Your top stocks to watch this week are five software standouts showing strong action with the stock market rally under pressure: Zscaler (ZS), Workday (WDAY), Coupa Software (COUP), Twilio (TWLO) and HubSpot (HUBS). Zscaler stock staged a breakout in heavy volume Friday, while Workday and Coupa are in buy range with earnings on the horizon. HubSpot stock is in a buy zone after recently reporting quarterly results. Twilio is just below a buy point with earnings out of the way for another few months.
Top Stocks To Watch: Software Stocks
Software stocks have led stock market gains this year, and seeing this sector hold up when the stock market came under pressure this past week is especially bullish. The software sector has collectively risen 32% so far in 2019 as of Friday’s close, far more than any other sector.
Zscaler stock, Coupa Software, Workday, Twilio and HubSpot each earn an IBD Composite Rating of 98 out of 99. That means their shares outperform 98% of all stocks in the market as measured by key fundamental and technical factors. Those factors include earnings and sales growth, profit margins, return on equity and relative price performance.
When investors are looking for top stocks to watch, screening stocks with a Composite Rating of 90 or above is a great place to start. Top stocks typically have high Composite Ratings as they launch big runs.
After finding support at its 50-day line, Zscaler stock jumped 7.2% to 73.55 in heavy volume Friday to clear a 73.04 buy point. The relative strength line for the security software stock is hitting all-time highs, which is notable.
The relative strength line measures a stock’s price performance vs. the S&P 500. Seeing the relative strength line at a new high amid a breakout is a bullish technical indicator for top stocks to watch. It’s especially positive given the market’s notable weekly losses. Zscaler is set to issue its quarterly report on May 30.
Zscaler stock is on IBD Leaderboard.
Coupa stock has earnings on the horizon too, with results due on June 3. The procurement and expense management software firm is trading 4% above a flat base with a 100.10 buy point. Coupa stock has been rangebound since its April 26 breakout. But the relative strength line for Coupa stock is at all-time highs.
Workday stock is trading 1.7% above a 200.10 buy point. After initially clearing that level in late April, Workday stock pulled back below the buy point. But Workday stock never triggered a sell signal and was able to rebound off its 50-day line to retake the buy zone.
Workday’s relative strength line is just below highs. The human resources and financial management software company will report earnings on May 28.
Twilio stock cleared a buy point of 136.10 just before quarterly results on April 30. The communications software stock reversed lower on the report and was as much as 6.9% below the buy point the following session. That means that the 7% to 8% sell rule was not triggered and the entry is still valid. During its pullback, Twilio stock also found support at its 50-day line giving investors a reason to hang on.
Twilio stock closed Friday at 134.26, just 1.3% below its entry. The relative strength line for Twilio stock is closing in on a new high.
The chart action for HubSpot stock is similar to that of Twilio stock. Shares of the marketing and sales software company were trading in buy range heading into HubSpot earnings on May 7.
HubSpot stock dipped below the 180.10 entry several times during the week but rallied from its 21-day average to end the week at 181.68, slightly in buy range. The RS line for HubSpot stock is at highs.
HubSpot is an IBD Leaderboard earnings options play.
Please follow Alissa Coram on Twitter at @IBD_ACoram for technical analysis and stock market updates.
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