Commercial Metals, a key supplier to construction and infrastructure markets around the globe, is among growth stocks approaching buy points. Amid a recent unexpected rise in profitability, it's also today's IBD 50 Stocks to Watch pick.
The growth stock is trading just 5% below a buy zone of a double-bottom 42.99 buy point. Last week, Commercial Metals powered over 12% higher and retook its 50-day moving average and 200-day moving averages — a bullish move after undercutting the 50-day line last April.
Since bottoming at around 31.47 in early July, shares have traded higher for four straight weeks. The growth stock's relative strength line has powered higher but is still off from recent highs.
Commercial Metals climbed nearly 3% Monday afternoon as it continues to rally. But after such a strong move, the stock may pause for a moment to digest the gains before moving higher. A possible handle entry may form as well.
Growth Stocks: Commercial Metals Earnings Growth Spurt
Commercial Metals manufactures, recycles and markets steel and metal products in North America and Europe. It's North American business made up roughly 84% of its total revenue in the most recent quarter. Europe accounted for 16% of sales. Its North American segment is a network of recycling facilities, steel mills and fabrication operations.
The company continues to invest in equipment and mills to insure further growth for many quarters to come. The Irving, Texas-based firm is on track to finish its third micro steel mill, which will serve regions in the eastern U.S. primarily.
Commercial Metals also recently acquired Tensar, a global provider of engineered civil construction products. This will be immediately accretive to CMC's earnings and will help expand its products and services. It could also create future growth opportunities.
The growth stock is expected to post full-year EPS of $8.73, representing growth of 147% for 2022, according to MarketSmith. Meanwhile, the firm has averaged earnings growth of 154% over the past three quarters and surprised investors with a strong earnings beat on June 16. Analysts expected May-quarter earnings of $1.85 a share. Commercial Metals reported EPS of $2.61 on revenue of $2.52 billion.
