American Superconductor is Monday's pick for IBD 50 Stocks To Watch as the electrical-gear company's shares reached a buy point Friday, though it came with a caveat. Shares are coming off two straight days of gains following the company's outstanding earnings report late Wednesday.
The stock was volatile Monday morning while still in a new buy zone. Shares were down around 3.3%.
The company designs and makes power systems and superconductor wires for power grids and wind turbines. Its products are used by chipmakers, industrial manufacturers and the U.S. Navy.
American Superconductor ranks No. 1 out of 46 stocks in the Electrical-Power/Equipment industry group. The group moved up to the No. 65 spot from 81 four weeks ago (out of 197 IBD groups).
Power Equipment Stock In Buy Zone
Shares are in a deep cup base with an official 32.70 buy point. But a handle with a 27.10 buy point also formed, though the handle is slightly lower than ideal. Handles should form in the upper half the entire base.
The power equipment stock reached the handle buy point Friday and is hovering in the 5% buy zone up to 28.46. Shares climbed 4.4% Thursday and 16.4% Friday in heavy volume and have gained around 158% so far this year.
American Superconductor blew fiscal second-quarter earnings estimates out of the water, with 27 cents per share vs. 4 cents per share that analysts expected. And that compared to 1-cent per share a year ago.
Sales growth accelerated to 60% from 32% and 33% in the prior two quarters. The quarter included results from the acquisition of NWL on Aug. 1. NWL provides power supplies to industrial and military customers.
Power Stock's Forecast
"During the second quarter of fiscal 2024 we booked nearly $60 million of new orders, with new energy power systems orders coming in stronger than previously demonstrated," said Daniel P. McGahn, president and CEO, in the earnings release.
Management guided current-quarter revenue in a range of $55 million to $60 million.
Analysts' consensus profit estimate for the fiscal year ending in March shows 50 cents per share, or a 2,400% increase, then a 5% rise the next fiscal year.
Mutual funds have been scooping up shares of the electric equipment stock, with 237 owning American Superconductor in September, up from 183 in June and 132 in March. In addition, its Accumulation/Distribution Rating of B indicates moderate institutional buying over the last 13 weeks.
The stock's IBD Composite Rating jumped to a best-possible 99 from 97 and 93 readings last week.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
