday.
ON stock now has a handle, but it’s a wild, steep handle that doesn’t offer easy entries. Ideally, On Semiconductor would switch from its on-off swings and settle down.
Its relative strength line is closing in on decade highs, with a Relative Strength Rating of 91. ON stock has a 93 Composite Rating and 93 EPS Rating.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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