Ollie's Bargain Outlet is the IBD Stock Of The Day as it finds support at a key level after a recent pullback. Shares of Ollie's stock, like other discount and bargain-hunt retailers, can offer shelter to investors in tougher markets, as well as solid growth prospects.
Ollie's Stock Bounces After Pullback
Shares of Ollie's Bargain Outlet edged up 0.5% to 94.45 on the stock market today. Ollie's stock bounced off support from a rising 50-day moving average. It recently pulled back to the 50-day as some retail earnings raised fresh concerns about consumer spending, but it has held well above the 200-day line.
The discount retail stock would be actionable if it gets above a trendline drawn from the July 15 peak. That might coincide with the 21-day exponential moving average.
If OLLI stock manages that, it would begin climbing the right side of what could become a new base.
The relative strength line for the "bargain hunt" retail stock has been moving sideways. That is a sign of strength amid the current market volatility. The RS line spiked earlier in the summer as investors digested Ollie's robust earnings and accelerating earnings growth.
Among other favorable technical signs, Ollie's stock shows an up/down volume ratio of 1.7. It earns a superior Accumulation/Distribution Rating of A-, but fund ownership of shares fell 3% in the June quarter, according to IBD Stock Checkup.
This bargain-hunt retailer shows a 91 Relative Strength Rating out of a best-possible 99. The RS Rating means that Ollie's has outperformed 91% of all stocks in IBD's database over the past year. Year to date, Ollie's stock has soared 24.2%, fueled by a successful earnings breakout in June.
Ollie's Earnings Accelerate
Shares of Ollie's Bargain Outlet boast a 91 Composite Rating out of 99. The Composite Rating combines various technical and fundamental metrics into one easy-to-read score. Ollie's stock also bears an 86 EPS Rating.
Ollie's rang in earnings growth above 38% in each of the past three quarters. That growth accelerated over the past two quarters, capped with a 49% gain in the quarter ended May 4.
But growth is slowing on both the top and bottom lines. For the full year, analysts expect the bargain-hunt retailer to deliver a 12.6% EPS gain on 8.1% sales growth.
For fiscal 2023, which ended on Feb. 3, Ollie's posted an 88% EPS jump on 15% sales growth. The company in March raised its long-term store count target to 1,300, up from 1,050.
"With our increasing size and scale, we are becoming more meaningful to our vendor partners, which is driving strong deal flow," Ollie's CEO John Swygert said in an earnings release. "Everybody loves a bargain and as consumers seek value, we are positioned to win."
Ollie's earnings growth rebounded in 2023 after plunging 31% the prior year amid "a highly promotional environment," the company said.
Discount Retail Earnings Due, Shoppers Bargain Hunt
Ollie's has not yet announced its next earnings date. The bargain-hunt retailer is likely to report for the second quarter by August end.
Among other discount retailers, BJ's Wholesale Club is set to report Aug. 22 and Dollar General on Aug. 29. Ross Stores and Dollar Tree are also likely to report by month end.
Discount retailers, at large, are a classic defensive growth play that can do relatively well in tougher markets or amid economic uncertainty. They benefit from the consumer trade-down at such times.
