Cirrus Logic, the IBD 50 Stocks To Watch pick for Thursday, chases a buy point amid powerful profit growth.
The Austin, Texas-based chipmaker is a leader in audio devices. Its products are found in devices including headsets, speakers, smartphones and smart wearables.
Cirrus also stands out as a pioneer in mixed-signal semiconductors, which combine both analog and digital circuits onto a single chip.
Growth Stocks To Watch: IBD 50 Stock Tests Buy Point
CRUS stock has formed a cup base within a larger consolidation. It is shooting for an ideal entry point of 89.02. The midcap growth stock tested the entry on Wednesday, but ended the session just below it. It popped in strong volume, a good sign.
The relative strength line has just spiked to new highs. This compares a stock's performance vs. the broader S&P 500 index.
If Cirrus stock can muscle higher and retake its buy point amid more strong buying it would be a positive indicator.
Its current pattern counts as a first-stage base. Such early patterns are more likely to result in rich gains, IBD research has found.
Big Money Snaps Up Cirrus Stock Amid Soaring Profits
A key sign of whether a stock is worth considering is whether it attracts institutional support.
Big Money has been snapping up Cirrus stock of late, with its Accumulation-Distribution Rating coming in at a strong B+.
In addition, 64% of its stock is currently held by funds, according to MarketSmith data.
A number of highly rated mutual finds currently hold shares. These include Fidelity Growth Company (FDGRX), Black Oak Emerging Technology fund (BOGSX) and Rydex Electronics Fund (RYSIX).
One of the reasons Cirrus is among the best growth stocks to watch at the moment is its current strong level of profit growth. When the firm posted results on Tuesday EPS jumped 107% to $1.12, well clear of Wall Street expectations.
Over the past three quarters earnings have grown by an average of 110%. Its track record has netted it a top notch EPS Rating of 95. In the most recent quarter earnings grew by 107%.
Analysts are also keen on the stock. On Aug. 3, Needham retained its buy rating on the stock and hiked its price target from 85 to 97. Stifel Nicolaus also held a buy rating and has given it a 100 target.
Susquehanna analyst Christopher Rolland is even more enthusiastic as he retained a buy rating while setting a price target at 110.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
