The latest list ofnew purchases by the best mutual fundsfeatures four enterprise software stocks, including the artificial intelligence leaderPalantir TechnologiesPLTR, cloud-based commerce solutions providerShopifySHOP and cloud connectivity specialistCloudflareNET.MagniteMGNI — among the world's largest independent sell-side advertising platforms — also popped onto thismonthly screen.
Here are three reasons Wall Street has stock in New York City-based Magnite on its radar, including a potential breakout from a first-stage base. But recent volatility in growth names likePalantirandMagnite stock, including a big bounce on theMarket indexeson Friday, brings into focus rules onhow to buy stocksandwhen to sell.
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1. Magnite Flashing Multiple Signs of Demand
Through its technology platform, Magnite connects publishers and other media outlets with top brands and advertisers, helping content providers monetize their output. The company has a global presence, with 20 offices around the world, serving 190 countries.
Magnite's cloud-based software enables clients to monetize their content across all screens and formats, including CTV, online video, display, and audio. It reaches 157 million unique households with ad-supported streaming TV, including 109 million in the U.S. Magnite clients include streaming powerhouses likeNetflixNFLX,DisneyDIS, and Disney-owned Hulu.
In addition to joining Palantir, Shopify and Cloudflare on the latest list of new buys by top funds, Magnite has shown other signs of demand. It sports a B-Accumulation/Distribution Ratingand a strong 1.6up/down volume ratio. Any number above 1.0 indicates demand.
There are 17 funds with an A+ rating from Investor's Business Daily that own shares of Magnite stock.
Magnite has also made its way onto theIBD Live Watchlist.
2. Double-Digit Earnings Growth Estimates This Year and Next
While sales growth has been in single digits over the last four quarters, Magnite has generated double-digit earnings growth during the period. In the second quarter, earnings increased 43% to 20 cents per share year over year, and sales grew 6% to $173.3 million.
For the full year, analysts expect the company to post 27% earnings growth to 90 cents per share, followed by a 25% gain to $1.13 per share in 2026.
3. Magnite Stock Eyes Breakout As Nasdaq Rises
With a history of volatilitychart action, Magnite fell into a long and deep slump after reaching an all-time high in February 2021. While continuing to regroup, the stockreset its base countin March by undercutting the low in its prior pattern. In April, the stock established a bottom and began to climb, retaking its10-week moving averagealong the way.
As the 10-week line has continued to rise sharply while rising above the longer-term 40-week benchmark - a sign of technical strength - Magnite stock has now formed a first-stage base with a 25.27buy point.
A sharp sell-off on the Nasdaq earlier this week pressured Magnite, as well as fellow enterprise software stocks Cloudflare, Shopify and Palantir.
But on Thursday, shares of Magnite rose over 3%, followed by more than a 7% rise on Friday. The gain has pushed the stock back above its21-day exponential moving averageafter having already bounced back above its50-day line.
Magnite shares closed the week 4% short of a breakout.
Industry peerPalantirhas also snapped its losing streak, delivering a strong bounce off its 50-day line.
Follow Matthew Galgani on X (formerly Twitter) at@IBD_MGalgani.
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