Power stock Hubbell is in the buy zone after breaking out of a base, following Tuesday's strong earnings report. Shares hit an all-time high today. It is Thursday's IBD 50 Stocks To Watch pick.
The Connecticut-based company designs, manufactures and sells electrical supply products for industrial, residential, construction, and utility and power applications.
The electrical supplier offers a wide range of products, including lighting instrumentation, solar panels and arrays, wind turbines and towers, and transmission components.
Hubbell has partnerships supporting clean, sustainable and renewable energy, including wind and solar energy projects. It's goal is to reduce greenhouse gas (GHG) emissions and water consumption by 10% by 2025.
The company operates in the U.S., Canada, Mexico and Brazil.
HUBB stock is ranked No. 3 out of 46 stocks in the Electrical Power/Equipment industry group, which holds the 85th spot out of 197 IBD industry groups.
Power Stock In The Buy Zone; Hits New High
HUBB stock gained nearly 2% Thursday and hit an all-time high at 266.42, bypassing Tuesday's rally high. Shares have gained over 14% so far this week.
Shares soared 11.6% in heavy volume Tuesday and broke out of a newly-formed flat base, hitting the 257.61 buy point.
The buying spike erupted after Hubbell posted better-than-expected Q1 earnings and sales, and lifted full-year 2023 earnings guidance above projections.
Shares are in the 5% buy zone reaching to 270.49, according to MarketSmith pattern recognition.
The nascent base formed from the handle of a base with a 256.43 buy point. Shares traded under the 50-day moving average through most of the new base construction but retook the line during the breakout.
The relative strength line hit a new 52-week high, as indicated by the blue dot on the weekly chart.
Electrical Stock Glows After Earnings Report
Hubbell's Q1 earnings grew an impressive 70%, up from 26% and 45% in the prior two quarters. Eleven percent sales growth matched the prior quarter, dipping from 21% two quarters ago. Operating margin increased to 19.4% year over year.
The company now estimates full-year 2023 sales growth between 8% and 10%. Meanwhile, analysts forecast 24% full-year EPS growth this year and a more modest 4% in 2024.
"Grid modernization and electrification continued to drive robust demand for Hubbell products and solutions," said Gerben Bakker, Chairman, President and CEO.
He said renewable electrical solutions were strong, commercial markets were more modest and the residential market remained soft, as expected. Bakker also noted that recent investments in capacity and productivity contributed to higher production levels.
Mutual Funds Adding Shares
Mutual funds hold 60% of shares, with 1,289 owning Hubbell stock in March, up from 1,247 in December and 914 in September. The CAN SLIM investing strategy looks for increasing institutional support for conviction, as big money managers can boost stock prices with large purchases.
Following the positive release, Morgan Stanley raised its price target on the power stock to 275 from 238 and maintained its equal-weight rating. Mizuho followed suit, raising its target to 300 while maintaining a buy rating.
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