Does one bad quarter mean it's time to sell a stock? Apparently not, at least for auto dealership chain Asbury Automotive. Investors have bid its shares up about 8% in the two weeks since it reported less than spectacular results. And on Tuesday, the Relative Strength (RS) Rating for Asbury stock climbed from 67 to 73.
Asbury Stock Approaching Key Benchmark
The 73 RS Rating shows that Asbury stock has outperformed 73% of all stocks in the past 12 months in terms of price performance. Market research reveals that the best stocks often have an RS Rating above 80 as they begin their largest climbs. See if Asbury Automotive can continue to rebound and hit that benchmark. The company has to prove itself though after a lousy earnings report last quarter.
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Asbury Automotive recorded a 10% dip in in first quarter earnings on April 25 to a still hefty $8.37 per share. Revenue slid 8% to $3.58 billion. But the prior three quarters Asbury's sales grew 53%, 61% and then 40%. Similarly, its EPS grew 29%, 25% and 22% during that time. It's easy to see how the Street might view last quarter's results as a one-off.
Additionally, its stock may have been due for a correction. It soared from a 157.53 intraday low on Dec. 20 to an all-time high 253.67 on Feb. 2 before consolidating. It closed at about 202 Tuesday, up fractionally for the day.
Asbury Breaks Out, Quickly Passes Buy Point
Asbury stock has climbed more than 5% past a 189.72 entry in a first-stage cup with handle, meaning it's now out of a proper buy zone. Look for the stock to offer a new chance to get in like a three-weeks-tight pattern or a pullback to the 50-day or 10-week moving average.
Asbury Automotive holds the No. 4 rank among its peers in the Retail/Wholesale-Auto Parts industry group. Its peer, Houston-based Group 1 Automotive and industry giant Penske Automotive, with a run rate approaching $30 billion, are also among the group's highest-rated stocks.
As you try to find the best stocks to buy and watch, be sure to pay attention to relative price strength.
IBD's unique RS Rating identifies market leadership by using a 1 (worst) to 99 (best) score that indicates how a stock's price performance over the trailing 52 weeks compares to the rest of the market.
