Building supplies distributor W.W. Grainger remains well-positioned for fast growth, Meanwhile, shares of GWW stock are forming a compelling technical picture.
After the federal government approved the trillion-dollar infrastructure bill to upgrade the U.S.' aging highways, waterways and airports last year, several building products and construction stocks were boosted. Despite poor market conditions, stocks like W.W. Grainger have held up relatively well this year.
The stock has recently formed a cup base and is trading just 6% below the 530.01 buy point. GWW stock peaked at an all-time high of 529.91 on April 13, just 10 cents below the proper entry. Since then, shares have pulled back alongside the market, according to MarketSmith chart analysis. GWW stock also just reclaimed its 50-day moving average after undercutting this area in early May.
From here, investors want to see the stock clear the breakout price in heavy volume.
Shares have run up 164% from a 2020 bear-market low of 200.61. The latest base could be seen as at least second stage.
The first breakout took place in July 2020 when GWW stock rose past 330.51. After a few normal-looking pullbacks, Grainger finally etched a serious new base that began with the December 2020 peak near 428. Since then, it's formed three bases that could be treated as one large base-on-base-base pattern.
The stock's relative strength line has slowly been trending higher in recent months and is hitting new highs. The Relative Strength Rating of 87 shows GWW stock is among the top 13% of all stocks in terms of price performance over the past year.
Robust Demand Boosts GWW Stock
W.W. Grainger has posted accelerating year-over-year EPS growth for each of its last five earnings reports. Over the past four quarters, the firm has averaged EPS growth of 36.5%, which is above the minimum 25% level expected for top growth stocks, according to CAN SLIM measures. For Q1 earnings, which were released April 28, W.W. Grainger reported a 58% jump in earnings to a robust $7.07 per share, as sales grew 18% to $3.65 billion.
"The Grainger team performed extremely well in the first quarter, with strong financial results supported by a robust demand environment," said CEO D.G. MacPherson in the firm's most recent earnings release.
W.W. Grainger is a business-to-business distributor of maintenance, repair and operating (MRO) products and services to companies worldwide. The firm offers more than 2 million maintenance, repair and operating (MRO) products in its High-Touch Solutions assortment and more than 30 million products through its expanding Endless Assortment offering.
The firm's Q1 news release noted strong performance in both the High-Touch Solutions and Endless Assortment segments.
GWW stock also has a long operating history and serious growth prospects for 2022. According to MarketSmith, analysts expect the firm to show full-year earnings per share of $26.45 in 2022, which represents growth of 33% from the prior year's EPS of $18.94.
