One IBD 50 stock to watch is Vertiv (VRT), a company that has benefited from the artificial intelligence boom. Another is insurance stock Root (ROOT). Both stocks have bounced off a key moving average in recent days.
Vertiv, an energy company, has seen its power and cooling systems come into great demand in data centers that train AI models and have intensive energy needs. Meanwhile, Vertiv stock cleared its most recent buy point of 103.69 on Oct. 3 ahead of third-quarter earnings.
Shares have rallied more than 160% this year, but there may still be time to buy Vertiv. The IBD 50 stock rallied 40% after breaking out of the buy point to an all-time high of 145.67 but has pulled back this week to a key level.
Normally, buy points emerge from bases. Based on IBD MarketSurge’s chart analysis, shares are now in a buy zone from a new buy point of 124.86. The buy point is not attached to a base, but rather emerges as the stock rises after pulling back to the 21-day moving average.
Vertiv announced its third-quarter results on Oct. 23. Sales grew 19% to $2.1 billion while earnings of 76 cents per share were 46% higher than the prior year. Its outlook for the current quarter is bullish.
The company announced that it expects sales of $2.14 billion with earnings of 82 cents per share — both midpoint estimates. Analysts polled by FactSet have a slightly higher estimate of $2.5 billion for sales though they expect earnings of 81 cents per share in Vertiv’s fourth quarter.
The AI leader’s full year outlook also remains strong with midpoint sales of $7.8 billion and earnings per share of $2.68. Vertiv joined the Nvidia partner network in March.
Funds Load Up On Vertiv Stock
Vertiv ranks first in the electrical and power equipment group. The stock has near-ideal Composite and EPS ratings of 98, according to IBD Stock Checkup while its outperformance over 52 weeks has earned it Relative Strength Rating of 97. Funds own 55% of outstanding shares.
Further, more funds have been net buyers over the past seven quarters and in more recent weeks, giving the stock an Accumulation/Distribution Rating of B. The AllSpring Growth Fund (SGRAX) holds shares of Vertiv.
Meanwhile, shares of insurance stock Root vaulted after it reported third-quarter results on Oct. 31. Root also hit a three-year high after the company reported its first profitable quarter.
Sales grew for the fifth continuous quarter to $305.7 million but earnings of $1.19 per share signaled a strong recovery. The company also stated that it had reduced its debt that benefited its earnings.
Root stock is bouncing off the 21-day moving average on Friday after four days of losses.
Root provides property and casualty insurance as well as renters insurance in some states. The stock has an ideal Relative Strength Rating of 99 while the Composite Rating of 92 is also outstanding. The EPS Rating lags at 72.
Mutual funds own 33% of outstanding shares and more funds have been net buyers in the past four quarters. Interest from big money has been exceptional in more recent weeks: Root stock holds an Accumulation/Distribution Rating of A+.
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