Expedia, AI Play Lead Five Stocks Near Buy Points

Expedia Group (EXPE), the online travel facilitator, and Synopsys (SNPS), which is revolutionizing its chip-design software with generative AI tools, lead this weekend’s watch list of five stocks near buy points. Along with EXPE and SNPS, lifestyle and project-oriented social media site Pinterest (PINS), industrial pump maker Flowserve (FLS), and oil and gas equipment supplier Weatherford International (WFRD) round out the list.

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Expedia stock is on the watch list of the IBD Leaderboard portfolio of elite stocks. Synopsys is part of the flagship IBD 50 list of leading growth stocks. SNPS stock, along with rival Cadence Design Systems (CDNS), is part of the IBD Long Term Leaders list featuring companies with a track record of reliable earnings growth that make them conducive to buy on moderate pullbacks.

Stock Market Set-Up

Economic data in the past week were positive for Expedia and Pinterest, the two consumer-related names on the list. GDP data show personal consumption expenditures ending 2023 on a strong note. Real PCE grew at a faster-than-expected 2.8% annual rate in the fourth quarter, including a 0.5% monthly increase in December. Even better, the solid growth is coming amid falling inflation, which should allow the Federal Reserve to start cutting rates by May, if not March.

The monster rally since late October has driven the S&P 500 to multiple all-time closing highs since Jan. 19. However, despite the pretty ideal combination of growth and inflation in data released Thursday and Friday, both the S&P 500 and Nasdaq composite ended the week on a muted note. We’ll find out in the coming week whether this was just a breather or a loss of momentum, with big tech companies due to report earnings and the Fed set to either support or quash market expectations of five or six rate cuts in 2024 with its Wednesday afternoon policy update.

Be sure to read IBD’s The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.

EXPE Stock

Expedia stock, after a period of underperforming rivals Airbnb (ABNB) and Booking Holdings (BKNG), has had a renewed spring in its step since comfortably beating Q3 estimates on Nov. 2 with 33% EPS growth as revenue rose 9%.

The operator of multiple travel properties, including Vrbo and Hotels.com, got a big vote of confidence from Evercore ISI analyst Mark Mahaney on Nov. 17. He said Expedia was approaching a “fundamental inflection point,” following the July launch of its One Key loyalty program across all its brands, which it recently consolidated on a single technology platform.

After Mahaney upgraded Expedia stock to outperform and boosted his price target to 200 from 135, a number of other analysts have followed suit.

EXPE stock dipped 0.2% to 151.93 in Friday stock market action, but rose 2.3% for the week, while bouncing after a test of its 10-week moving average. A move past Thursday’s 153.57 high would break above the trendline from its Dec. 26 peak, providing an early entry opportunity.

A weekly MarketSmith chart shows that Expedia stock now has an official 155.84 buy point from a five-week flat base.

Travel stocks generally are showing strength, including Booking and Airbnb, but also Royal Caribbean (RCL), several hotel stocks and even airlines rebounding.

SNPS Stock

On Jan. 16, Synopsys announced a deal to buy engineering simulation software company Ansys (ANSS) for about $35 billion. The deal should expand Synopsys’ total addressable market by 50% to $28 billion, but it will take over a year to begin to bolster earnings, the company said. Plus, the deal isn’t seen closing until 2025.

Since Dec. 22, when The Wall Street Journal revealed the merger negotiations, Synopsys and rival Cadence Design Systems have diverged, with CDNS breaking out to a new high on Jan. 19.

SNPS stock reclaimed its 10-week and 50-day moving averages with some gusto early last week, but faded back to the key support levels by the end of the week.

A move past Wednesday’s intraday high of 554.57 would offer an early entry. But that could turn into a proper handle after Tuesday. For now, SNPS has an official 573.77 buy point from a six-week consolidation.

PINS Stock

Pinterest was featured as Friday’s IBD Stock Of The Day, as PINS stock rallied with help from a price-target hike from Evercore ISI’s Mahaney. He touted the potential of Pinterest’s partnership with Amazon that the digital pin board with 480 million users announced in April.

The partnership is part of Pinterest’s push to drive more shopping directly from its platform. Mahaney noted “a significant ramp up in Amazon ads” over the past few months. He gave PINS stock a 50 price target, up from 45, keeping a buy rating.

PINS stock rose 1.9% to 37.70. While the stock gave back some gains after rising as high as 38.63, the rebound off its 10-week moving average and break of a trendline from its Jan. 10 high make it actionable…