After blowing out their earnings expectations, AAPL saved the market on Friday last week. The QQQ’s look much healthier and could have a sustained bounce in the short term after the Hand of God pattern has held, which we talked about here. I’ve got 3 stocks on my radar that I’m looking to buy if the price confirms.
A lot of charts are starting to look like they may be bottoming out, and here are 3 of my favorites. They are BGFV, DPZ, and WYNN. My 3 top watches coming into this week are outside of the Tech Sector. Big 5 Sporting Goods Corporation (BGFV) operates as a sporting goods retailer, Domino’s Pizza, Inc., (DPZ), through its subsidiaries, operates as a pizza company in the United States and internationally. Wynn Resorts, Limited (WYNN) designs, develops and operates integrated resorts and casinos.
There has been a lot of rotation out of the tech sector in recent weeks, with these types of stocks seeing extreme volatility and pretty much just getting smashed.
My 3 top watches are all outside of the tech sector. Whilst they have also pulled back significantly with most of the market, they are starting to consolidate and have not been as volatile as the tech. This should make these stocks trade a little bit cleaner, and they could benefit significantly as investors seek real companies with profits over money-losing dog meat tech companies!
BGFV
Big 5 Sporting Goods Corporation operates as a sporting goods retailer in the western United States.
In January, BGFV guided that it expects to See FY21 EPS $4.50-$4.52 Vs $4.28. It had Net Income of $103.5 million in Q3. Furthermore, it’s trading at a forward P/E of only 5.76, according to Finviz, which could be seen as a very cheap valuation.
This stock is trading inside a range between past resistance and current support near $17.50.
If the bulls can break above the resistance level, I feel that a run higher back towards $25 is in the cards.
If not, we might see a drop towards $15 as the bears are back in control.
DPZ
Domino’s Pizza, Inc., through its subsidiaries, operates as a pizza company in the United States and internationally. It operates through three segments: U.S. Stores, International Franchise, and Supply Chain.
In Q3 DPZ reported Q3 EPS of $3.24, Beating the $3.11 Estimate. In Q3 they had a net income of $506.68 million. DPZ is trading at a forward P/E of 28.89, which on its own is not cheap, however, DPZ is a solid profitable company that continues to grow.
I want to watch DPZ as sellers have pushed this stock from the highs and back towards a support zone.
If this level can hold, then it proves to me it is now a support level, and I can use this level to set up my trades against it.
For now, it will remain on my radar until the markets find a direction they want to head in.
If I buy, I want to use the pivot lows near $421 as the stop on this trade, and use the pivot near $475 as the target before the gap.
WYNN
Wynn Resorts, Limited designs, develops, and operates integrated resorts and casinos. WYNN is historically a profitable business but was hit hard during the pandemic. In fact, it has not had a profitable quarter since COVID-19. However, it has lost less over the last 2 quarters, in Q3 they reported a loss of $848 million compared to a Q2 loss of -$1.44 billion. The companies fundamentals are trending the right way as holiday-goers return to their resorts and casinos, in fact, it’s one of my favorites, I love going there!
Descending triangles can be considered a bullish or bearish signal depending on the technical analyst you are talking to.
In this stock, I think it will resolve to be more bullish as buyers have shown a lot of interest in the $80 level.
At this point, I want to watch for either a dip back below support to sell higher implied volatility options or wait for a push above the 13/30 daily moving averages in order to know there is bullish momentum behind the move to the upside.
Bottom Line
Due to the increased volatility in Tech Stocks, I am watching some stocks in other sectors for some less stressful trades. There has been a rotation out of tech in recent weeks, and whilst this may change shortly, there are opportunities elsewhere in the market. 3 stocks I am watching closely are BGFV, DPZ, and WYNN.
I love these great businesses and think they are priced to perfection, as opposed to some of the dog meat money-losing “growth” stocks out there. I am waiting for my setups to form before I take a position in these superb businesses. As always, I will update subscribers when this happens!
