It has been a rocky road for Abercrombie & Fitch ever since it hit an all-time high in May, but it finally cleared a trendline entry near 164 on Wednesday. Shares have rallied past the 50-day moving average and are on track for a sixth straight gain. Abercrombie stock is today's selection for IBD 50 Stocks To Watch.
Shares gapped down and triggered multiple sell signals before and after fiscal second-quarter results were announced on Aug. 28. Both the daily and weekly charts on IBD MarketSurge show that, ahead of earnings, Abercrombie stock round-tripped back below a buy point at 140.28. Shares undercut the 50-day moving average in heavy volume at the same time.
But investors who held onto the stock through the plunge found relief as the 40-week moving average proved to be a level of support. Shares then rallied into their second-quarter report only to fall again to the 200-day moving average following the report.
As the stock caught up with its 50-day moving average, it started heading higher this month. This week, the stock climbed above a trendline drawn across the highs since Abercrombie stock topped on May 29. The entry is around 158.
MarketSurge's latest feature, the earnings line, shows a steady upward climb. Abercrombie stock had gained 86% year to date as of Wednesday's closing price. Compare that with the S&P 500's 22% gain during the same period. Last year, Abercrombie & Fitch was one of the best-performing stocks.
Abercrombie Stock Holds Impressive Ratings
Notwithstanding the somewhat tortuous path to its most recent buy point, the stock boasts pretty solid ratings from Investor's Business Daily.
The Composite Rating is nearly ideal at 98 on a scale of 1-to-99. The rating is determined by how close the stock is to its all-time high as well as its fundamental and technical performance. The stock's all-time high of 196.99 is 15% above the current trading price around 167.
The EPS Rating stands at 95 and the Relative Strength Rating also shows strong outperformance at 95.
On Aug. 28 shares fell, likely for two reasons. Sales decelerated slightly from the prior quarter, though they grew 21% year over year to $1.1 billion. Also, earnings growth of 127% showed a sharp quarter-over-quarter slowdown but that was because Q1 earnings grew a whopping 449% — a tough act to follow.
Analysts are bullish on future profits for the trendy fashion retailer. In fiscal 2025 ending in June, they see profits rising 65% to $10.36 per share. In fiscal 2026, they see profits continuing to rise 3% to $10.67 a share.
Fund Ownership Stands At 68% Of Total Shares
Abercrombie stock ranks first in the apparel retail industry group, according to Investor's Business Daily's Stock Checkup. The group holds 45th place among 197 groups in the IBD database.
Fund ownership stands at 68% of shares outstanding. A rising number of funds have been net buyers over the past six quarters. Funds have been accumulating shares over the recent 13 weeks as well. Abercrombie stock holds an IBD Accumulation/Distribution Rating of C+.
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