Federal Signal stock recently hit an all-time high, and it looks primed for another leg up of sales and profit growth.
Federal Signal is in a buy zone after breaking out past a 95.21 entry in a double bottom. The proper buying range extends to 5% above the initial entry, around 99.97. FSS stock traded at XXX Tuesday afternoon.
FSS stock hit an all-time high at 102.18 on July 31. Oak Brook, Ill.-based Federal Signal, just outside of Chicago, began forming a classic double-bottom base the next day. The second leg down of the pattern was just below the first, just the way The IBD Methodology investors like to see it. That pattern often leads to big gains.
Federal Signal's Relative Strength Rating Raised
Federal Signal is a top-rated maker of specialized vehicles for municipal, government, industrial and commercial markets around the world. It also sells safety and security products in the U.S., Canada, Europe and South Africa.
Its Relative Strength (RS) Rating got an upgrade Tuesday from 69 to 73 Tuesday — a welcome improvement, but still below the 80 or better score you prefer to see. However, some of its its other ratings are outstanding. It has a 93 Composite Rating out of 99. The best growth stocks have a 90 or better Composite.
Additionally it boasts a 94 EPS Rating, putting it in the top 6% of companies for recent and long-term profit growth. One yellow flag is its D+ Accumulation/Distribution Rating on an A+ to E scale. That indicates mutual funds and ETFs are selling more of its shares than buying. Look for that to improve to a C or better.
Federal Signal is putting up profit growth numbers that young growth companies would envy. The 123-year-old company reported earning per share growth of 30%, 39%, 42% and 24% last quarter to 88 cents per share. That came on quarterly revenue growth ranging from 6% to 15%. Last quarter sales rose 6% to $474.2 million.
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Among Top 5 In Its Group
Federal Signal holds the No. 4 rank among its peers in the 40-stock Security/Safety industry group. The group itself ranks a lofty No. 7 on IBD's list of 197 industries. Axon Enterprise is the top-ranked stock in the group.
IBD's unique Relative Strength Rating tracks technical performance by showing how a stock's price movement over the last 52 weeks compares to that of the other stocks in our database. Market research shows that the top-performing stocks typically have an RS Rating north of 80 in the early stages of their moves. See if Federal Signal can continue to rebound and hit that benchmark.
Please follow James DeTar on Twitter @JimDeTar
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