Amazon stock leads this weekend’s watch list of five S&P 500 stocks holding near buy points after delivering better-than-expected earnings. Amazon (AMZN) is joined by JPMorgan Chase (JPM), Visa (V), Exxon Mobil (XOM), and Dexcom (DXCM).
Dexcom, which makes glucose monitoring systems for diabetes patients, is part of the IBD Big Cap 20 list of leading stocks.
JPMorgan is making headlines this weekend as a likely bidder for First Republic Bank (FRC), as the FDIC aims to resolve the failing bank’s status to limit any fallout among other regional banks.
Of this weekend’s watch list stocks, only Dexcom is a defensive (growth) play, with demand insulated from economic ups and downs. The others are cyclical in nature and may underperform the S&P 500 if the U.S. economy falls into a recession.
Earnings reports are always a big risk for stocks. But in the past several days, a number of leading stocks have suffered massive declines following quarterly reports. So stocks that have earnings in the rear view mirror are worth paying attention to.
E-commerce giant Amazon’s first-quarter results topped estimates with EPS of 31 cents, beating by a dime, including a loss from its Rivian (RIVN) investment. Revenue grew 9% to $127.4 billion, boosted by 16% growth for Amazon Web Services and 9% growth in ad revenue.
Retail profitability has been shored up as Amazon streamlines operations and cuts costs, including 27,000 announced layoffs.
However, CFO Brian Olsavsky said on the earnings call that AWS sales growth had slowed to about 11% so far in April as Amazon helps customers optimize cloud expenses as they weather a tough economic climate. Still, analysts are upbeat about the intermediate-term outlook for cloud spending, boosted by artificial intelligence uses.
Amazon stock fell 4% to 105.45 on Friday, dipping below its 200-day line. However, a move to 109.92, back above Thursday’s high and the 200-day line, would offer an early entry opportunity. AMZN stock has a 114.10 buy point as it forms a bottoming base.
While Amazon stock has been a laggard, its recent performance is more encouraging. The relative strength line, the blue line in IBD charts that tracks its performance vs. the S&P 500, is just off its highest level since late October.
JPMorgan’s Q1 report demonstrated the advantages of being a too-big-to-fail bank, especially in the current environment. As deposits exit smaller banks, JPMorgan saw inflows of 2% since the end of 2022 to $2.37 trillion, as depositors poured into the well-capitalized giant. Net interest income spiked 49% from a year ago to $20.9 billion.
Overall, JPMorgan EPS surged 55% to $4.10 on a 25% leap in revenue to a quarterly record $38.35 billion.
Following earnings reported on April 14, JPM stock jumped past its 50-day moving average. After the rally stalled last week, JPM stock retreated to its 50-day line, where it found support. The buy point is 141.50, just above April 18 handle high in an eight-week cup-with-handle base.
Credit card giant Visa comfortably topped fiscal Q2 estimates on April 25, as adjusted earnings leapt 19.4% to $2.09 per share on 11% revenue growth to $8 billion.
Payments volume rose 10% overall, fueled by 24% growth in higher-margin cross-border transaction volume. Excluding Europe, cross-border volume rocketed 32% over the year, as Covid waned.
Visa said that U.S. transaction volumes in April were flat or mildly decelerated vs. March, but cross-border activity accelerated.
Visa stock initially pulled back after earnings but found support above its 50-day line. On Friday, Visa stock climbed 1.6% to 232.73.
V stock is in buy range, above a 227.51 buy point from a double-bottom base. That buy zone runs to 238.89.
However, 230.15 is a slightly higher entry point, if you ignore the double-bottom and take the April 4 high as the top of handle at the end of a consolidation.
Exxon Mobil Stock
On Friday, Exxon Mobil posted 36% quarterly earnings growth to $2.83 a share, though revenue fell 4% to $86.56 billion. A 4% rise in net production to 3.8 million oil-equivalent barrels per day was offset by lower prices.
The oil-price outlook is mixed as recession clouds gather, but output is constrained. U.S. crude oil futures rose 2.7% to $76.78 per barrel Friday. Oil dipped as low as $66.74 in March, but U.S. oil futures hit a five-month high $83.38 per barrel on April 12 following the news from OPEC+, which includes the Organization of the Petroleum Exporting Countries and key allies.
XOM stock rose 1.3% to 118.34 on Friday, moving back above a 117.28 buy point from a cup with handle base.
Dexcom reported Q1 results late Thursday, with EPS up 113% to 17 cents on 18% revenue growth to $741.5 million. While ahead of estimates, investors weren’t thrilled with the slight lift to the revenue outlook. The midpoint of the new sales outlook of $3.4 billion to $3.52 billion was just below average analyst outlook.
Still, analysts characterized the guidance as conservative, allowing room to top expectations, as Dexcom ramps up the launch of its small G7 glucose monitoring system and capitalizes on expanded Medicare coverage of such systems.
DXCM stock slipped 1.8% to 121.34 on Friday but found support at its 21-day exponential moving average. DXCM stock has a 125.65 buy point from a consolidation that began in early December.
Dexcom stock flirted with a breakout on Thursday ahead of earnings, another example of why buying stock before a quarterly report is risky.
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