Navigating this bear market is no easy task. But smart transportation technology play Verra Mobility has managed to pave a less bumpy road than most tech stocks. Having posted average earnings growth of 73% over the last three quarters, Verra has found a spot on the IBD Breakout Stocks Index.
With a 94 Composite Rating, Verra Mobility earns top billing among its peers in the specialty enterprise software group. But the industry ranks a lowly No. 181 out of the 197 groups IBD tracks.
The company went public through a special purpose acquisition company (SPAC) — also called a "blank check company" — in October 2018.
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Verra Mobility Signals 150% EPS Growth Ahead
Based in Mesa, Ariz., Verra provides smart mobility technology to make transportation safer, smarter and more connected. With a focus on tolling payments and traffic enforcement cameras, its transportation technology bring together vehicles, hardware, software, data and people to enable safe and efficient solutions.
Verra is global in scale, with operations in North America, Europe, Asia and Australia.
From cities and counties and school districts to car and ride share providers, Verra Mobility works with a wide range of government and private organizations. It also solves complex payment, utilization and compliance challenges for fleet owners and rental car companies.
After generating EPS gains ranging from 59% to 92% over the last three quarters, analysts expect Verra Mobility to drive 150% growth when it reports in August.
Over the last four quarters, sales growth has ranged from 61% to 90%.
While the stock did not make the latest list of new buys by the best mutual funds, 22 funds with an A+ rating from IBD have reported owning VRRM stock. Plus, Verra sports a B+ Accumulation/Distribution Rating and six quarters of rising fund ownership.
VRRM Stock Flashes Leading Relative Strength
Breakouts in a bear market tend not to work. But even in a market correction, investors should stay on the lookout for stocks forming new chart patterns.
During the current downturn, Verra Mobility has shown promise. In addition to the impressive sales and earnings growth noted earlier, Verra's relative strength line has hit a new high, signaling market leadership.
As the stock market indexes look to establish a bottom, Verra Mobility has reset its base count by undercutting the low in its prior pattern. That makes its current cup with handle a first-stage base. The buy point is 16.83.
While Verra's 50-day moving average remains below its 200-day line, the stock has found support at its 200-day benchmark.
Although now is not an ideal time to buy any stock, keep an eye on Verra Mobility. If it can successfully navigate this bear market, it may be poised to drive solid gains when a new uptrend begins.
On Wednesday's close, Verra Mobility rose over 1% in light volume, putting it 6% below the buy point.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
