These Are The 5 Best Stocks To Buy And Watch Now

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?Ford(F),CarMax(KMX)Target(TGT),Scotts Miracle-Gro(SMG) and the SPDR S&P Metals & Mining ETF (XME) are prime candidates.

and shoulderspattern uh but we'll also take a look atVolume 0%

Since the coronavirus bear market, stocks rebounded powerfully. The strong action reflects rising confidence that the economy will eventually recover from the coronavirus. The stock market has managed to get back on track after a brief correction, when all the major indexes all dipped below their50-day moving averages.

Now is a good time to get back into the market, but caution should be exercised. It is somewhat akin to a tiger's tail - enticing enough to be worth grabbing, yet dangerous to hold on to too tightly due to possibly painful repercussions.

The Nasdaq is still acting like it's in a correction trapped below its 50-day line. The Dow Jones and S&P 500 ended March 26 at record closes.

The coronavirus pandemic remains a concern, though new cases and deaths are well off highs while vaccinations are ramping up. President Joe Biden has signed the $1.9 trillion coronavirus stimulus bill. Fed Chairman Jerome Powell has saidthat the central bank is committed to an "all-in" approach as it tries to nurse the economy back to health.

There are concerns thataggressive fiscal and monetary policycould spur too-much inflation and hurt stock prices long-term.

So why do the stocks chosen stand out? Before turning to that question, it is important to consider how one goes about choosing a stock in the first place. Superior fundamentals and technical action, and buying at the right time, are all part of a shrewd investing formula.

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.

TheCAN SLIM systemoffers 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'sCAN SLIM Investing Systemhas 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 agood entry point. You should wait for a stock toform a base, and then buy once it reaches abuy point, ideally in heavy volume. In many cases, a stock reaches aproper buy pointwhen 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 to win big on the stock market, can be found here.

Don't Forget The M When Buying Stocks

Never forget that theM in CAN SLIM stands for market. Most stocks, even the very best, will tend to follow the market direction. Invest when the stock market is in aconfirmed uptrendand move to cash when the stock market goes into a correction.

The Dow Jones Industrial Average, Nasdaq and the S&P 500 rallied strongly after recent pressure. The S&P 500 and the Dow Jones have recaptured their50-day moving averages, but are meeting resistance. The Nasdaq also briefly traded above this key benchmark, but slipped back below it. Technology and growth stocks are still showing signs of weakness.

It is now is a good time to get back into the market and buy fundamentally strong stocks coming out of proper chart bases. But this is no longer the powerful, growth stock rally of 2020.

The stocks featured below are potential candidates.

As you identify stocks, on a technical basis look for stocks with rising relative strength lines. Stocks that hold up amid tough conditions often bound to new highs once a market stabilizes.

Remember, things can quickly change when it comes to the stock market. Make sure you don't miss out on a rally by keeping a close eye on themarket trend page here.

Best Stocks To Buy Or Watch

Now let's look at Ford stock, CarMax stock, Target stock, Scotts Miracle-Gro stock and XME in more detail. An important consideration is that these stocks all boast impressive relative strength.

Ford Stock

Ford stock is just above a 12.14 buy point after previously clearing a three-weeks-tightpattern. It is also rebounding from its 10-week moving average, which also serves as entry.

The RS line has been falling back after a strong spike from early January until mid-March. From a longer term perspective, it has been making progress, with periodic pullbacks, since May 2020. It is now at levels last seen in early 2019.

Ford stockhas more than tripled from its 2020 lows. This improvingstockmarket performance has helped itsIBD Composite Ratingimprove to a strong, but not ideal, 87. This puts it in the top 13% of stocks tracked overall.

Earnings are improving, but are lagging its price performance. This is reflected in its EPS Rating of 75.

Ford stockhas been bolstered by the firm taking a more aggressive stance on investments in electric vehicles and other technology.

Spending in electric and autonomous vehicles will total $29 billion through 2025, more than double prior guidance of $11.5 billion. Of the $29 billion, Ford will spend $22 billion on EVs and $7 billion on autonomy.

The bigger amount even outpaces the $27 billion commitment from rival GM, which had already hiked it from $20 billion.

"We are accelerating all our plans – breaking constraints, increasing battery capacity, improving costs and getting more electric vehicles into our product cycle plan," CEO Jim Farley said when the firm posted earnings in February.

However, the company said chip shortages will hurt production and profit this year. It has had to cut production of its lucrative F-150 pickup due to chip shortages.

The iconic auto giant is ticking boxes forCAN SLIM investors, who look out for firms bringing new products to market.

The Ford Mustang Mach-E launched at the end of 2020 and picked up steam in February. The electric crossover competes with Tesla's Model Y.

Fordalso has launched the Mach-E in Europeand has begun production of the Mach-E in China.

It is also an investor in electric truck maker Rivian, whose shares could go public as soon as September and set a record for the biggest EV IPO.

Ford stock rose in February after it announced a six-year partnership with Google parent Alphabet (GOOGL) to develop more connected vehicles. The partnership will put Google apps and services into future Ford and Lincoln vehicles.

CarMax Stock

CarMax stock is near buy zone after breaking out of aflat base. The idealentry point is 128.68, according to MarketSmith analysis.

The used car dealer chain rebounded strongly last week after test its 10-week line and briefly undercutting the buy point.

KMX stock also has a three-weeks-tight around the top of the buy zone. That offers an alternate entry of 136.53.

In addition, therelative strength linefor CarMax stock is looking mighty. It is sitting near all-time highs on its weekly chart, and has been trending upwards since early January. The stock is up more around 44% so far this year.

