Tuesday's IBD 50 Stocks To Watch pick — ExlService — is one of the top stocks to buy and watch following Monday's breakout move. Shares climbed nearly 1% midday Tuesday and are in the 5% buy range past their latest buy point.
Stocks To Buy And Watch: ExlService
New York-based ExlService provides outsourcing services for global companies in the banking, financial services and insurance industries. Specifically, the company offers collections, cash management, loan servicing and other finance and accounting processes.
In the latest quarter, the company reported strong results on Thursday, earning $1.54 per share on revenue of $361.4 million. Earnings grew 18% vs. the year-ago period while sales jumped 24%. The company also raised its full-year 2022 earnings outlook.
"In the current macroeconomic environment, our clients are facing heightened volatility and uncertainty and they are looking to streamline operations, reduce costs and improve end customer experience," said CEO Rohit Kapoor in the Q3 conference call.
Kapoor continued, "In this environment, our business model has become even more relevant and strategically important for our clients. We have all the tools necessary to drive this transformation. By harnessing data, we are helping our clients make better business decisions, embed intelligence in the workflow and streamline operations."
IBD Stock Ratings
EXLS stock shows a solid 94 out of a 99 Earnings Per Share Rating and a best-possible SMR Rating of A, according to IBD Stock Checkup.
ExlService grew earnings by an average 23% over the last three quarters, while sales grew a steady 25%. In 2021, pretax margins and return on equity measured 19% and 23%, respectively. Those are sound figures.
This stock to buy and watch shows a strong 97 IBD Composite Rating, ranking it first in the Commercial Services-Outsourcing industry group.
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EXLS Stock Breaks Out Past New Buy Point
EXLS stock is breaking out past a cup base's 179.91 buy point, according to IBD MarketSmith pattern recognition. Shares broke out Monday, rising more than 3%. But volume was only slightly above average. Breakout-day volume should increase at least 40% above average, indicating big institutional demand.
Shares rose nearly 1% Tuesday despite the stock market's midday losses. The 5% buy area goes up to 188.91.
The relative strength line hit a new high on the breakout day. A strong RS line during the early stages of a new stock market rally and during a volatile market environment is a key technical indicator of strength.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on top stocks to buy and watch and the stock market.
