Tuesday's IBD 50 Stocks To Watch pick — industrial leader W.W. Grainger — is one of the top stocks to buy and watch, as it trades in buy range past its latest buy point. GWW shares inched lower into midday Tuesday.
Stocks To Buy And Watch: W.W. Grainger
Illinois-based Grainger is a leading distributor of maintenance, repair and operating (MRO) supplies. With operations primarily in North America, Japan and the United Kingdom, it has approximately 24,200 employees and over 4.5 million customers. The company generated $13 billion in revenue in 2021.
Last month, the supplier posted better-than-expected top and bottom-line results while raising guidance above estimates. In response, shares surged more than 7%. The company earned $8.27 per share on sales of $3.94 billion, representing year-over-year increases of 46% and 17%, respectively.
"The third quarter performance reflects our focused execution against our long-term strategy and ability to serve customers well in this demand environment," said CEO D.G. Macpherson in the company's news release. "Our teams are driving impressive results across both business segments and, after another quarter of strong performance, we are increasing our 2022 full year guidance. We remain on track to deliver an exceptional year."
Grainger's IBD Stock Ratings
This stock to buy and watch shows a solid 94 Earnings Per Share Rating and a SMR Rating of "A," according to IBD Stock Checkup.
Over the last three quarters, Grainger's EPS showed average growth of 57%. Earnings are expected to jump 48% for the full year. It booked a modest 11% pretax profit margin in 2021, with an exceptional 56% return on equity.
Boasting a perfect 99 IBD Composite Rating due to strong fundamental and technical metrics, Grainger is the top-ranked stock in the machinery tools industry group. Among the other machinery leaders, Deere is extended past a cup-with-handle's 406.12 buy point, following a strong report last week. Deere is also an IBD Leaderboard stock.
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GWW Stock Breaks Out
GWW stock is in the 5% chase zone past a 588.72 buy point in a cup base, according to IBD MarketSmith chart analysis. This zone goes up to 618.16. Shares lost 0.3% into Tuesday midday, threatening to extend a three-day losing streak.
The relative strength line hit a new high during the stock's breakout move in November, confirming technical strength while reiterating Grainger's status as a market leader. The RS line measures a stock's price performance vs. the S&P 500.
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