Even while facing the headwinds of a weakening stock market and the effects of a union strike, automaker Stellantis has formed a cup base and is nearing a buy point. The growth stock is Thursday's selection for IBD 50 Stocks To Watch.
Sales and earnings have accelerated over the past six quarters. Sales grew 16% to $53.7 billion while its $1.88 EPS was higher by 42% from the prior year quarter.
Buyers came in with heavy volume after earnings results on July 26, sending the stock up to the buy point of the current base, according to IBD MarketSmith chart analysis. The stock has gained 36% so far this year, more than twice the S&P 500's 14% gain.
Stellantis, along with General Motors and Ford, has been laying off workers in response to the strike, according to reports. The trio face a deadline Friday before workers expand the UAW strike. So far, in response to a demand for a 40% wage hike, the automakers are reported to have offered a 20% hike over 4.5 years.
Growth Stock Shows Strong Performance, Wins Top Ratings
Stellantis stock is about 6% below its buy point of the cup base. Earlier, STLA shares formed a three-weeks-tight pattern along the 50-day moving average within the base — a bullish sign of support.
The growth stock has a nearly perfect Composite Rating of 98, while the EPS Rating of 95 also shows outperformance. The Relative Strength Rating has trended higher to 94 from 87 three months ago, which is also a show of technical strength.
Stellantis ranks No. 3 in the auto manufacturers group, which itself ranks No. 38 among IBD's 197 industry groups.
The company makes several iconic vehicle brands under various segments such as Maserati in its luxury line, premium vehicles like Alfa Romeo, the sport utility vehicle brand Jeep, the popular American Dodge and Chrysler brands and the European Fiat and Peugeot.
The company also sells service parts and accessories for its vehicles and provides financing, leasing and renting services through its subsidiaries, partners and third party vendors.
The B- Accumulation/Distribution Rating shows strong interest from fund managers. Several exchange traded funds hold shares of the growth stock as well. State Street's SPDR S&P Kensho New Economies Composite ETF and the Horizons U.S. Large Cap Index ETF hold shares of STLA.
The IBD 50 growth stock is showing exemplary fundamental and technical strength. That earns it a place on watchlists as it approaches a buy point. However, one missing ingredient is a robust stock market, which is a must for successful CAN-SLIM investing.
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