Microsoft (MSFT) and the AI enterprise software company ServiceNow (NOW) are the top picks on this weekend’s list of five stocks approaching buy points. Joining them are cement manufacturer Martin Marietta Materials (MLM), logistics company XPO (XPO), and Axon Enterprise (AXON), a provider of Tasers, body cameras, and other law enforcement technologies.
The selection includes two stocks with an exceptional 99 IBD Composite Rating, namely ServiceNow and Axon, placing them in the top 1% based on fundamental and technical factors.
Both Microsoft and Axon are part of the prestigious IBD 50 list of leading growth stocks.
Microsoft is also featured in the IBD Long-Term Leaders list, which showcases companies with consistent growth potential that are worth considering during market pullbacks.
The upcoming week is anticipated to be critical for the ongoing market rally, with significant inflation data scheduled for release on Wednesday and Thursday.
For detailed insights into the prevailing stock market trends and their implications for trading decisions, readers are encouraged to follow IBD’s The Big Picture column after each trading session.
Microsoft Stock
According to Jefferies analyst Brent Thill, Microsoft stands out as the top performer among artificial intelligence stocks. Thill raised the price target for Microsoft to 550 from 465, maintaining a buy rating. He emphasizes Microsoft’s strong infrastructure and enterprise positioning, which enable the company to leverage the transformative opportunities in the market.
Furthermore, Microsoft is among the select group of stocks, known as the Magnificent Seven, that have avoided significant antitrust actions. Analyst Frederic Havemeyer from Macquarie highlighted Microsoft’s strategic move to offer Teams separately from its Office suite globally, indicating a proactive approach to address regulatory concerns. Havemeyer reiterated an outperform rating with a price target of 455.
In Friday’s market activity, MSFT stock rebounded by 1.8% to 425.52, bouncing off its 21-day exponential moving average. This surge pushed Microsoft above a buy point of 420.82 following a brief consolidation after its interim peak on Feb. 9.
Microsoft’s relative strength line, a key indicator tracking the stock’s performance against the S&P 500, has shown sideways movement since reaching a peak in late November.
ServiceNow Stock
ServiceNow, known for its cloud-based software platform that automates IT processes and provides analytical insights for informed decision-making, experienced a successful product launch with Pro Plus featuring generative AI capabilities in Q3. The company’s CFO, Gina Mastantuono, highlighted the significant value proposition of Pro Plus, which led to a 60% higher pricing compared to the previous version.
KeyBanc initiated coverage of ServiceNow with an overweight rating and a price target of 1,000, citing confidence in the company’s ability to monetize AI effectively.
On Friday, NOW stock surged by 3.4% to 783.50, reclaiming its 50-day moving average. ServiceNow is in the process of forming a flat base with an official buy point of 815.32, as per MarketSurge analysis. Additionally, the stock’s movement beyond the 50-day average and a trendline from its intraday high on March 13 signals an early entry opportunity.
Martin Marietta Stock
Seaport Research raised its price target for Martin Marietta to 670 from 520 while maintaining a buy rating. The firm acknowledged the stock’s premium valuation, attributing it to incremental earnings expected from the recent agreement to acquire $2 billion worth of aggregates operations from Blue Water Industries.
Seaport Research also expressed confidence in the sustainable pricing power of the industry, driven by infrastructure projects and government funding, independent of economic growth outlook.
Following a market selloff that tested its 21-day line, MLM stock surged by 2.5% to 619.41 on Friday, closing at an all-time high. The stock surpassed a buy point of 617.08, forming a quasi-flat base after a three-week tight pattern. Additionally, Thursday’s intraday high of 620.78 could serve as an alternative entry point.
The Relative Strength (RS) line for MLM reached new highs, confirming its outperformance against the S&P 500.
XPO Stock
XPO, a provider of less-than-truckload logistics services, witnessed a turnaround in revenue growth from -7% in Q2 to 15% in Q4 following industry disruptions, including the bankruptcy of Yellow Corp. The company capitalized on this opportunity by acquiring 28 truck terminals at a bankruptcy auction.
JPMorgan analyst Brian Ossenbeck raised the price target for XPO to 144 from 122, maintaining an overweight rating based on expectations of cyclical volume recovery supporting pricing.
On Friday, XPO stock surged by 4.7% to 128.16, bouncing off its 21-day line. The stock’s movement past Thursday’s intraday high of 127.71 presented an early entry opportunity. A weekly chart indicates a rally off the 10-week moving average with XPO potentially forming a minimum five-week flat base.
Axon Enterprise Stock
After a strong performance post-Q4 earnings beat, Axon stock has been consolidating for the past five weeks. The company reported a 29% revenue growth to $432.1 million, accompanied by a 60% surge in EPS driven by the demand for its latest Taser 10 weapon and software subscriptions.
William Blair analyst Jonathan Ho reiterated an outperform rating, emphasizing Axon’s commitment to innovation and its positive impact on officer safety and effectiveness. Ho highlighted Axon’s growth prospects, particularly in real-time crime center and drone technology for law enforcement applications.
Axon stock rose by 1% to 309.90 on Friday, finding support at the 21-day line. The stock is currently 5% below a flat-base buy point of 325.63, with a potential early entry signaled by a move past 315.61, breaking a trendline from the March 4 high.
