Today's IBD 50 Stocks To Watch pick, Manhattan Associates, bristles with strong fundamental and technical ratings. The growth stock is nearing a buy point in a bullish basing pattern.
And this isn't the software stock's first outperformance rodeo. Just this year, MANH stock has beaten the S&P 500 with nearly thrice the index's gain. Shares are up some 66% this year vs. the S&P 500's 18% gain.
Manhattan Associates is in a cup base with a buy point of 208.31, according to IBD MarketSmith. Buyers came in strong numbers as the stock leapt off its 50-day moving average line on Tuesday.
A sell-off in shares from their all-time high was pretty much over by the time they found support at the 50-day line after the company reported second-quarter results on July 25.
Q2 sales grew 20% to $231 million while earnings per share of 88 cents were up 28%. Revenue from the company's cloud subscriptions rose to $60.9 million from $42.2 million the prior-year quarter. Revenue from services also increased to $124.6 million from $100.9 million over the same period. License revenue declined but was also a smaller part of total sales.
The company bought back 381,357 shares during the quarter as part of its ongoing share repurchase program.
For the full year, the company expects revenue of $886 million-$894 million, which would represent 16% growth at the midpoint. Earnings per share of $3.07-$3.11 would indicate a midrange 12% growth.
Growth Stock Has High Ratings
The enterprise software stock has a near-perfect Composite Rating of 98 and an EPS Rating of 95. The Relative Strength Rating of 94 also confirms the stock's strong price action vs. other stocks in the market. What's more, its relative strength line is hitting new highs as the stock approaches a buy point, earning it a bullish Relative Strength Line Blue Dot, shown on the weekly chart in MarketSmith.
More funds have been buying the growth stock over the past six months. Mutual funds own 60% of outstanding shares, giving it an Accumulation/Distribution Rating of B. Alger Small Cap Growth Fund(ALSCX) holds shares of MANH. Exchange traded funds hold the stock as well. The Invesco S&P MidCap Quality ETF and the Invesco Dynamic Software ETF hold shares of MANH.
Manhattan Associates provides software for supply-chain and inventory management for businesses in several industries, such as retail and wholesale, consumer goods, logistics service providers, technology and health. Its products include Manhattan SCALE, which offers logistics services to optimize warehouse and transport management, and Manhattan Active, which is an omnichannel service for businesses. Its warehouse management service, launched in 2020, allows businesses to visualize, analyze and execute plans to make improvements anywhere in the supply chain.
The company has grown through four acquisitions over the decade, with the most recent acquisition being in 2014 when it bought Global Bay Technologies from VeriFone. The purchase expanded MANH's omnichannel capabilities by adding Global Bay's point-of-sale applications. The stock ranks No. 3 in the enterprise software group, which ranks No. 35 among IBD's 197 industry groups.
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