It's in a late-stage base, which is a risk. But astute investors may argue that the yearlong consolidation from August 2020 reset the base count. That has set the stock up for its cup with handle with a buy point of 71.10.
But investors cannot escape market risk, which is high right now as indexes go through a correction. It may be smart to keep BJ's on a watchlist rather than buy shares until the market improves.
The stock is trading above the its 50-day line and just below its 21-day moving average, according to MarketSmith. On a day the overall market is in a correction, the fact that the stock is down only 0.6% Tuesday is a good sign for the stock.
With a rising Relative Strength Rating of 94 and a Composite Rating of 95, this stock ranks No. 1 in IBD's Retail-Discount & Variety Group. The group ranks 39 out of 197 industry groups. The group is benefiting from rising inflation, which has driven many consumers in search of bargains.
Categorized in different industry groups in Stock Checkup, BJ's Wholesale and Costco both earn top billing among their peers. BJ's outpaces other discount chains such as Dollar General, Five Below, and Dollar Tree in terms of key stock-picking traits.
BJ's And Other Discount Retail Stocks Gain From Rising Inflation
Costco stock is ranked among fellow retailers, including Target and Walmart, in the Retail-Major Discount Chains group.
Earnings growth for BJ's is light for an IBD 50 company, but that happens in a weak market. Its three-year average EPS growth rate is 43%. FactSet analysts expect the company to earn 70 cents per share for the first quarter ended April 30, which would be a loss of 2.5% over the year-ago period. Sales are expected to be $4.2 billion.
The stock is 76% owned by institutional investors, which is huge for any stock. Vanguard and ClearBridge are the biggest funds holding BJ's as part of their portfolios.
Based in Westborough, Mass., BJ's Wholesale Club operates membership warehouse clubs in the eastern U.S. Its retail outlets include 226 clubs and 158 BJ's Gas locations in 17 states.
Last month, BJ's Wholesale Club made two moves aimed at further streamlining fast delivery for customers.
At the end of March, BJ's announced the chain-wide rollout of Same-Day Select, a membership add-on to its popular Same-Day Delivery service, an upgrade option for BJ's Wholesale members. The offering allows customers to pay a one-time fee upfront for either unlimited or a set number of same-day grocery deliveries in as little as two hours. Annual costs for these delivery options range from $55 to $100.
Also in March, BJ's partnered with DoorDash to give club members and nonmembers access to BJ's products on demand.
