Powell Industries is Thursday's pick for IBD 50 Growth Stocks To Watch as shares are building a base after the electrical industry stock surged following its stellar earnings report. But the stock gave back more than 5% in afternoon trading.
The electrical equipment company's markets include electric vehicle charging systems and semiconductor power converters, also called rectifiers. It also serves industrial markets including data centers, which are in higher demand for the massive computing needs of artificial intelligence tools.
The company also serves utilities, oil and gas producers, refineries, liquefied natural gas facilities, petrochemical plants, paper producers and mining operations.
Powell Industries Stock Gives Back Some Gains
The electrical devices maker's stock Thursday gave back much of Wednesday's explosive 18.9% gap-up in heavy volume. Powell stock reclaimed its 50-day moving average on Wednesday's surge, after the company reported a strong beat on its fiscal second-quarter earnings and sales estimates late Tuesday.
Powell stock, which is still above the 50-day line, is building a cup base with a 197.87 buy point, according to MarketSurge pattern recognition.
Shares gapped up after the company beat fiscal first-quarter profit and sales views on Jan. 30. The stock rallied to a record high 197.87 on March 4, which became the starting point of its current base.
Shares have gained around 80% year to date, leaving the S&P 500 in the dust with its 5.2% gain.
Earnings Growth Delights Investors
In the March-ended quarter, Powell produced another robust quarter of triple-digit earnings growth. Profit grew 293% to $2.75 a share from 70 cents in the prior year's quarter. Sales grew 49% and have ranged from 28% to 53% in the last five quarters.
Analysts expect earnings growth to temper. Current-quarter profit estimates show 42% growth then slowing to 6% and 2% gains the following two quarters, according to FactSet. Revenue growth is on a similar trajectory, with a 15% increase expected in its current quarter, then 11% and 10% in the next two periods.
Fiscal full-year 2024 profit is expected to increase an impressive 104%. The power stock holds a best-possible 99 IBD Composite Rating and a 98 Relative Strength Rating.
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