3 Innovative Stocks To Buy Before Earnings Amid The Market Pullback

Today’s episode of Full Court Finance at Zacks dives into the recent stock market pullback. We then turn our attention to three innovators in their respective industries—Vertiv (VRT), Align Technology (ALGN), and DexCom, Inc. (DXCM) —that investors might want to buy before earnings to take advantage of the recent stock market downturn.

The S&P 500 and the Nasdaq are trading firmly below their 50-day moving averages for the first time in 2024 after a string of selling sparked by fears of a hawkish Fed and growing Middle East tensions. The recent drop, coupled with the broader chop over the last few months, means the market is already rather cool.

The S&P 500 is currently at its move oversold RSI levels since the market bottomed in October 2023, and the CNN Fear & Greed Index has tumbled from “Extreme Greed” in March to “Fear.”

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There could be more selling in the near term. But long-term investors are often well-served to buy stocks amid bouts of weakness.

 

Vertiv Holdings Co (VRT) – Q1 Results on Wednesday, April 24

Vertiv is a high-tech picks-and-shovels AI and big data investment that crushed Nvidia over the last two years, soaring 520% vs. 280%. Vertiv’s portfolio of power, cooling, and IT infrastructure solutions and services help keep the computing power needed to drive the modern economy running smoothly nonstop.

VRT’s organic orders climbed by 23% in Q4 and it closed 2023 with a record backlog of $5.5 billion. The company is projected to post 12% sales growth in FY24 and FY25 to reach $8.56 billion. Meanwhile, its adjusted EPS are expected to climb by 33% and 30%, respectively. Plus, Vertiv’s earnings outlook has soared over the last several months and the past year to help it land a Zacks Rank #1 (Strong Buy).

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Wall Street is bullish on Vertiv, with nine of the 10 brokerage recommendations Zacks has at “Strong Buys.” VRT is trying to find support at its 21-day moving average, and its valuation levels are solid despite its run.

 

Align Technology, Inc. (ALGN) – Q1 Results on Wednesday, April 24

Align’s Invisalign clear aligner system has shaken up orthodontics over the last 20-plus years. Align has helped treat roughly 17 million patients and thrived as would-be competitors such as SmileDirectClub go bust. Align works hand-in-hand with dentists and orthodontists who help customers through the entire process from start to finish.

Align has expanded its reach within the key teenage demographic, and it’s growing its international reach.

Align grew its sales from roughly $1 billion in 2016 to $3.86 billion last year. The company is projected to post 5% sales growth in 2024 and 11% higher sales next year to reach $4.49 billion. ALGN, which lands a Zacks Rank #2 (Buy), is projected to grow its adjusted EPS by 9% in 2024 and another 14% next year.

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The stock has soared 2,300% in the last 15 years and 500% in the last 10. Yet it trades 60% below its 2021 peaks. Align got overheated after it posted an unsustainable 60% sales expansion in 2021 (driven by cash-flush consumers). The stock is up 10% YTD and is trying to find support at its 200-day moving average, which is near its 50-week.

 

DexCom, Inc. (DXCM) – Q1 Results on Thursday, April 25

DexCom is a connected medical device standout that posted steadily large growth as more people in the U.S. and globally suffer from diabetes. DexCom makes continuous glucose monitoring systems designed for people with diabetes. DexCom’s addressable market is growing rapidly even though 1 in 10 people in the U.S. and globally already have diabetes. DXCM in early March announced that the FDA cleared Stelo by Dexcom, becoming “the first glucose biosensor that doesn’t require a prescription.”

DXCM is projected to grow its revenue by 19% in 2024 and 2025, following 25% average sales expansion over the past four years. DexCom is projected to expand its bottom line by 16% and 26%, respectively. The stock has crushed our EPS estimates in the trailing four quarters.

Zacks Investment Research

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DexCom shares have skyrocketed roughly 5,300% during the past 20 years and 1,500% over the last 10 years. Yet DXCM trades 17% below its 2021 highs even though it has soared 56% in the past six months. DXCM trades between its 21-day and 50-day moving averages. 


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