Wednesday's IBD 50 Stocks To Watch pick is egg producer Vital Farms, which is breaking out this week above its latest buy point. That makes Vital Farms one of the best stocks to buy and watch right now.
The Austin, Texas-based company provides premium-branded, pasture-raised eggs and butter. The assortment of eggs such as cage-free, pasture-raised, free-range and organic can be confusing and even controversial. But mid- to upper-level consumers — those least stressed by recent inflation trends — tend to know precisely what they want.
Vital Farms reported avian flu incidents in 2022 and 2023. Despite those hits, the company says its network of family farms tends to reduce disruptions to its egg supply and operations.
On Nov. 7, Vital Farms reported adjusted earnings of 16 cents per share on sales of $145 million, which represented year-over-year increases of 60% and 31%, respectively. Meanwhile, the company also raised its full-year 2024 outlook on the back of strong consumer demand.
"The virtuous cycle of growing consumer demand, driving expanded distribution, driving further demand continued in the third quarter," Chief Executive Russell Diez-Canseco said in the company's third-quarter earnings call.
Diez-Canseco added: "Even with this rapid growth, we see ample opportunity to add many more items to existing shelves at locations where we already have a strong presence and further increase sales velocity of our items."
In addition, Vital Farms increased the number of family farms to 375 in the third quarter, and the company is on track to meet its $1 billion net revenue target by 2027.
For the full year 2024, Wall Street expects the company's earnings to grow by 90%, with an increase of 9% in 2025, per IBD MarketSurge.
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Stocks To Buy And Watch: Vital Breaks Out
On Monday, Vital Farms stock broke out past a 41.57 buy point in a double-bottom base, per IBD MarketSurge chart analysis. Shares are in the 5% buy zone that runs up to 43.65. Vital stock added 1.2% Wednesday morning.
Keep a close eye on the relative strength line. While the RS line remains far from its 52-week high, it has reached its highest level since mid-July. That shows strong stock market outperformance over the near term.
Another positive signal is that the current base formation is an early-stage base, at a second stage. Early-stage bases are more likely to net bigger gains than later-stage formations.
The IBD Stock Checkup shows that Vital Farms stock boasts a near-perfect 98 IBD Composite Rating, another bullish attribute. That strong Composite Rating places the name among the best stocks to buy and watch in today's market.
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Other Stocks To Keep An Eye On
Three recent IBD 50 Growth Stocks To Watch picks are among the best stocks to buy and watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| HealthEquity | 88.26 | Cup base | |
| Globus Medical | 87.22 | Flat base | |
| Argan | 165.33 | Cup base |
Source: IBD Data as of Jan. 15
Follow Scott Lehtonen on X at @IBD_SLehtonen for more on the best stocks to buy and watch and the Dow Jones Industrial Average.
