Stocks to buy and watch may include IT networking leaders as the group moves up the rankings
When looking for stocks to buy and watch, investors can rely on top-ranked industry groups as a source of stock ideas. One of them is the computer networking group, which ranks 13th in the 197 industries IBD tracks.
In IBD’s computing sector, the computer networking group is ranked highest, beating out others like embedded systems, hardware, and data storage. Just two weeks ago, the networking group ranked No. 49. And it’s come a long way since May, when it ranked No. 148.
Networking companies offer networking and Internet-connected products, including wireless and Ethernet connections. Some work to provide network security services and critical Internet of Things (IoT) products for other companies.
The accelerated deployment of 5G wireless networks has driven the rapid evolution of next-generation products and driven the demand for networking products from leading industry players such as Cisco Systems (CSCO), Arista Networks (A NET) and International Digi (DGII).
Arista Networks: Ranked #1
ANET stock forms a large double bottom basis with a buy point of 143.67. The stock still has some way to go before reaching the entry and sits 18% below the buy point. But a descending trendline could offer a lower entry for aggressive investors. A volatile stock market could prevent Arista or other stocks from reaching new highs.
Stocks recently started to pull back along with the market, but found support at their 50-day moving average. ANET stock is currently below its 21-day exponential moving average.
Although the stock’s relative strength line is slightly below its recent highs, it hasn’t fallen much amid the current price pullback. This indicates that the stock is keeping pace with the market and continuing to show its strength against the wider market.
Stocks to buy and watch: Digi International
Digi International jumped 37% after a breakout and a buy point of 26.13. The actions broke out on July 19.
On August 4, stocks hit the 20% profit-taking zone on the back of a better-than-expected earnings report. The analyst expected Digi’s third-quarter EPS to hit 37 cents per share. But Digi surprised with EPS of 45 cents per share, representing an 80% year-over-year jump.
Revenue also beat expectations, growing 31% year over year.
Since the breakout, the stock has remained well above its 21-day line until last week. The shares are trading just below this support zone but remain well above their 50 and 200 day lines.
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