Heavy Buying Points to Upside for These 3 Stocks

Summer concert season is here. Your favorite band takes the stage, the volume gets cranked up, and the crowd goes crazy.

The same goes for stock trading. When volume rises, the masses take notice—and the party often continues.

Yes, vacations and three-day weekends often lead to low volume days during the hot months. However, with headlines pouring in as usual, rest assured there will be plenty of days that sizzle.

Traders that take a siesta when the calendar flips to June have historically missed out on some nice returns. Yardeni Research points out that since 1928, June, July, and August have each averaged positive returns in the S&P 500. July has notched the strongest average return (1.6%) of any month.

With U.S. stocks showing signs of recovery, activity has picked up in recent weeks as traders seek to capitalize on a potential market bottom. Volume has been unusually high in the following three names. And since they are being driven by buying pressure, encore performances could last well into the summer.

Is Dell Technologies Stock Undervalued? 

On May 27th, Dell Technologies Inc. (NYSE: DELL) gapped up 13% with nearly 16 million shares exchanging hands. The stock’s highest trading volume since November, it was followed by above-average volume the next two days before volume faded into the weekend on some benign profit-taking.

There’s reason to believe the revamped Dell trends higher from here. From a chart perspective, the stock regained its 50-day moving average line in 3.5x its 90-day average volume. When this occurs, it is often the start of a new uptrend that is supported by the key near-term trend line. 

In terms of the fundamentals, Dell’s outlook is also bullish. The stock’s recent surge was the result of a resounding Q1 earnings beat stemming from enterprise PC demand that is expected to persist. As companies welcome back employees to the office, they are also welcoming in new equipment to take the place of aging (and vulnerable) infrastructure. 

To help turn this increasing demand into increasing profits, management is doing a commendable job of managing parts shortages and higher logistics costs. A demonstrated ability to also pass on higher expenses to customers has the Street projecting 8% profit growth in the current fiscal year despite the ongoing supply chain hurdles. It won’t be long before this O.G., but undervalued, tech stock reaches a fresh record high. 

Will Roche Holding Stock Go Higher?

Roche Holding AG (OTCMKTS: RHHBY) bucked the market trend by rising to an all-time high in April before succumbing to broader market weakness. Recent trading patterns suggest it is heading north again.

The Swiss pharmaceutical giant strung together three consecutive high volume jumps late last month. The low volume pullback since has shaken out the weak hands and created a good entry point for those that missed the run.

Roche recently announced that it received European regulatory approval for Polivy, a drug used in combination with existing therapies to treat lymphoma in adult patients. This was soon followed by the release of positive data around a different lymphoma drug that targets more aggressive cases. Then the FDA granted a label extension for Roche’s Evrysdi for use in infants with spinal muscular atrophy (SMA). 

The positive regulatory momentum has sparked renewed interest in Roche shares which are still inexpensive at 15x this year’s earnings estimate. If multiple expansions can bring the stock back to its five-year historical average P/E of 21x, a fresh record high in the mid-$50’s would be established.

What is a Good Utility Stock?

Alliant Energy Corporation (NASDAQ: LNT) has its sights on a new all-time high after last week’s big green volume spike. More than 10 million shares were traded on May 31st in a utility stock that typically sees around 1.5 million shares exchange hands on a daily basis.

The regulated electric company was a month removed from reporting a 13% jump in first quarter earnings when the sparks began to fly. Absent any known insider buying or large hedge fund purchase, the stock seemed to get a jolt from feelings that inflation may have peaked—and that the Fed’s aggressive monetary policy may soon be ratcheted down. 

A pause in rising interest rates is good news for utility companies who are often highly dependent on the debt market to raise capital for growth projects. Lower rates also leave more money in utilities’ pockets for dividends, a primary investment attribute of the sector. Alliant Energy has raised its dividend for 20 consecutive years.

Alliant shares are also attractive here because of the company’s focus on renewable energy sources. Over the next 4 years, the company plans to invest $2.5 billion in renewable energy projects like natural gas. It is already the nation’s third largest owner of regulated wind assets. 

As a steady income generator, Alliant Energy won’t skyrocket anytime soon. But with bullish trading volume again in its favor, it will keep charging higher as it has for decades.