As the tech-heavy Nasdaq pops back above its 50-day moving average, artificial intelligence powerhouse Nvidia (NVDA) is setting up a potential breakout. The artificial intelligence powerhouse leads this list of 20 companies highlighted by this stock screener showcasing stocks to watch with the highest-possible 99 or better Composite Rating.

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The AI chipmaker sold off Tuesday when billionaire investor Stanley Druckenmiller cut his stake in Nvidia stock. But Nvidia bounced off its lows to retake its 50-day moving average. Trading near the top of its price range for the day, shares of NVDA now stand within striking distance of a 974 buy point in a consolidation pattern.

With earnings due May 22, analysts expect Nvidia to deliver a fourth straight quarter of triple-digit earnings growth with a 473% gain.

Fellow semiconductor giant Broadcom (AVGO) has also etched a new buy point, but comes up just short of a ‘perfect’ grade with a 98 Composite Rating.

Although it has slipped below its 10-week line, Super Micro Computer (SMCI) also earns the highest-possible 99 Composite Rating.

Highflying restaurant stocks Chipotle Mexican Grill (CMG), Cava Group (CAVA) and Texas Roadhouse (TXRH) also earn that distinction. CMG and CAVA stock are extended from earlier breakouts. After serving up a breakout of its own last month, Texas Roadhouse has climbed just beyond buy range from its 157.42 buy point in a flat base.

Nvidia, Cava, CMG Among Top Stocks In Top Groups

All the names on this stock screen hail from today’s Top 20 industry groups — a factor worth noting since winning stocks tend to come from the top-ranked groups among the 197 industries that IBD tracks.

Nvidia’s fabless semiconductor group, for example, ranks No. 15. The restaurant group, which includes Chipotle, Cava and Texas Roadhouse, ranks an even-better No. 11.

Use This Stock Screener To Build Custom Filters And Watchlists

Stock Screener Highlights Top-Rated Industry Leaders

Data as of May 7, 2024

Nvidia, Broadcom Among Best Stocks To Watch

To make this screen of top stocks to watch in the top-ranked industries, each company must meet the following criteria:

Ratings, of course, are just one part of the equation when evaluating a stock. Be sure to always check the stock chart to gauge when to buy, sell or hold.

Stock Screener: Build Your Watchlist With Stock Ratings And Stock Lists

Running stock screens with the IBD Stock Screener or MarketSurge is an effective way to streamline your research to find top-rated stocks to watch like Nvidia, Broadcom and Cava.

You can also zero in on the best stocks to watch using IBD stocks lists based on a wide range of preset filters. You’ll find top-rated stocks meeting the criteria of the IBD 50, IBD Sector Leaders, IBD Big Cap 20, IPO Leaders and more.

Currently, you’ll find CAVA stock on IPO Leaders. Nvidia earns a spot on the IBD 50 and IBD Sector Leaders, our most stringent screen.

Once you’ve put together potential stock picks for your watchlist, you’ll want to evaluate your ideas with IBD Stock Checkup. With pass, neutral or fail ratings for each of your stocks, IBD Stock Checkup provides a detailed look at both the fundamental and technical health of the companies on your watchlist.

Additionally, based on the CAN SLIM system, the Composite Rating provides an overall score that takes into account each of the IBD ratings. The single score considers how a company and its stock are performing in terms of annual and quarterly earnings growth as well as its relative strength vs. the rest of the market. The score also accounts for sales, profit margins and institutional demand.

However, note that you should not buy a stock solely on its ratings or placement on one of IBD’s stock lists. No matter how compelling a company’s story may seem, savvy investors will always check the technical action in the stock chart before buying.

Check The Chart To Know When To Buy Nvidia, Cava And Others

Using stock lists helps you zero in on the best stocks to watch. Stock ratings look under the hood to diagnose a company and its stock’s fundamental and technical health. Both stock lists and stock ratings help you understand what to buy. But to fully understand when to buy stocks, take a look at the stock chart.

Meanwhile, it’s also critical to understand what type of environment you’re currently in. Is it a bull market, when most stocks go up? Or a bear market, when most stocks go down? Or is it a volatile, choppy and uncertain time when the market indexes tend to fail to make any sustained headway?

Use stock charts to evaluate both the market indexes and individual stocks. Charts will help you pinpoint the best time to buy stocks by identifying support and resistance, as well as buy points and buy zones. Using charts also helps you identify warning signs and when to sell stocks.

So when searching for potential stock picks and stocks to watch, always check the charts. They provide the most unbiased diagnosis of a stock’s health.

Follow Matthew Galgani on Twitter at @IBD_MGalgani.

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