One of the best performing stocks in one of the least sexy fields just got a rating upgrade. Discount grocery chain Grocery Outlet has posted double-digit sales and profit growth for the last five quarters. That was after it reversed from shrinking earnings growth the prior quarters. It's no surprise that the Relative Strength (RS) Rating for Grocery Outlet stock headed into a higher percentile Monday, as it got a lift from 70 to 74.
Grocery Outlet Stock Near Milestone
The 74 RS Rating means that Emeryville, Calif.-based Grocery Outlet stock outperformed roughly three-fourths of all stocks this past year. It's approaching a milestone. Top-performing stocks often have an 80 or higher RS Rating before they launch their biggest runs.
Heading its list of other key ratings is a superb 95 Earnings Per Share Rating, out of 99. That puts it in the top 5% of all companies for recent and long-term profit growth. The operator of more than 400 discount supermarkets across the country also has a B Accumulation/Distribution Rating, on an A+ to E scale with A+ superb and E dismal. The B A/D Rating shows that big funds are fairly heavy buyers of its stock. Its 79 Composite Rating, a combination of IBD's five top ratings, is OK but could use some improvement.
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Can It Repeat Strong First Half?
Grocery Outlet stock raced 41% higher in just over five months, rising from an intraday low 25.91 on March 1 to 36.54 on Aug. 9. The company reported $1.01 billion sales on Aug. 8, is first billion-dollar quarter. "Our second quarter results came in ahead of our expectations and were driven by strong same store sales growth and gross margin expansion," CEO RJ Sheedy said in the earnings release. "Our differentiated model and compelling value proposition are resonating with both new and existing customers," Sheedy added.
GO stock consolidated in recent weeks in sync with the market pullback. Still, Grocery Outlet has moved more than 5% past a 29.29 entry in a first-stage consolidation, meaning it's now out of a proper buy zone. Look for the stock to create a new chance to get in like a three-weeks-tight pattern or pullback to the 50-day or 10-week moving average.
Monday afternoon Grocery Outlet traded at about 31.70, down for the day.
The grocery chain reported 19% earnings growth last quarter, to 32 cents per share, on a 13% revenue increase to $1.01 billion. The prior three stanzas it reported 13%, 25% and 42% profit growth.
No. 3 In Its Industry Group
Grocery Outlet stock holds the No. 3 rank among its peers in the Retail-Discount & Variety industry group. Fun-themed closeout chain Ollie's Bargain Outlet is No. 2. And China's Miniso Groupis No. 1 among the group's highest-rated stocks.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.
The exclusive Relative Strength Rating from Investor's Business Daily measures share price movement with a 1 (worst) to 99 (best) score. The score shows how a stock's price behavior over the trailing 52 weeks holds up against all the other stocks in our database.
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