Wingstop stock retook a key level on Wednesday and earned its way back into the IBD 50. The chicken wings restaurant stock is today's IBD 50 Stocks To Watch pick.
The restaurant company has around 2,000 locations in 44 states and internationally, and plans to add about 240 net new locations this year. Its ultimate goal is 7,000 locations.
Wingstop ranked No. 9 out of 55 stocks in the retail-restaurants group. The group is ranked a strong No. 18 out of the 197 IBD industry groups.
WING is on the Leaderboard's Leaders watchlist.
Stock Trading At A Key level
WING soared 9.4% in heavy volume after its first-quarter earnings report on May 3. Shares hit an all-time high of 223.77 to create a buy point of a cup base, according to MarketSmith pattern recognition.
The stock pulled back 4.8% the following day and closed near the lows of the day. Shares traded between the 200 and 210 level for three weeks.
WING stock violated the 50-day moving average in early June and trended downward until bottoming on June 23 in heavy volume. That set the bottom of the base.
Shares traded tightly for three weeks near the bottom of the base, biding their time.
Wingstop shares got the catalyst it needed, and popped 3.9% on Tuesday, after Northcoast Research upgraded the stock to a buy from a neutral rating with a price target of 229.
The stock retook the 21-day exponential moving average on Tuesday's move. More importantly, WING reclaimed the 50-day line on Wednesday's 2.1% increase.
Shares pulled back around 1% in light volume on Thursday and are trading around the 50-day line, looking for support.
Investors can also use a move above the 50-day line for an aggressive entry. A break above the 210 resistance level could also offer an early entry, or a place to add to an existing position.
Wingstop Is An Earnings Leader
Wingstop holds an enviable 98 IBD EPS Rating, the second-highest in its industry group.
The company exceeded analysts' first-quarter earnings and sales expectations on May 3. EPS grew an impressive 79% as bone-in chicken wing costs decreased 52.8% over last year's quarter.
The restaurant chain has a three-year EPS growth rate of 27%, according to the IBD Stock Checkup.
Quarterly sales increased 43% year over year. Its digital sales reached a record 65.2% of total sales, while domestic same-store sales rose 20.1%.
Sales growth has held strong, ranging from 41% to 46% in the last three quarters.
Management gave updated guidance, including "high single-digit" domestic same-store sales growth for 2023. Analysts expect 16% full-year EPS growth this year and next.
Mutual funds own a high 73% of shares, with 654 funds owning the stock in March, up from 630 in December and 597 in September.
Lastly, six funds found on the exclusive IBD Mutual Fund Index hold shares of WING stock, although three of them trimmed their positions in the March quarter.
Follow Kimberley Koenig for more stock market news on Twitter @IBD_KKoenig.
