Author: MATTHEW GALGANI
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Looking for the best stocks to buy and watch? Narrow your search with stock lists that identify the common traits of top-performing stocks. Names like Tesla (TSLA), Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), and Nvidia (NVDA) will change over time, but the characteristics of what to look for in the best stocks don’t.
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When looking at individual stocks to watch, always keep an eye on the general stock market. This is critical since three out of four stocks tend to simply follow the overall market trend. Stock market direction can change very quickly, driving leading stocks to new highs or new lows.
So while tracking current market trends — regardless of whether we’re currently in an uptrend or downtrend — regularly check stock lists like Sector Leaders, IBD 50, IBD Long-Term Leaders, and the IBD Big Cap 20.
As these stock lists did with the best stocks of 2020, they highlight stocks like Apple and so-called FANG stocks — Facebook (FB), Amazon, Netflix (NFLX) and Google parent Alphabet (GOOGL) — in the early stages of their runs.
You’ll also find names like Tesla stock, Nvidia stock, ServiceNow (NOW), Veeva Systems (VEEV), DocuSign (DOCU), Palo Alto Networks (PANW) and Peloton (PTON) as they make exceptional moves.
Just this week, IBD 50 members PANW stock and ServiceNow stock have launched new breakouts as the stock market tries to shake off turbulence hit at the end of January. PANW is also on the IBD Big Cap 20.
Regularly check IBD Stock Lists Update to see which stocks were just added to — and removed from — these time-tested screens.
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Best Stocks To Buy And Watch: IBD Indexes Vs. S&P 500
The table below shows the recent and long-term performance of the indexes based on IBD’s stock lists, both before, after and during the coronavirus crash.
In 2018, the indexes had a tough time as the market corrected, but Sector Leaders — IBD’s most stringent screen — still managed to pull out a 3.86% gain, as compared to a 6.34% loss on the S&P 500.
That outperformance continued in 2019, with Sector Leaders (+42.11%) more than doubling the S&P (19.18%).
Then came the coronavirus crash and powerful rebound of 2020. After what became the longest bull market in history, the pandemic infected Wall Street with economic lockdowns and a sharp decline in the stock market. But with exceptional strength and resilience, the stock market shook off the initial pain, with the performance of IBD lists once again far outpacing the S&P 500 for the rest of the year.
In fact, in 2020 the IBD Big Cap 20 more than doubled the gains of the S&P 500. Sector Leaders and the IBD 50 essentially doubled the performance of that benchmark index.
As 2021 got underway, stocks continued to climb until hitting resistance at the end of January. But in the early days of February, the stock market seems poised to shake off that turbulence and resume its climb.
So with the market kicking off a promising new month, use these stock lists and the IBD Stock Screener to identify the best stocks to buy and watch. Pay particular attention to names like ServiceNow stock, NVDA stock, PANW stock, AAPL stock, VEEV stock and others that are setting up or entering new buy zones.
Here’s a look at where the market and IBD indexes stood at the end of 2020 and 2021 gets rolling.
| Index | 2021 Performance (YTD) | 2020 | 2019 | 2018 |
| S&P 500 | -1.11% | 16.26% | 19.18% | -6.24% |
| Sector Leaders | -3.21% | 32.10% | 42.11% | 3.86% |
| IBD 50 | -0.10% | 32.00% | 17.91% | -6.70% |
| IBD Big Cap 20 | -0.50% | 35.38% | 3.37% | -5.23% |
*Data as of Jan. 31, 2021
See How To Use IBD Stock Lists And Ratings
Stocks To Buy & Watch: Why Do IBD Stock Lists Outperform?
The strategy behind IBD’s stock lists is simple.
Through an ongoing study of every top-performing stock over the past 100-plus years, we’ve identified seven common traits big market winners typically share just before they launch their major moves.
Using IBD SmartSelect Ratings and other screening criteria based on that research, we identify which stocks are most strongly showing those same traits right now. You can see that reflected in the appearance of Apple stock, Amazon, Veeva, DocuSign, ServiceNow and many others on IBD stock lists.
In other words, history shows what big market winners look like in the early stages of a new climb, and IBD’s lists alert you to stocks that have that same look today.
Also note that the screens are computer-generated and based solely on objective rules, not human emotions, guesswork or predictions.
While you should never just buy a stock because it’s on one of IBD’s screens, regularly checking Sector Leaders and other lists is a quick and efficient way to build your own watchlist and zero in on the next crop of potential big winners.
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Find Top Stocks To Buy Before They Break Out
Streamline your research with alerts to stocks in or near a potential buy zone and a brief chart analysis for each name on Sector Leaders, IBD 50, IBD Big Cap 20, IPO Leaders and Stock Spotlight.
For example, Veeva Systems was featured in the IBD 50 on May 16, 2016. The chart analysis noted that the stock was near a buy point: “New handle shows 28.05 buy point to cup base.” That gave you time to put Veeva on your watchlist and research the company before it broke out just days later.
From the breakout, Veeva stock began to soar. It’s formed multiple chart patterns since then and managed to survive the coronavirus crash and rebound to new all-time highs.
VEEV stock soared from its 2016 breakout, and continued to show up on various IBD lists, alerting you to additional bases and buy points. Starting in July 2019, the stock entered a long basing period, then again shot higher.
Veeva is currently on the IBD 50 and on the watchlist for IBD Long-Term Leaders. Veeva Systems is just one recent example of why you want to regularly check IBD’s stock lists as part of your investing routine.
Not every stock on these lists will launch those types of moves, but checking these screens regularly is a proven way to help improve your investing results by quickly building a high-quality, actionable watchlist.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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The post Find The Best Stocks To Buy With 3 Lists That Doubled The S&P In 2020 appeared first on Investor’s Business Daily.