Samsara stock is Tuesday's IBD 50 Stocks To Watch pick as the Internet of Things name is building up the right side of a base with earnings on the horizon.
Samsara stock is in an undefined base with a 36.91 buy point, according MarketSmith pattern recognition. The buy point coincides with its all-time high reached on Dec. 14.
The Internet of Things player gapped up 25.6% in huge volume on Dec. 1, the day after it reported better-than-expected fiscal third-quarter earnings and sales. Shares reached a high and then started forming its current base.
Samsara stock tested its 50-day moving average within the base and fell back below the key level Tuesday as shares sank around 6%. Its relative strength line has bumped along and has been trending sideways throughout the base.
Samsara Stock: Earnings And Sales Growing
The company operates an integrated platform allowing internet connectivity across devices, workforce, vehicles and facilities. It uses artificial intelligence in its vehicle safety cameras, provides Global Positioning System and vehicle tracking, as well as electric vehicle charging statistics. Samsara serves the retail, warehouse, logistics, food and beverage, and education industries along with governmental agencies.
Samsara stock had its initial public offering on Dec. 15, 2021, at $23 a share.
When Samsara beat views with its Nov. 30 report, it posted its second straight quarter of profits after numerous quarterly losses. Samsara's quarterly sales growth has been in the 40% to 49% range for the last five quarters.
The company boasted that it reached a critical milestone in annual recurring revenue, known as ARR, in its earnings report.
"We achieved an important milestone this quarter as we surpassed $1 billion in ARR in just our eighth year of selling," Chief Executive Sanjit Biswas said in the report. Biswas is a co-founder of the company.
Samsara also raised its fiscal 2024 adjusted earnings outlook to 5 cents-6 cents a share. In addition, management now expects fiscal 2024 sales of $918 to $920 million, up from the $896 million to $900 million it previously predicted, topping estimates.
Samsara stock analysts expect fiscal 2024 profit of 5 cents a share, up from a loss of 13 cents a share in 2023. Wall Street sees per-share earnings of 8 cents in fiscal 2025.
The company is due to report fourth-quarter earnings on March 7.
Internet of Things Stock Has Some Work To Do
Samsara's Accumulation/Distribution Rating of C+ indicates modestly higher institutional buying vs. selling in the last 13 weeks. On a positive note, mutual funds are increasing ownership, with 349 funds owning Samsara stock in December. That's up from 333 in September and 319 in June.
Shares also hold an Up/Down Volume Ratio below 1.0, which shows lower demand for Samsara stock over the last 50 days. Samsara stock holds a 94 IBD Composite Rating but a less-than-ideal 81 EPS Rating as it starts to work on profitability.
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