Amazon Partner MongoDB Emerges as Leader Among Three AI Stocks Approaching Buy Points

Amazon-associate MongoDB and companion AI-linked plays Globant and Synopsys, are amid this week’s stocks to keep an eye on near purchase points. Homebuilder Lennar (LEN) and China-based New Oriental Education (EDU) are also nearing entries.




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MongoDB

In 2023, New York-based database software company MongoDB (MDB) soared 108%, driven by triple-digit earnings growth and optimistic views that MongoDB will gain from business adoption of artificial intelligence. However, most of that surge happened in the first six months of the year before stalling.

MDB stock received a minor boost at the end of 2023 from new partnerships with Amazon (AMZN). In November, Amazon announced plans to integrate MongoDB’s Atlas Vector Search database with Amazon Bedrock, enabling customers to utilize generative AI tools and develop AI applications through AWS. Earlier in November, Amazon teamed up with MongoDB to enhance its open-source database management program for Amazon CodeWhisperer, Amazon’s code-generating tool, TechCrunch reported.

However, shares dropped after MongoDB’s December earnings report as Atlas software sales growth failed to meet high expectations from analysts.

MongoDB is part of the IBD 50.

MDB stock surged 6.6% on Friday to 436.01, surpassing a 426.51 handle buy point, moving in sympathy after the Amazon earnings report. Shares leaped 10.3% for the week, rebounding off the 50-day moving average and 21-day line.

MongoDB has a flawless 99 Composite Rating, which integrates various technical indicators into one comprehensible score. Shares have an 83 EPS Rating. MongoDB’s relative strength line is rising back up to early-December levels. The stock has a 95 RS Rating.

Globant

Luxembourg-based Globant supplies information-technology data and services to companies across the Americas, Europe and Australia and leads the Computer-Tech Services industry group, according to IBD Stock Checkup.

Globant’s earnings expansion has slightly accelerated in the last two quarters, but analysts anticipate a further increase in pace.

Mizuho began covering GLOB stock Monday with a buy rating and 283 price target, stating it anticipates strong organic growth and top-line execution to persist amidst next-generation technologies and generative AI.

Meanwhile, Needham predicts organic growth to speed up as macroeconomic conditions approve, as per a Jan. 26 research note. Global 2000 firms have moderated spending levels over the past several quarters due to macro challenges and it will likely be a gradual recovery, Needham wrote.

Still, the company is “impressed” with Globant’s sales execution and leading growth. Needham raised its price target to 275 from 215 and maintained a buy rating on the shares.

GLOB stock surged 4.9% during the week to 249.69, briefly surpassing a 250.39 flat-base buy point on Friday. That’s after rebounding off its 21-day exponential moving average and 10-week line on Thursday.

Investors could consider the Jan. 29 high of 247.49 as a slightly premature entry, as well as being close to the 10-week line.

Globant has a 99 Composite Rating and a 96 EPS Rating. GLOB has a 95 RS Rating.

Shares have progressed 4.9% so far this year.

Synopsys

Chip design and manufacturing company Synopsys (SNPS) dropped almost 17% from record highs in late December and early January on Ansys (ANSS) takeover reports. Shares have since rebounded after the $35 billion deal was officially announced on Jan. 16. The deal should expand Synopsys’ total addressable market by 50% to $28 billion. However, Synopsys doesn’t expect the acquisition to close until 2025 and will take over a year to improve earnings.

A number of firms decreased their price target on SNPS stock following the news due to the absence of a short-term synergy boost.

FactSet anticipates Synopsys to report Q1 adjusted earnings of $3.43 per share, up 39% from last year but slowing after two quarters of accelerating gains. Analysts forecast a 20.9% revenue increase to $1.65 billion.

SNPS stock is an IBD Long-Term Leader, along with rival Cadence Design Systems (CDNS), which reports ahead of Synopsys.

Synopsys is also a member of the IBD 50 list and Big Cap 20, and the  IBD Breakout Stocks Index .

SNPS stock is nearing a 554.57 cup-with-handle buy point. The stock broke a trendline in the handle at the end of the week to offer an early entry, after rebounding above its 50-day line.

Synopsys has perfect Composite and EPS Ratings at 99. SNPS stock’s relative strength line is working back toward mid-December highs with an 91 RS Rating.

New Oriental Education

China-based online education services provider New Oriental Education more than doubled in 2023 on five straight quarters of triple-digit earnings gains.

New Oriental Education on Jan. 24 reported a 190% increase in Q2 adjusted earnings to 29 cents per share while revenue leapt 36% to $870 million in what’s “traditionally the slowest quarter of the year.” Wall Street expected earnings of 26 cents per share on $814 million in sales. The company guided Q3 revenue to jump 40% to range from $1.07 billion to $1.09 billion, surpassing FactSet forecasts of $942 million.

JPMorgan after the earnings report raised its price target on EDU to 95 from 80, noting the exceed-and-raise guidance suggests the tutoring business is in a “Goldilocks environment,” with very positive supply-demand dynamics and a stable policy backdrop. The firm maintained an overweight rating on the shares.

New Oriental Edu ranks third in the Consumer Services-Education industry group, which is led by Afya (AFYA).

EDU stock is approaching an 82.25 handle buy point within an eight-week consolidation after its huge 2023 run. Shares flashed above an early entry at 78.19 on its Q2 earnings late last month, but then backed off.

New Oriental Education has a 97 Composite Rating and an 82 EPS Rating. Shares have a 96 RS Rating.

Lennar

Lennar was the IBD Stock Of The Day for Wednesday. The stock is constructing a 50% run from the end of October and marked its third straight monthly gain in January.

The homebuilder surprised Wall Street on Dec. 15 with better-than-expected Q4 earnings and revenue. But Lennar’s Q1 guidance fell short of analyst predictions, sparking shares to reverse from a record high. Still, LEN, shares rallied 21% in December and continued to climb at the turn of the year as interest rates hover around 6.78%.

Meanwhile, the U.S. faces a housing shortage of about 5.5 million homes, according to the National Association of Realtors. The NRA estimates the gap will take more than a decade to close even if new home construction accelerates.

On Jan. 9, Lennar hiked its annual dividend by 50 cents to $2 per share. The homebuilder also authorized an increase to its stock-repurchase program to $5 billion.

LEN stock held support at the 21-day and 10-week last week, rebounding from those levels Friday. It’s trading near a 156.01 flat-base buy point.

Many homebuilders and construction-related plays have been consolidating bullishly in recent weeks.

Lennar has a 95 Composite Rating and a 91 RS Rating. Shares have an 82 EPS Rating, as earnings fell by double digits for three straight quarters leading up to its Q4 report.

LEN stock has risen 3.3% in 2024.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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