The weekend announcement that certain electronic items from China would be exempt from tariffs helped get the Nasdaq 100 and other technology sectors off to a good start, but the looming dark cloud of earnings season and the economy requires that you stay cautious in picking the stocks that you add to your portfolio.
This week’s Five Stocks looks at several “Best in Breed” names in key industries to help you weather what is likely to be a rough summer.
Palantir shares will start the week trading lower by more than 1.5% as investors react to market-based headlines from late last week and over the weekend.
Last week, the company made news about its sale of an AI military system to NATO. The sale reminds investors of two things.
First, Palantir is an AI services company that specializes in the government sector. This means that its operations and revenue should remain more stable when the economy slips further towards a recession. Second, the company only started their expansion into the private sector last year meaning that the percentage of business that may be sensitive to a slowdown in recessionary spending is small.
Another AI company that finds itself in a similar situation is IBM (IBM),
Palantir shares remain one of the top performers in the Nasdaq 100 so far in 2025. The stock is trading just above its 50-day moving average in a slightly bullish trend.
The technical strength doesn’t mean that Palantir won’t see selling pressure over the next two weeks as the earnings season is likely to increase volume and volatility with stocks trading lower. It does mean that Palantir is a better “buy the dip” candidate than 90% of the stocks in the Nasdaq 100 and S&P 500.
The company will report its latest earnings results on May 5, just two weeks ago. Palantir has seen its stock rally an average of 23% following earnings calls since 2021 as the company improves its revenue and earnings per share “beat” rate.
Investors preparing for more selling in Palantir should consider the $80 and $70 as potential “buy the dip” prices.
Shares currently have an upside target of $120 and remain in a long-term bull market trend.
Netflix posted another strong quarter of earnings results last week as the company posted $6.61 in earnings per share. That was $0.94 better than expected. The company also beat its revenue targets slightly, as revenue grew 12 1/2% over the same quarter last year.
Investors and analysts are looking at Netflix as a stock that may better weather through the trade war and a recession than most companies. As a service company, Netflix does not import “products” to any country meaning that they are highly unlikely to be affected by the trade war.
In addition, Netflix demand is seen as more elastic during a recession due to its low price and perceived high value.
The company’s management has provided an outlook that includes doubling revenue before 2030, an aggressive goal that would put them ahead of most large cap technology stocks.
Netflix price remains in a bullish trend as the stock is trading above its bullish 50- and 200-day moving averages. On Monday morning, Netflix displayed its relative strength against the market as the stock opened nearly 2% higher while the Nasdaq 100 opened lower by 1.6%.
From a long-term technical perspective, Netflix shares have been making a series of lower lows and lower highs since their all-time highs in February. This pattern suggests that Netflix will see additional selling pressure while the market suffers through its technical turmoil but should remain a relative strength leader.
Shares remain in a strong bullish trend with a price target of $1,200.
Utilities and other stocks that households aren’t likely to cut from their budget are falling in favor with investors as we move closer to a possible recession. ADT (ADT) finds itself among that group of stocks as companies and households treat their ADT services like a utility.
In addition to posting year-to-date returns of 14%, ADT shares also pay a dividend rate of nearly 3% making the stock a strong growth and income allocation to investors’ portfolios.
Last month, ADT released its earnings results, beating both revenue and earnings per share targets as the company grew its revenue by 7.5% over the last year. That number was an improvement from 5.4% last quarter.
Shares are trading in a long-term bull market that started in 2024 and have carried the stock more than 18% higher.
From an intermediate-term perspective, ADT shares remain in a bull market trend as they trade above their bullish 50-day moving average on their way to a 3–6-month target price of $8.75, another 11% move higher from today’s price.
ADT’s long-term bullish trend and utility stock qualities should prepare the stock to continue its bullish move higher with a 2025 target price of $10.
You’ll hear me talking a lot more about utility stocks and “safe harbor” positions as volatility and lower prices continue to be a common denominator in the market. One of the oldest “safe harbor” group if stocks out there are the utility stocks.
Companies like Duke Energy (DUK) American Electric Power (AEP) and Consolidated Edison (ED) are considered safer alternatives to other stocks given the inelastic demand for their products, utilities.
There are plenty of sayings about how a household’s first payment of the month is to the mortgage, second the insurance and the third is for the lights, this consistency is what keeps utility stocks moving higher during times of market uncertainty and volatility.
Con-Ed shares are currently trading more than 25% higher for the ear of 2025 with volume trading higher than average. All a sign that investors are looking for safer harbor investments.
The stock recently traded to new all-time highs – along with several in the utility sector – as its bullish 50-day moving average continue to provide incredibly strong opportunities for investors to buy the dip.
As for the long-term, current volatility and price trends suggest that the broader S&P 500 and Nasdaq 100 (QQQ) still have another 10-20% or more in declines ahead before the market gets close to a long-term bottom. The utility stocks like Consolidated Edison will help portfolio weather that volatility while providing strong dividend income.
This is going to be the most unpopular “Bearish Stock of the Week” since the Five Stock Watchlist was first published, but that’s one of the reasons it’s time to take a hard look at NVIDIA.
NVIDIA was the first stock to kick off the three month decline in stocks way back in December. Shares rolled over after hitting highs of $150 followed by a shift in the stock’s 50-day moving average to a bearish trend. That bearish trend forecasts a 67% chance that the stock will close lower every day until the 50-day reverses and starts to move higher.
Just two weeks ago, NVIDIA’s stock posted a “Death Cross” Pattern, its first since April of 2022. The Death Cross is a technical pattern formed when a stock’s 50-day moving average crosses below its 200-day moving average. In short, that pattern signals that a stock’s momentum has turned decidedly negative.
Now, NVIDIA is bouncing – tepidly – at the critical $100 price level after breaking through that same price just a little more than a week ago. Shares are now falling into a stronger acceleration lower as investors are becoming alert to the fact that the earnings season is likely to include cuts to capex on items dealing with AI and AI data centers, that hits NVIDIA directly in their stock’s outlook.
Watch for a break of $100 this week to lead to an $80 price on the stock over the next 3-4 weeks or sooner. That move will close NVIDIA below its long-term 20-month moving average, classifying the stock as being in a long-term bear market trend.
This stock is considered a “buy the dip” candidate, however investors may want to consider the $75 level as a low-price target for NVIDIA shares over the summer in order to plan their purchases accordingly.
