Mexico-based BBB Foods is Wednesday's pick for IBD 50 Growth Stocks To Watch as shares broke of out a consolidation pattern and are near a buy zone. Shares of the discount grocery chain hit a 52-week high on Wednesday.
BBB's company name is an acronym for "Bueno, Bonito y Barato," which translates to "Good, Nice and Affordable." The Mexico City-based hard-discount store is similar to Aldi.
It offers more than 800 products and reported a network in excess of 2,500 stores and 16 distribution centers as of June 30. It said it is on track to meet its full-year 2024 goal of opening 380 to 420 new stores.
BBB Foods In Buy Zone
BBB stock started trading on Feb. 9, with an initial offer price of 17.50. The grocery store stock is in its third base since it started trading and has gained 74% since that date.
Shares broke out of a seven-week consolidation pattern with a 33.16 buy point Tuesday. Shares slid back slightly below the buy zone with a 1.5% loss in morning trades. BBB's buy zone goes from 33.16 to 34.82.
BBB stock is above its 21-day exponential moving average and its 50-day moving average. It holds a 96 Relative Strength Rating from Investor's Business Daily.
Grocery Store Keeps Growing
On Aug. 21. BBB Foods reported its second-quarter revenue grew 27.5% and its same-store sales increased 10.7%. Its gross profit margin grew to 16.7% from 16.1% in the year-earlier quarter.
FactSet forecasts show average revenue growth of 34% over the next four quarters. The company's second-quarter earnings before interest, taxes, depreciation and amortization — a key measure of profitability — increased to 5.1% from 4.5% over the prior year.
Mutual funds own 66% of shares, with 119 funds owning the grocery store stock as of the September quarter.
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