Xpotential Fitness is in a buy zone above a 30.80 entry. The ascending base shows robust technical health and has taken the growth stock to an all time high.
Shares found support at the 50-day moving average since they started building the base in January. Another bullish indicator is the early stage formation. Stocks in first- or second-stage bases have a higher potential for big gains after a breakout. The relative strength line is near its 52-week high, another plus.
Growth Stock Makes It To IBD 50
The IBD 50 stock has strong ratings. The Composite Rating of 91, out of 99, and Relative Strength Rating of 97 are further indicators of solid price performance and fundamentals. Sales grew 44% to 98% the past seven quarters.
The Irvine, Calif.-based company broke a streak of losses with profits in the second half of 2022. Fourth-quarter earnings of 7 cents a share reversed the 20-cent loss per share a year ago. The company doubled its membership, average unit volume and same store sales from the previous year. Systemwide sales passed the $1 billion mark for the first time.
In the third quarter, Xponential posted a profit of 10 cents a share, vs. a year-earlier loss of 16 cents, according to MarketSmith.
For the full 2022, revenue increased 58% to $245 million from $155.1 million in 2021. A loss of 87 cents a share for the year compared favorably to the $2.85 per share loss the previous year.
For 2023, the company plans on adding 540 to 560 new exercise studios. It also expects systemwide sales in North America of $1.34 billion to $1.35 billion. It has increased its revenue outlook to $285 million to $295 million.
Xponential is a boutique fitness company that operates 48 studio locations in the U.S. and Canada and has several franchise agreements across 14 countries. The company offers 10 brands for Pilates, barre, indoor cycling, stretching, rowing, boxing, running and yoga. These include ClubPilates, PureBarre, CycleBar, StretchLab, RowHouse and YogaSix.
The growth stock has also partnered with Fitness International and offers its brands in LA Fitness and City Sports Clubs owned by Fitness International. According to the agreement, 350 franchised locations will add Xponential brands to more than 500 Fitness International locations over five years.
Stock Up More Than 150% Since IPO
Xponential Fitness went public in July of 2021, offering 10 million shares at $12 apiece in a downsized offering. Shares have rallied more than 150% from the IPO as they hit new highs.
XPOF ranks No. 2 in IBD's leisure services group, which holds 65th place among IBD's 197 industry groups. Mutual funds own 51% of the stock. The stock's Accumulation/Distribution Rating of B+ also indicates strong institutional interest. The growth stock was the IPO Stock of The Week recently.
The iShares Russell 2000 ETF and the Fidelity Small Cap Index Fund (FSSNX) are among the ETFs and funds that own the growth stock.
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