KMX stock has a strong, but not ideal, IBD Composite Rating of 89. Earnings are the standout strength for KMX stock, with itsEPS Rating coming in at 90 out of 99.

It has been affected by the initial coronavirus lockdowns, butEPS roared back to 37% growth in the most recent quarter. Earnings have accelerated for the past two quarters.

Analysts see earnings falling 16% in 2021, before roaring back with growth of 27% in 2022.

Big money is piling in, with its Accumulation/Distribution Rating coming in at B+. This represents moderate-to-heavy buying over the past 13 weeks. In total, 57% of its stock is held by funds.

CarMax operates used car stores in more than 70 metropolitan markets. It is a recentIBD Stock Of The Day.

CarMax's network of 220 stores nationwide sold more than 830,000 used cars in its last financial year. Overall used vehicle sales are expected to rise 2.9% in 2021 to 39.3 million, according to Cox Automotive.

For Q3, it reported more than 50% of customers chose to advance their transaction online. It has expanded in home delivery and contactless curbside pickup, tapping new avenues of growth.

"We are on track for most of our customers to have the ability to buy vehicle online independently if they choose by the middle of next fiscal year," CEO Bill Nash said on an earnings call last December.

Meanwhile, more consumers moved to the used car market during the pandemic. At the same time, used car prices rose on a combination of factors.

The pandemic strained Americans' wallets, forcing consumers to hold on to old cars longer and making fewer used cars available for sale. People also sought to avoid mass transportation. Rising new car prices, partly due to limited supply, also turned more shoppers to the used market.

Target Stock

Target stock is in buy zone after breaking out of a new double-bottom base. The ideal buy point here is 196.35. The stock aggressively sprinted away from its 10-week line as it broke out.

In fact TGTstockhas broken clear of all its major technical benchmarks, including its21-day exponential moving average. This is a very bullish behavior.

The RS line offers further reasons for enthusiasm among Target investors. It is spiking higher once more, and could soon hit a new high.

Target stock has a good Composite Rating of 87, putting it in top 13% ofstocks tracked. Earnings in particular are a strength, with EPS rising by an average of 83% over the past three quarters. Earnings rose by a less impressive, but still strong, 58% in the most recent quarter.

Institutional sentiment is also strong, with itsAccumulation/Distribution Ratingcoming in at B-. This reflects moderate buying among institutions. Notable holders include the Fidelity Select Retailing Portfolio Fund (FSRPX), which ranks as one of the very best funds according to IBD research.

Target recently announced it will invest$4 billion a year for several years to accelerate its shift to e-commerce

During a virtual investor day, management said the massive investment campaign would include 30-40 new stores each year, new distribution centers and technology aimed at speeding up shelf restocking.

Target will also test new package-sorting hubs and look for ways to design more efficient delivery routes.

The company's focus on revamping its stores to serve more as fulfillment centers for online orders was well under way before Covid-19 hit. It is working to regain market share lost to online retail giantAmazon(AMZN).

Scotts Miracle-Gro Stock

Scotts Miracle-Gro stock has broken out of a cup-with-handle base, clearing the 238.91 buy point on March 26. SMG stock rebounded from its 50-day line the prior day.

The relative strength line for Scotts Miracle-Gro stock has been recovering strongly from recent dip, and could soon reach new highs.

So far in 2021, the stock is up more than 21%.

SMG stock has a good balance of earnings and price performance. This has earned it a top notch Composite Rating of 97. This puts it in the top 3% of stocks tracked.

Scotts Miracle-Gro stock is particularly noteworthy for marijuana enthusiasts. The lawn care specialist has been investing in R&D for better plant genetics and nutrient formulations for both cannabis and hemp plants.

SMG took part in the marijuana stock rally that followed the Jan. 5 runoff elections in Georgia, granting a de facto majority in the U.S. Senate to the Democratic Party.

Big money is getting behind SMG stock, with itsAccumulation/Distribution Ratingcoming in at B-. The Federated Hermes Kaufmann Fund (KAUFX), rated as one of the best funds by IBD, is a noteworthy holder. In total, 49% of its stock is held by funds.

Management holds a further 27%. A large management stake in a company is often seen as a sign of strong future prospects.

XME

The metals and mining ETF has charged back into buy zone after a powerful rebound from its 10-week line. It comes after the stock painfully reversed after breaking out of a 38.09cup base entry.

The rebound is particularly impressive when one considers the RS line has taken a slight dip. Overall, the ETF'srelative strength linehas been making good progress since November.

Investing in individual stocks can carry more volatility and risk, though the rewards can be far greater. Investing in an ETF provides a way to play an entire industry.

XME offers a good opportunity for those wanting to play the macro changes in the mining environment. Nevertheless, XME has still been displaying plenty of volatility amid a seesaw market. The rewards are obvious when one considers it has gained almost 20% in 2021 however.

Holdings include the likes ofAlcoa(AA) andFreeport-McMoRan(FCX),Steel Dynamics(STLD) andRoyal Gold(RGLD).

The gains for the ETF and other mining stocks come with a broader economic rebound from the coronavirus pandemic. As the economy reopens, some investors are betting demand for metal materials, and demand for more such materials to be mined from the earth, will recover with it.

"Commodity markets have strengthened as the outlook for demand is improving and supply constraints are increasing," Jefferies mining stocks analysts said in a research note last month.

Commodity prices for things like iron ore and nickel stood at multiyear highs earlier this year. Mining stocks have also been buoyed by prospects for more U.S. infrastructure spending.