Shares of Beacon Roofing Supply cleared a buy point Tuesday, little more than a week after the stock gapped up on news it is investing in a startup that makes roofing robots.
The stock Tuesday climbed above the 121.42 buy point of a flat base in heavy trading. The buy zone goes to 127.49. The relative strength line is at new highs, a positive sign for the breakout. Keep in mind, however, that stock market risk is elevated right now.
In a precursor to Tuesday's breakout, Beacon Roofing rallied 6.7% in volume nearly 400% above its average on March 10. On that date, the company said it made a strategic investment in Renovate Robotics, a Brooklyn, N.Y.-based startup developing robots designed to install roofs.
Their first robot, called Rufus, installs asphalt shingles on residential roofs, Beacon's announcement said. It is expected to launch with contractors in New Jersey and Pennsylvania later this year.
A video on Renovate Robotics' website shows a robotic arm picking up shingles and laying them on a roof. The startup also plans to build robots to help install solar panels.
"This technology has the potential to disrupt the roofing industry where labor is a scarce resource, and we are excited to be an early partner that can help shape its development," Beacon CEO Julian Francis said in the announcement. Renovate Robotics, he added, fits the company's goals for worker safety and efficiency.
Robot Helps Beacon Stock To New Highs
Beacon — the largest publicly traded distributor of roofing materials and related building products in the U.S. and Canada — has an EPS Rating of only 50. Results have fluctuated in the past eight quarters, going from a loss of $3.98 a share in Q3 of 2023 to a profit of $2.80 a share in Q3 of last year, according to IBD MarketSurge. Sales growth ranged from 3% to 17% the past eight quarters.
Yet, Beacon stock is trading at all-time highs.
Beacon stock has a 21-day average true range of 2.28%. The average true range, available on IBD's MarketSurge, gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs. In the current market, IBD suggests stocks with ATRs of 3% or below.
