The 5 Best Stocks To Buy And Watch Right Now (2023)

Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. So what are the best stocks to buy now or put on a watchlist? Occidental Petroleum (OXY), Pure Storage (PSTG), Livent (LTHM), Texas Roadhouse (TXRH) and Shift4 Payments (FOUR) are prime candidates.

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With inflation worries high, and the Federal Reserve tightening rates aggressively, market action has been challenging so far in 2022. The Russian invasion of Ukraine also continues to weigh on markets.

Best Stocks To Buy: The Crucial Ingredients

Remember, there are thousands of stocks trading on the NYSE and Nasdaq. But you want to find the very best stocks right now to generate massive gains.

The CAN SLIM system offers clear guidelines on what you should be looking for. Invest in stocks with recent quarterly and annual earnings growth of at least 25%. Look for companies that have new, game-changing products and services. Also consider not-yet-profitable companies, often recent IPOs, that are generating tremendous revenue growth.

IBD's CAN SLIM Investing System has a proven track record of significantly outperforming the S&P 500. Outdoing this industry benchmark is key to generating exceptional returns over the long term.

In addition, keep an eye on supply and demand for the stock itself, focus on leading stocks in top industry groups, and aim for stocks with strong institutional support.

Once you have found a stock that fits the criteria, it is then time to turn to stock charts to plot a good entry point. You should wait for a stock to form a base, and then buy once it reaches a buy point, ideally in heavy volume. In many cases, a stock reaches a proper buy point when it breaks above the original high on the left side of the base. More information on what a base is, and how charts can be used towin big on the stock market, can be found here.

Don't Forget The M When Buying Stocks

A key part of the CAN SLIM formula is the M, which stands for market. Most stocks, even the very best, follow the market direction. Invest when the stock market is in a confirmed uptrendand move to cash when the stock market goes into a correction.

A stock market rally that kicked off 2022 soon fell on its face. While the market battled back amid a better than expected earnings season, the previous uptrend failed amid disappointing inflation data. But the market is rallying back, with the S&P 500, the Nasdaq and the Dow Jones Industrial Average all powering off lows for the year. A key test awaits as the Federal Open Market Committee gets set to meet to discuss interest rates.

The market is now back in a confirmed uptrend. Nevertheless, you should raise exposure gradually as there is still a chance this will not lead to a sustained climb. Focus on fundamentally strong stocks coming out of sound chart patterns, such as those in the IBD 50. These names will tend to have rising relative strength lines. The stocks below are good candidates.

Stay disciplined and stick to sound buy and sell rules. In addition, continue to stay on top of sell signalsas not every trade will work out, even in an uptrend. Any stock that falls 7% or 8% from your purchase price should be jettisoned. Also beware of sharp breaks below the 50-day or 10-week moving averages.

Remember, there is still significant headline risk. Inflation remains a key issue while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market.

Things can quickly change when it comes to the stock market. Make sure you keep a close eye on the market trend page here.

Best Stocks To Buy Or Watch

• Occidental Petroleum
• Pure Storage
• Livent
• Texas Roadhouse
• Shift4 Payments

Now let's look at Occidental Petroleum stock, Pure Storage stock, Livent stock, Texas Roadhouse stock and Shift4 Payments stock in more detail. An important consideration is that these stocks all boast impressive relative strength.

Occidental Petroleum Stock

The Warren Buffett stock is in a buy zone after previously crossing the 72.14 buy point from a cup-with-handle base, according to MarketSmith analyis.

Shares are trading above their 50-day line and well above their 200-day moving average, both bullish signs.

Adding further to the encouraging picture, the relative strength line is hitting new highs. This compares a stock's performance to the S&P 500.

The stock is up more than 138% so far this year, far outperforming the broader stock market.

While price performance is top class, earnings are also improving. The stock currently has an EPS Rating of 80, and earnings grew by 888% in the most recent quarter.

Analysts predict Occidental will report a profit of $10.24 per share in 2022, up more than 300% from last year. Sales are expected to jump 43% to $37.3 billion over the same period.

