Big Tesla Rival BYD leads five stocks to watch

Chinese electric vehicle maker and battery giant BYD (BYDDF), lithium and fertilizer giant Company Quimica Y Minra (SQM), discount retailers General dollar (DG) and grocery store (GO), and media and live events company World wrestling entertainment (WWE) are five stocks showing resilience in a difficult market environment.


The Dow Jones Industrial Average, S&P 500 and Nasdaq composite suffered steep weekly losses, all dropping to their worst levels since late 2020.

Now is not the time to buy stocks, but investors should build watchlists with stocks that are holding up relatively well.

WWE stock is on the IBD rankings. SQM stock is on IBD 50. BYD was Friday’s IBD stock.

BYD Stock

The Warren Buffett-backed electric vehicle maker has grown by leaps and bounds. It has posted seven straight quarters of at least double-digit sales gains. BYD stock jumped 4% on Friday to 37.45. But shares fell 4.1% for the week, ending a five-week winning streak.

Sales of its electric and plug-in hybrid vehicles are expected to overtake Tesla’s in the second quarter in number of units sold, with BYD launching a slew of new models in the coming quarters. BYD manufactures its own batteries and chips, which has helped it better manage an industry-wide shortage, especially during the pandemic. It would soon start supplying batteries to You’re here (TSLA), although the Texas-based company has not confirmed a deal.

BYD stock has a buy point of 41.34 cups on a daily chart, according to MarketSmith. On a weekly chart, the EV giant has a handle with a buy point of 39.81. The handle needs a few more days on a daily chart. Ideally, BYD would have a long handle, perhaps long enough to be its own base, to offset the base of the deep cup and let the main indexes catch up.

The company’s fundamentals aren’t great, though. BYD has spent a lot on capital expenditures in 2021, but it’s paying off in terms of massive EV/battery capacity. Sales of BYD EVs and plug-in hybrids topped 100,000 vehicles in the past two months, up from the first quarter and a year earlier. Growth should continue to explode in the coming quarters with new models and new markets.

BYD’s relative strength line is taking a breather after hitting an all-time high over the past few weeks. Its EPS rating is 56 out of 99, the best possible, and lower than the 80 and above recommended by IBD. Its RS rating is 96.

Tesla vs. BYD: Which electric giant is the best buy?

Stock of m²

The Chilean producer of specialty fertilizers, iodine and industrial chemicals finds support in its 50-day line after giving up some gains. SQM stock rose 2.1% to 90.29 on Friday, down 6% for the week.

SQM broke out of a consolidation above a buy point of 90.97 on May 19, hitting a 52-week high of 115.76 on May 27. But almost as quickly, it made a round trip of 27%.

The company is benefiting from the insatiable demand for lithium, which is used in the manufacture of batteries for electric vehicles, as the adoption of electric vehicles increases.

SQM has increased its profits more than 10 times in the last quarter. Sales almost quadrupled. Lithium sales volume jumped 59% as ore prices soared 572%.

Both SQM and BYD stocks are key components of Global X Lithium & Battery Tech ETF (LIT), along with Tesla.

General action in dollars

Shares of the discount retailer are trying to hold around the 50-day line, falling 1.1% to 230.80 for the week. The DG stock has a cup-handle base buy point of 240.07.

With the recession looming, even Dollar General buyers have to tighten their belts. American consumers, the backbone of economic growth, are not as optimistic these days as they usually are.

Dollar General has struggled to top the sales and profit growth rates it has posted during the pandemic. Nonetheless, the company raised its outlook for the year in its latest quarterly report, as buyers continue to seek deals to blunt the effects of inflation.

Dollar General said it expects net sales growth of 10% to 10.5% from previous views of around 10%. It raised its forecast for same-store sales growth to around 3% to 3.5% from its previous forecast of 2.5%.

The DG stock’s RS rating hit a new high of 92 last week. The RS rating tracks a stock’s price performance over the past 52 weeks relative to all other stocks. The best stocks will often have odds above 90 by the time they launch a big price run.

Dollar General’s relative strength line is also rising. The RS line, the blue line in the charts shown, shows a stock’s performance against the S&P 500 Index. Dollar General’s EPS rating is 78.

Stock market forecast for the next six months

Grocery stock

On June 16, Grocery Outlet, based in Emeryville, Calif., announced its latest East Coast expansion, with the opening of a new store in Maryland. The expansion marks the extreme value grocer’s entry into its eighth state.

Founded in 1946, Grocery Outlet also has locations in California, Idaho, New Jersey, Nevada, Oregon, Pennsylvania and Washington.

As food prices continue to soar, Grocery Outlet is likely to be the top pick among inflation-pressed shoppers.

GO stock is extended, but keep an eye on it to see if it comes back up. Shares hit a 52-week high of 41.36 intraday on Friday, before retreating to fall slightly 0.7% to 40.15. GO stock rose 3.9% for the week.

WWE Action

The media and entertainment company produces and markets television, pay-per-view and live events.

WWE stock has slipped in recent days amid the scandal. CEO Vince McMahon resigned on Friday as investigators investigate a silent payment of $3 million for an alleged affair.

WWE has a buy point of 68.82 cups with handle. The stock found support at its 50-day line on Friday.

It previously cleared a flat base with a buy point of 63.81. But the focus should be on the cup with handle or, perhaps, a rebound from his 50-day line.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.


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