Samsara is below a potential buy point of 36.91 after forming a three-weeks-tight pattern. But if we go by the daily price highs within the pattern, a buy point near 36 emerges which can also be seen as an entry. Shares surged on an earnings gap-up that sent the stock past an earlier buy point, according to IBD MarketSmith. IOT stock is today's selection for IBD 50 Stocks To Watch.
Shares gapped up nearly 26% in strong volume after third-quarter results were announced Nov. 30. The stock broke out of an early-stage base on that move. It followed that up by forming the current pattern. That shows that the stock has been able to hold its impressive gains after the breakaway gap on earnings.
IOT stock has a Composite Rating of 93 and EPS Rating of 81. Its Relative Strength Rating is nearly ideal at 97.
Samsara is in the enterprise software industry group, which holds 40th place among IBD's 197 industry groups. The stock started trading on the New York Stock Exchange in December 2021 at an initial offering price of $15.
IOT has strong fund sponsorship and boasts an Accumulation/Distribution Rating of B-. Mutual funds own 51% of shares outstanding and more funds have been net buyers over the past six quarters.
The Lord Abbett Developing Growth Fund (LAGWX) and the Harbor Disruptive Innovation Fund (HAMGX) hold shares of IOT. Exchange traded funds that hold shares of Samsara include GlobalX's Internet of Things ETF and the ALPS Disruptive Technologies ETF.
IOT Stock Gaps Up On Earnings
Third-quarter sales grew 40% to $237.5 million, while earnings per share of 4 cents reversed a 2-cent loss in the prior year's same quarter. During the quarter, the company achieved $1 billion in annual recurring revenue. For the fourth quarter, it gave midpoint guidance of $258 million in sales, or a 38% increase from the year-ago quarter, and earnings of 3 cents per share after a loss of 2 cents a year ago.
For fiscal 2024, which ends next month, Wall Street expects earnings of 5 cents per share. But that rises sharply by 49% to 8 cents per share in fiscal 2025.
Samsara provides a cloud platform for connected devices. The Internet of Things play provides its Connected Operations Cloud for the construction, logistics, manufacturing and other industries that depend on physical locations.
Since November the company has been adopting AI features to help companies that rely on physical operations. This ranges from improving safety and making maintenance smoother and faster, to providing workers with data on cellphones and other devices as they go about their daily tasks.
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