Pfizer stock and Raytheon (RTX) lead this weekend’s watch list of five stocks near buy points. As Russia’s invasion of Ukraine and rising interest rates are making a tough period for investing, the list includes two stocks in defense contractor Raytheon and cybersecurity leader Fortinet (FTNT) that stand to benefit from the high-threat environment. Investment bank and asset manager Raymond James Financial (RJF) is set to cash in on higher short-term interest rates.
The other two stocks on this weekend’s list are two defensive health care plays, Pfizer (PFE) and Edwards Lifesciences (EW). Demand for their lifesaving medicines and technologies won’t fade if rapid Federal Reserve interest-rate hikes wallop the economy.
Pfizer stock is part of the IBD Big Cap 20 stock list, while Edwards Lifesciences is on the watch list for potential addition to the IBD Leaderboard portfolio of elite stocks. Raymond James is part of the SwingTrader portfolio designed to take advantage of short-term market shifts.
Pfizer is due for another big year, powered by sales of its Covid shot, Comirnaty, and antiviral treatment called Paxlovid. Together, Pfizer has said they should generate $54 billion $98-$102 billion in full-year sales. On April 5, Citi analyst Andrew Baum hiked his Pfizer stock price target to 57 from 46, saying a big order of Paxlovid from China could prove a catalyst.
Pfizer also is working to grow its future pipeline with deals such as this month’s announced $525 million buy of ReViral. The deal adds to Pfizer’s efforts targeting respiratory syncytial virus, which leads to lower respiratory tract infections.
Pfizer stock finished little changed at 53.12 on Thursday, continuing to hold support around its 21-day line. PFE stock is about 14% below a 61.81 buy point, just above its Dec. 20 high. However, Pfizer stock appears to be etching out a handle with a 56.42 buy point, 10 cents above its April 11 intraday high. That handle is already there on a weekly chart, but needs one more day on a daily chart.
Several other drug and biotech stocks have made strong moves in recent weeks.
Edwards Lifescience, like other medical equipment suppliers, stands to benefit from the fading of the pandemic. The Covid crisis created a crunch for hospital resources, delaying nonemergency procedures.
A leader in minimally invasive heart valve technologies, Edwards has a big opportunity ahead in Transcatheter Mitral and Tricuspid Therapies. For the full year, TMTT sales doubled over the prior year, to $86 million. Edwards says the global TMTT opportunity will reach $5 billion by 2028, offering a “rare growth story,” Bernstein analyst Leo Hambright wrote in a March 16 note.
EW stock dipped 1.6% to 120.02 on Thursday and stands about 9% below a 131.83 cup-base buy point on a daily chart. After Monday, Edwards could have a handle. EW stock already has a cup-with-handle buy point of 125.21 on a weekly chart. EW’s relative strength line has moved to an all-time high, which can be bullish when it happens ahead of a breakout.
Raytheon is enjoying an upturn in both its commercial aerospace and defense businesses, with air travel having taken off as the pandemic waned. In addition to missile defense systems, Raytheon also makes aircraft engines and communications technology.
Raytheon’s Stinger anti-aircraft missile and the Javelin anti-tank missile, made by Raytheon and Lockheed Martin (LMT), have helped Ukraine hold off Russia’s military. Meanwhile, the conflict is creating more urgent demand for its Patriot missile-defense system. Earlier this month, the U.S. approved a $95-million Patriot sale to Taiwan.
European countries, notably Germany, plan to step up defense spending. That should help fuel arms sales for years to come.
Raytheon stock rose 0.9% to 104.27 on Thursday, closing just below at a 104.44 buy point from a flat six-week base. The flat base formed after RTX stock and other defense giants surged from long consolidations near the start of Russia’s Ukraine invasion.
Raytheon’s relative strength line, the blue line in the charts provided that tracks a stock’s progress vs. the S&P 500, has broken out to a two-year high.
LMT stock and General Dynamics (GD) also are near buy points in flat bases
Fortinet, a leader in firewalls and related solutions, could benefit from an increase in cybersecurity budgets, Webush analyst Dan Ives wrote in a note last week. Russia’s invasion has boosted perceived threat levels.
From a bigger picture, the shift to working anywhere has increased exposure to cybersecurity threats. The sector also is a focus of consolidation: Google-parent Alphabet (GOOGL) on March 8 said it’s acquiring cybersecurity firm Mandiant (MNDT) for $5.4 billion. Thoma Bravo agreed last week to pay $6.9 billion for Sailpoint (SAIL), the latest cybersecurity buyout by the private equity giant.
Fortinet stock slipped 2.7% to 331.76 on Thursday, on a bad day for the Nasdaq, but found support at its 21-day moving average. Fortinet is 11% off its 371.77 high, but has carved out a handle on the end of its consolidation. The handle offers a 353.08 buy point.
The FTNT stock chart has some wild swings in recent weeks, but has tightened up somewhat. The handle coincides with a newly formed three-weeks-tight pattern.
For Raymond James, the financial market’s rocky start to the year isn’t all bad news. While investment banking revenue is expected to be down, and a drop in asset values is a negative, higher interest income will help. The company has said that each one percentage point rise in short-term interest rates should provide a $570-million boost to interest income and fees.
Meanwhile, Raymond James continues to execute on its strategy of attracting financial advisors to its brand. It entered the year with more than 8,500 financial advisors with client assets of $1.26 trillion.
RJF stock came up to 113.80 intraday Thursday, but faded for a 0.1% gain to 111.80. That’s 2% below a 114.10 cup-with-handle buy point. Raymond James flashed an early entry Wednesday, as it broke the downtrend of its handle. But with Thursday’s resistance near the official buy point, investors may want to wait for a breakout.
RJF stock is flashing new highs for its relative strength line.
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