Six retail stocks in the IBD 50 list of top growth stocks are showing strength, mocking the major stock market indexes, which are looking for a sustainable rally. A couple of the retailers are enticing investors as they approach buy points in new bases.
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Crocs (CROX), Ulta Beauty (ULTA), Hibbett (HIBB), Deckers Outdoor (DECK) stand out in wearable retail groups. Furniture leader Ethan Allen (ETD) and Asbury Automotive (ABG) are setting up in bases.
But while these stocks belong on watch lists, investors tempted to buy should use caution with the market still uncertain. That could change quickly.
Top Growth Stocks Showing Strength
Danbury, Conn.-based Ethan Allen sells a wide range of furniture products through 300 design centers and Ethanallen.com. Its stock is in a flat base with a relative strength line Blue Dot showing on its MarketSmith weekly chart. Its earnings report is due Jan. 25.
ETD stock has many of the hallmarks of top growth stocks. Its Composite Rating, Earnings Per Share Rating and Relative Strength Rating are all in the 90s.
The latest base started when the top growth stock peaked at 29.90 on Nov. 15. ETD stock is about 7% below the base’s buy point of 30.
A blotch on the furniture company’s otherwise rosy fundamental portrait is that analysts forecast earnings will fall 4% in the current quarter and 9% in the fiscal year ending in June. That follows two strong years of profit recovery from the impact of the Covid pandemic. Earnings per share shot up an average 75% in the past three years and 56% in the past three quarters.
Ethan Allen ranks No. 2 in its 18-stock home furnishings industry group, according to IBD Stock Checkup.
Asbury Automotive is in a cup with handle base and its chart on MarketSmith is also adorned with RS line blue dot. But the handle is deeper than normal, about 17% in depth. The entry is 190.07, 10 cents above top of the handle at 189.97. The handle can be viewed as a base, too.
Duluth, Ga.-based Asbury runs 139 auto dealerships that buys and sells new and used autos in 39 states. Earnings have ramped up at an average 50.8% clip the past three quarters and 73% the past three years. Analysts expect the EPS growth pace to ease to 10% in the current quarter and 26% for the full year.
Ulta Extended After Run-Up
Ulta Beauty, which operates more than 1,000 stores in the 50 states, is extended beyond a buy range of a cup-with-handle base and is pushing into new high ground. The buy range topped out at 448.34. The stock has risen in 10 of the past 11 weeks, so it may be due for a base-forming pullback. Stay tuned.
Deckers Outdoors, which markets Ugg boots and other luxury footwear and apparel, is in the upper reaches of a long, deep consolidation that resembles a cup. DECK stock peaked at an all-time high of 451.49 in September 2021. It bottomed at 272.25 last May, 40% below the peak.
In positive signs shared by top growth stocks, it’s now back above both its 50-day moving average and 200-day moving average and within 12% of its record high. Its RS line is also back near new-high ground.
Shoe maker Crocs is well beyond both a buy range of a consolidation and a conventional profit-taking level. It cleared an entry of 83.74 on Nov. 4 and is now up 34% from the buy point. It’s sailing comfortably above its 50-day and 200-day lines as well as its 21-day exponential moving average.
Hibbett shares the No. 1 rank in the leisure products group with Build-A-Bear Workshop (BBW). Like Ulta and Crocs, Hibbett is extended from the buy range of a recent base, this one a cup with handle.
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Source: https://www.investors.com/stock-lists/ibd-50/top-growth-stocks-retail-keep-eye-on/?src=A00220&yptr=yahoo