The company reports Q3 results on Nov. 8, with consensus for earnings of $2.50 per share, according to FactSet. That would mark an impressive 185% year-over-year growth surge.

Warren Buffett is a major fan of Occidental. His firm Berkshire Hathaway has increased its OXY stake to 20.9%, with warrants that could bring the stake up to more than 25% of outstanding shares, according to SEC filings.

This comes after the Federal Energy Regulatory Commission (FERC) granted Berkshire approval on Aug. 19 to purchase up to 50% of the energy giant.

AWall Street Journal reportspeculates that, given "Berkshire Hathaway's value-driven DNA, though, it might take a big drop in oil prices to prompt an acquisition of that scale."

Oil and gas stocks have consistently outperformed the 2022 market and Houston-based Occidental Petroleum is one of the top S&P 500 performers. It has benefited from higher fuel prices, triggered by inflation and Russia's invasion of Ukraine in February. However, crude oil has slumped since peaking in June, dropping below $85 per barrel earlier this week.

The firm's primary business in oil, natural gas liquids and natural gas hasn't been dented, at least so far. On the other hand, the heavyweight has a petrochemicals segment that has struggled since home sales have imploded.

The Oxychem division makes PVC pipe and is one of the three largest suppliers. This chlorinated hydrocarbon and plumbing product is made from natural gas and salt.

Pure Storage Stock

PSTG stock is also one of the best stocks to buy or watch now. It has just cleared a consolidation pattern buy point of 31.62. The base, which started on Aug. 18, is within a much-larger consolidation.

The RS line has just hit a consolidation high, a positive sign. It has also reached its highest level in seven months.

Excellent all-around performance is reflected in its IBD Composite Rating of 93 out of 99. Earnings are its biggest strength, with the stock holding a rare perfect EPS Rating.

It is also in the top 11% of stocks in terms of price performance over the past 12 months.

According to IBD Stock Checkup, Pure Storage ranks first out of 10 stocks in IBD's Computer-Data Storage industry group.

The Mountain View, Calif.-based company makes high-speed storage systems for businesses and cloud-computing services using all-flash chip technology.

Pure Storage says it has 10,500 customers worldwide, including 56% of the Fortune 500 companies.

It is a beneficiary of the billions of dollars that Facebook owner Meta Platforms (META) is spending to build the metaverse.

Two months ago, the company reported better-than-expected results for itsfiscal second quarterended Aug.7.

Its revenue jumped 30% from the year-earlier period to $646.8 million. Subscription services revenue grew 35% to $232.2 million. And it posted adjusted earnings of 32 cents a share, up 128%.

The company guided for third-quarter revenue of $670 million, ahead of analyst estimates by 3% and up 19% from the year-earlier period. For its fiscal year 2023 it expects revenue of $2.75 billion, topping views for $2.6 billion.

"Our portfolio continues to be strong despite a turbulent macro environment," Chief Financial Officer Kevan Krysler said during the company's second-quarter earnings conference call. "Our U.S. business continues to deliver strong revenue growth."

Its products, such as Pure Fusion, enable customers and cloud service providers to implement a cloud operating model for data storage management and offerings.

Livent Stock

Livent stock is holding right at its 10-week and 50-day moving averages. A solid jump above its 50-day line could offer an early entry point for aggressive investors.

It has also formed a consolidation pattern. The potential buy point here is 36.48.

Livent previously raised full-year revenue guidance to a range of $800 million to $860 million, up from $755 million to $835 million. All eyes will be on the lithium producer's progress when it reports Q3 earnings after the close Tuesday. Lithium giant Albemarle (ALB), which has a similar chart, reports late Wednesday.

An approach highlighted by Investor's Business Daily is touse options as a strategy to reduce risk around earnings. It's a way to capitalize on the upside potential of a stock's move around earnings, while reducing the downside risk.

In an earnings preview, Deutsche Bank analyst Corinne Blanchard wrote that Livent "has been relatively conservative in its contract structure," with limited exposure to spot prices. However, with increased capacity coming online from its Argentina operations, Livent may get more exposure to higher prices, she wrote.

