Cloud computing stock PagerDuty (PD) broke out of a base, hitting a buy point last week. PD stock is a IBD 50 Stocks To Watch pick after being added to the Leaderboard Leaders List.
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The software firm operates a Software-as-a-Service (SaaS) incident response platform for IT departments, alerting clients to service disruptions and outages. It offers security incident response, critical event management, live call routing, on-call management and process automation.
PagerDuty uses machine learning in its cloud platform and has partnered with Amazon (AMZN), Salesforce (CRM) and Datadog (DDOG). It serves retail, financial services, health care, public services and nonprofit industries.
The company just announced its First Process Automation SM Solution as part of PagerDuty Process Automation. The technology allows customers to coordinate automation across cloud computing and data center environments, in different applications in varying regions.
PagerDuty holds the top spot out of six stocks in the Computer Software-Desktop industry group, which is ranked 36th out of 197 IBD groups. The group soared from 164th place four weeks ago, with tech stocks finding recent strength as Treasury yields decline and inflation data shows signs of slowing.
The software stock was also featured as a recent IBD Stock of the Day.
Cloud Computing Stock Hits Buy Point
The cloud computing stock broke out of a long, deep cup-with-handle base last week, hitting the 33.87 buy point in heavy volume. Shares are in the 5% buy zone.
PD stock gapped up nearly 15% mid-March after reporting better-than-expected January-ended quarterly results and higher-than-expected Q1 and full-year guidance.
Shares reclaimed the 50-day moving average on the big move and have trended up since the report.
The relative strength line hit a new 52-week high as indicated by the blue dot on the daily and weekly charts, according to MarketSmith pattern recognition.
The cloud computing stock is about 10% off its 52-week high and has a ways to go to reach the February 2021 peak at 58.36 and 2019’s all-time high at 59.82.
It came public in April 2019. According to William O’Neil’s “How to Make Money in Stocks,” many big stock winners had their initial public offering (IPO) in the prior one to eight to 10 years.
Explosive Earnings Growth Expected
PagerDuty reported Q4 earnings of 8 cents per share last month, beating 2-cent expectations. Management projects 9 to 10 cents adjusted Q1 EPS. Quarterly sales grew 29%, slipping from 31% and 34% in the prior two quarters. Full-year fiscal 2023 sales grew 31.8% to $370.8 million.
Executives of the cloud computing firm projected a first-quarter sales range of $102 million to $104 million and fiscal 2024 revenue of $446 million to $453 million.
Analysts expect big growth, forecasting a 2024 profit of 46 cents per share, up from 4 cents in 2023. 2025 looks even better, with a 64 cent profit forecast.
Mutual funds own 68% of shares, but the number of funds owning the software stock has eased to 349 funds. from 360 in September.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
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Source: https://www.investors.com/research/software-stock-hits-a-buy-point-explosive-eps-growth-expected/?src=A00220&yptr=yahoo