Even artificial intelligence bellwethers Nvidia (NVDA) and Palantir Technologies (PLTR) have not made the list of new buys by the best mutual funds every month this year. But Parsons (PSN) has. And while Palantir clears a buy point and Nvidia takes some heat early Thursday, Parsons stock looks to launch a breakout of its own.
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Parsons Doesn’t Miss A Beat — Unlike Nvidia, Palantir
Palantir stock fell off the list of new buys by top funds in June. That marked the first time this year the AI, defense and intelligence player went AWOL. But Palantir bounced back onto the list in July.
Demand for Nvidia stock among these top institutional players has been more sporadic. The AI powerhouse made a triumphant return to this monthly stock screen in June, with savvy investors scooping up more than $3.32 billion worth of Nvidia stock. But then Nvidia vanished in July, replaced by Microsoft (MSFT), which raked in more than $10 billion.
Meanwhile, Parsons stock has appeared on this screen without fail every month this year. One factor driving that unwavering demand is the company’s impressive growth.
AI Boom Spurs Strong And Steady Growth
Based in suburban Washington, D.C., Parsons provides key technologies across a range of industries, with a focus on national security and global infrastructure. The company is involved in cybersecurity and intelligence, as well as space and missile defense. Parsons’ reach also extends to transportation, environmental remediation, urban development, and critical infrastructure protection.
In addition to boosting Palantir, Nvidia, Microsoft and more, the AI boom has also given a lift to Parsons.
Over the last four quarters, revenue gains have ranged from 25% to 35%. Last quarter, revenue rose 31% to $1.54 billion. Earnings growth has come in at 35% to 63% over the same period.
While growth estimates are trending lower, they remain in double digits for both the top and bottom lines this year. For the full year, analysts forecast 23% earnings growth, followed by a 15% rise in 2025.
Parsons Stock Targets Breakout
The current AI-driven bull market remains robust as the tech-heavy Nasdaq continues to flash new highs. Early Thursday, however, the Nasdaq reversed lower, as did Nvidia, Microsoft and Palantir.
Microsoft and Nvidia remain within striking distance of their all-time highs. And after shooting past a 26.57 buy point, Palantir rose nearly 4% Wednesday to close just out of buy range. Down 2% Thursday, Palantir has pulled back to now trade near the top of that buy zone.
Meanwhile, Parsons stock has found support at its 50-day moving average as it works on a new handle. It has managed to hold a small gain on Thursday, while Palantir, Nvidia and Microsoft slip.
In a sign of rising technical strength, the 21-day line for Parsons has just crossed back above the longer-term 50-day benchmark.
The buy point for Parsons is 83.17.
The relative strength line slumped as Parsons formed the new cup-with-handle base. Look for the RS line to turn higher as the potential breakout nears.
The stock’s B- Accumulation/Distribution Rating indicates more buying than selling over the last 13 weeks. But a weak 0.6 up/down volume ratio falls short of the 1.0 mark to indicate demand. See if that and the relative strength line begin to turn around as Parsons takes aim at a fresh breakout.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
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