The spot price for lithium carbonate in China rose to nearly $78,000 per ton last week, an all time high and up about 130% on the year.

That follows a prediction from Morgan Stanley earlier this month that the current lithium supply deficit will turn to a surplus next year. By 2024, spot lithium prices would fall by about 75%.

Other industry specialists have panned predictions like Morgan Stanley's, arguing that optimistic lithium supply projections almost never pan out. Mining timelines get pushed out and quality issues often arise.

Still, lithium stock skeptics have another arrow in their quiver now. The issue isn't just a potential oversupply, but a coming hit to demand from a possible global recession.

Texas Roadhouse Stock

Texas Roadhouse is trading in a buy zone after previously clearing a flat-base entry point of 95.52. It comes after it previously broke past an early trendline entry.

TXRH stock undercut its buy point on Friday following earnings, but rebounded from its 21-day line to close down just 4 cents at 98.71. It is now moving higher still.

The relative strength line for TXRH is remarkable, making new highs for months. This is especially impressive as retail and consumer-spending sector leaders are few and far between.

Overall powerful performance is reflected in an IBD Composite Rating of 93. The stock has seen its price pop by over 13% over the past four weeks alone.

Texas Roadhouse's first shop opened in Indiana, very close to its current headquarters of Louisville. It follows a simple strategy: Provide a fun, family friendly dining experience with great value.

The pitch has one plenty of institutional support, with 63% of its stock currently being held by funds.

The casual dining specialist has over 680 locations in 49 states and 10 foreign countries. It also operates under the Bubba's 33 and Jaggers names.

The firm currently boasts average EPS growth of 14% over the past three quarters. Texas Roadhouse has also posted average EPS growth of 43% over the last three years.

The purveyor of hearty fare likeTexas Size Combos and Fall-Off-The-Bone Ribs reported Q3 earnings after the close on Oct. 27.

A 24% EPS increase in the third quarter of 2022 comes on top of 79% growth in the same quarter a year ago. Quarterly sales have averaged 36% year-over-year growth over the past six quarters through Q3 this year. A recent study by research firm Placer.ai notes that Texas Roadhouse is one of the best-performing U.S. restaurant brands in terms of visits, up 27% in the third quarter vs. the same period in 2019.

Earlier this month Wedbush hiked its price target on Texas Roadhouse stock to 98 from 95 while maintaining an outperform rating. The firm noted "consistent market share gains' for the dining chain.

Fed Pivot Hopes Face Big Test

Shift4 Payments Stock

Payments stock FOUR built a bottoming base that goes as deep as 14% below its entry point. It is offering a buy point at 51.52.

In addition, investors should watch for a strong move above its 50-day or 200-day moving averages. The Oct. 20 high of 48.66 might offer a specific early entry.

The relative strength line for Shift4 stock is looking stable. A sharp upwards thrust would be desirable at this point.

Improving technical performance has lifted its IBD Composite Rating to 75 out of 99.

It remains down about 22% so far in 2022, so it has plenty of ground to make up. Earnings are not ideal though, despite the fact EPS popped by 30% in the most recent quarter. Analysts see full-year EPS popping by 87% in 2022 and by 50% in 2023.

Shift4 is set to report third-quarter earnings on Nov. 7. Investors may want to be cautious ahead of the earnings report.

Shift4 gets most of its revenue from customers in the hotel and restaurant industries as well as casinos. It has expanded into sports stadiums, airlines and charitable giving as well as food and beverage companies. One new customer is Elon Musk's satellite broadband service Starlink. It operates in 20 countries.

Acquisitions have played a part in Shift4's strategy. To help drive international expansion, Shift4 in early 2022 announced the acquisition of Finaro for $575 million. Finaro is a pan-European cross-border e-commerce platform with banking licenses in Europe, Japan and Hong Kong.

The Finaro purchase is expected to close by year-end.

Also, Shift4 acquired software maker VenueNext for $72 million in March 2021 as it targets sports stadiums.