Powell Industries fell off its perch and all-time high of 364.98 and suffered a 20% loss last week. Investors who held the AI stock as it soared past its profit zone but were lucky enough to sell it at its record high netted an 84% gain — if they bought it as it broke out of a cup with handle with a buy point of 198.49. Powell is Thursday's pick for IBD 50 Stocks To Watch.
Shares started falling ahead of the company's fourth quarter results on Tuesday. However, the steep plunge did not end up triggering a sell signal, according to IBD MarketSurge charts and time-tested selling rules.
The stock tried to stem its fall at the 21-day moving average but fell further before rebounding from the 50-day moving average on Thursday in higher volume. An entry can be identified at about 265.
An up/down volume ratio of 1.8 shows strong demand for the stock. Meanwhile, more funds have been loading up over the past seven quarters. Mutual funds own 64% of shares outstanding.
Powell holds a Composite Rating of 83. That is above the minimum of 80 for growth stocks, according to Investor's Business Daily research. Its EPS Rating of 80 also meets IBD targets.
However, the Relative Strength Rating is its strongest point and shows the stock has done better than 97% of other stocks in the IBD database.
AI Stock Forays Into Data Centers
Powell makes circuit breakers and switchgears for the power-generation industry. The company has been extending its products to data centers as demand for energy surges amid the artificial intelligence boom.
Fourth quarter sales grew 32% to $275.1 million, while earnings of $3.77 per share rose 74%. Sales and earnings growth slowed from the prior quarter. Over the past eight quarters, sales growth has ranged between 28% and 53%.
The company declared a dividend of 27 cents a share payable to shareholders on record as of Wednesday.
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