On Holding is Thursday's pick for IBD 50 Growth Stocks To Watch as the footwear and apparel company is building a cup base. On Holding stock gave back part of a big gain from Wednesday but is finding support at a closely watched moving average.
Footwear stocks dipped in sympathy with Crocs on Thursday, as that footwear maker beat second-quarter earnings and sales estimates. But Crocs warned third-quarter profit may be lower than expected.
On Holding stock got caught up in the sector sell-off, losing 2.6% in recent action.
Switzerland-based On Holding makes fitness shoes, activewear and accessories for men, women and children.
On Holding stock ranks No. 5 out of 11 stocks in Investor's Business Daily's Apparel-Shoes and Related Manufacturing group. That group recently fell out of favor and sank to No. 143 out of the 197 industry groups IBD covers.
On Holding Stock Builds Base
On Holding stock is building the right side of a stage two cup base with a 44.30 buy point. The entry is also the stock's 52-week high, which was reached on June 12.
Shares surged 6.7% Wednesday and reclaimed their 50-day moving average in earnest after volatile action within the base. But Thursday's drop is nearing the line of support.
Wednesday's jump came after Raymond James initiated coverage on the stock with an outperform rating and a 46 price target.
The stock broke out of its prior stage one undefined base in heavy volume in mid-May, after the company easily topped first-quarter adjusted earnings and sales estimates. Shares swiftly climbed 22% to the June high from the 36.15 buy point before retreating and forming the cup base. On Holding stock has gained nearly 50% so far this year.
Big Profit Growth Expected
On Holding's first-quarter earnings grew 123% over the prior year's quarter following a loss in the fourth quarter.
Quarterly sales growth has decelerated for five straight quarters, and hit 23% during the first quarter. Revenue growth is forecast to be in the 26% to 34% range over the next four quarters.
On Holding reports second-quarter results on Aug. 13, before the market opens. Estimates call for profits of 18 cents a share, up from four cents in the prior-year quarter.
The stock holds a 38 IBD Earnings Per Share Rating, which includes modest profits per share and a loss from 2020. But its full-year 2024 profit estimates show an impressive 155% growth, followed by 4% growth in 2025.
Mutual funds are adding shares with 482 funds owning On Holding stock in June, up from 449 in March and 372 in December. Its Accumulation/Distribution Rating of A- indicates fairly heavy institutional buying over the last 13 weeks.
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