IPO Stock Of The Week and shoe leader Birkenstock (BIRK) is building a new base and it soared the past week, shrugging off the stock market sell-off.
Birkenstock stock is one of the best names to watch on Investor's Business Daily's IPO Leaders screen.
↑ XOn Tuesday, the German maker of popular sandals and shoes reported adjusted earnings of 32 cents per share on sales of $507.5 million, which represented year-over-year increases of 128% and 28%, respectively. The strong result was driven by "continued strong and growing consumer demand for its products across all segments, channels and categories," according to the company.
Birkenstock boasts two quarters of accelerating earnings growth, from 2% to 12% to 128%. Accelerating earnings growth is a hallmark of stock market winners.
"As we continue to gain the attention of consumers and wholesale partners, we are seeing strong, balanced growth in both our DTC (direct to consumer) and B2B (business to business) channels," Chief Executive Oliver Reichert said in the news release. "Both of these channels are highly profitable and allow us to maximize our reach, especially into new targeted consumer groups."
For the fiscal year ending next September, Wall Street sees Birkenstock generating a 42% year-over-year jump in earnings to $1.81 per share, with an increase of 27% in the next fiscal year, per IBD MarketSurge.
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Following the company's earnings report, shares extended a run up the right side of a cup base that has a 64.78 buy point, according to IBD MarketSurge pattern recognition. Meanwhile, an alternative entry exists at 62.45, the high on Wednesday.
The relative strength line has also rebounded sharply since bottoming in mid-November. While it remains off its old highs, it is at its highest level since late August, when the stock plunged on weaker-than-expected fiscal Q3 earnings and sales.
Look for the RS line to hit a new high if the stock is able to muster the strength for a breakout.
A positive signal is that the latest base formation is a first-stage base. During the stock's plunge in late August, it undercut the lows of the previous base. That reset the base count back to one. Early-stage bases are more likely to net bigger gains than later-stage formations. That's another reason that Birkenstock stock is one of the best names to watch.
The IBD Stock Checkup shows that Birkenstock boasts a strong 97 IBD Composite Rating.
Be sure to follow Scott Lehtonen on X at @IBD_SLehtonen for more on the Dow Jones Industrial Average and the stock market today.
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