Tuesday's IBD 50 Stocks To Watch pick, Toro, is holding just shy of a new buy point ahead of this week's earnings report. Toro is one of top stocks to buy and watch in the stock market uptrend. Toro stock rallied 1% midday Tuesday, just 3% away from the latest entry.
The Bloomington, Minn.-based company specializes in equipment used in turf and landscape maintenance, snow and ice management, underground utility construction, irrigation and outdoor lighting solutions. Users include golf courses, groundskeepers, agricultural growers, government and educational institutions, sports venues and, of course, homeowners.
Toro manufactures in nine countries and distributes its products to over 125 countries.
In the most recent quarter, Toro earnings jumped 98% to $1.11 a share, as sales increased 22% to $1.17 billion.
Earnings are due out Thursday before the stock market opens. The company is expected to earn 93 cents a share on revenue of $1.15 billion, for respective year-over-year increases of 41% and 24%, according to FactSet.
Toro's IBD Stock Ratings
This lawn-equipment stock to buy and watch has a strong 95 out of 99 Earnings Per Share Rating, according to IBD Stock Checkup. The EPS Rating takes into account the growth and stability of a company's earnings over the past three years, with extra weighting put on the two most recent quarters.
Toro has a stellar long-term track record, with a stable five-year EPS growth rate of 22%. That positively impacts the EPS Rating. Looking forward, annual earnings are expected to grow 17% in the fiscal year ending in October and another 13% in fiscal 2024, per FactSet.
As for the SMR Rating — which looks at sales, profit margins and return on equity — Toro has an "A" rating. In the latest fiscal year, Toro had a decent 12% pretax margin, with a strong 36% return on equity. And over the last three quarters, Toro has grown its sales by an average 16%.
Stocks To Buy And Watch: TORO Just Off New Buy Point
Toro shares rallied 1% Tuesday, rebounding from support around their 50-day moving average. The stock is building a flat base with a 117.76 buy point, according to IBD MarketSmith chart analysis.
This week's quarterly results could provide the necessary catalyst for a breakout move. If that occurs, then the 5% buy zone will go up to 123.65.
Keep an eye on the stock's relative strength line. The RS line has flagged a bit during the base-building process, which is completely normal. However, now that the stock is within striking distance of the entry, look for the RS line to hit an new high during a breakout to new highs.
The stock's exemplary fundamental strength makes the lawn-equipment leader one of the top stocks to buy and watch.
Other IBD 50 Stocks To Buy And Watch
These are three recent IBD 50 Stocks To Watch picks.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| HubSpot | 399.65 | Cup with handle | |
| Monolithic Power Systems | 530.75 | Cup with handle | |
| Super Micro Computer | 92.90 | Double bottom |
Source: IBD Data As Of March 7, 2023
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.
