Does the Street know something that most people don't? Shares of discount chain Ollie's Bargain Outlet have shot up three days in a row, just ahead of its fiscal first quarter earnings report, slated for release Wednesday before the market opens. The Relative Strength Rating for Ollie's stock cleared a key benchmark Tuesday, with a jump from 76 to 83.
Ollie's Stock Popped Over Last 3 Days
OLLI stock rose 4.5% Friday, 2.8% Monday and 4.5% Tuesday for a powerful three-day gain. Additionally, its RS Rating upgrade to 83, of a best-possible 99, shows that Ollie's stock outperformed 83% of all stocks for price appreciation this past year. Research shows that the best stocks tend to have an RS Rating north of 80 as they begin their biggest climbs.
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Ollie's Bargain Outlet sells low-priced buyouts, overstocks and closeout goods at its 479 stores in 29 states. The company is adding stories at a rapid clip. It strives to make shopping fun too, with its colorful ads featuring a cartoon "Ollie" and in-store decorations and events.
Harrisburg, Pa.-based Ollie's, just north of Philadelphia, has a 79 EPS Rating, and a 79 Composite Rating. It has a C Accumulation/Distribution Rating, indicating that funds are buying roughly as many shares as they are selling.
Completed A Cup-With-Handle Pattern
Ollie's stock has just completed a cup handle with a 69.26 buy point. If its earnings report is strong, it could take off. See if the stock can break out in heavy volume. It would be prudent to wait to buy until the earnings report comes out though. If the numbers disappoint its stock could tank too.
Earnings for the small-cap company grew 22% last quarter to 84 cents per share on a 10% increase in revenue to $549.8 million, up from 9% growth the prior report. Its two recent gains have been a turnaround from the two prior quarters, when its earnings and sales growth shrank on a year-over-year basis.
Ollie's stock holds the No. 3 rank among its peers in the Retail-Discount & Variety industry group. Larger rival Five Below and Emeryville, Calif.-based Grocery Outlet are also among the group's highest-rated stocks.
When looking for the best stocks to buy and watch, a good tool to use is a relative price strength rating.
IBD's unique RS Rating identifies market leadership with a 1 (worst) to 99 (best) score. The grade shows how a stock's price movement over the trailing 52 weeks compares to all the other stocks in our database.
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