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Best US stocks to buy?


7th October 2020


My review of the technical analysis for all of the stocks in the S & P 100 index, found that six of these had particularly bullish charts. These are as follows:-


1. Texas Instruments

2. Colgate-Palmolive

3. Microsoft

4. Netflix

5. Oracle

6. Eli Lilly

I have written about Microsoft one two occasions already this year, firstly in April; 'Best Shares To Buy' and again in May; 'Which FAANGs will outperform?'. Both contained buy recommendations, so I will omit it this time around - to avoid repetition.

Netflix was also featured in my above articles (in the 'Market Topics' section), the April article being positive, but the May article was less so, due to valuation concerns. So I have decided to omit it this time for the same reasons.


Oracle and Eli Lilly are perhaps a little too much in the spotlight recently, and it is often difficult to find value in that type of scenario. What I mean by that, is that the good news that has put them in the spotlight with the financial media, is usually priced in by that time. The former looks likely to pick up a sweet deal on buying the US interests of TikToc, owned by Chinese company ByteDance which is privately owned. The latter is developing a treatment for Covid.


That leaves us with Texas Instruments and Colgate-Palmolive, neither of which have been featured very much in the financial media recently. However, a review of the fundamentals indicates that both have some very positive characteristics.

1. Texas Instruments (TXN)

Share price: $146.28

A technology company that has been around since 1930, would appear to be something of an oxymoron.  Yet TXN has continuously adapted to new technology trends, and has survived and thrived in that time. The chart is very bullish, primarily because of the recent breakthrough the previous all time high of $130 set in September 2019, and retested in December 2019.


TXN makes semiconductors, which are an essential component of computer chips. These are used in mobile phones and tablets, factory automation systems, electronic components for the auto industry and various other applications. It also makes some consumer products such as calculators.

So why is the chart so bullish - what is going on? A review of the fundamentals does not reveal anything terribly exciting - at first. The revenues and earnings have been static for the past three years, with revenues of approximately €15 billion and profits before tax of around €6 billion each year. That is a very healthy net profit margin of well over 30%. However, the lack of growth raises questions about why the sudden burst of strength in the shares has occurred.


A further review of the financials reveal a few possible explanations. TXN regularly beats quarterly earnings expectation by 5% to 10%. However, in the most recent two quarters, it has beaten earnings by a much higher margin. The earnings per share (eps) average forecast by analysts was $1 for the quarter ending 30th March 2020. The actual earnings came in 24% higher at $1.24. Again, the forecast for the quarter ending 29th June 2020 was $0.88. The actual earnings beat that by a whopping 68%, coming in at $1.48.

Why were analysts forecasts too low? Two possible reasons.


2. Colgate-Palmolive (CL)


Share price: $77.97

The well known toothpaste and toothbrush maker, which one would normally expect to be a sort of 'steady eddy' i.e. a mature company with little growth, has registered a very strong buy signal on the chart recently - on breaking through a resistance level at $76 which had held for the past five years.


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