Shares of BellRing Brands have been acting as though the company took some of its own products. The protein shakes maker's stock climbed again Monday.
The maker of Powerbar, Dymatize and other protein-packed products gapped up March 24 after Morgan Stanley named the stock a top pick. Since that 4% rally, BellRing stock has resisted the stock market weakness, trading tightly around its 50-day moving average.
Shares are forming a cup-type base with a conventional buy point at 80.67. In a more predictable market, the March 24 high of 74.70 would've offered an early entry. Shares are also shaping a possible handle above 50-day support.
The relative strength line is leading the stock into new highs. That is often a bullish sign, but keep in mind that the stock market remains in a correction, so stock purchases are not recommended.
Morgan Stanley initiated coverage of BellRing Brands with an overweight rating and 84 price target. (Shares Monday traded around 74.) The firm named it a Top Pick.
"We believe (BellRing) is well positioned to deliver outsized topline growth driven by its exposure to the attractive convenient nutrition category, increased innovation and marketing supported by incremental capacity gains, and significant opportunity for shelf-space expansion," analyst Megan Alexander Clapp wrote in a note to clients.
The analyst added that data points to acceleration in unmeasured-channel sales. BellRing, moreover, "is seeing contributions from both increasing household penetration and buy rates in recent periods."
Protein Shakes Stock A Leader In Its Industry
Even before Morgan Stanley's bullish note, the protein products company was a leader in its industry group. It already owned the second-highest Composite Rating in IBD's cosmetics and personal care industry group.
Of more than 50 companies in the industry group, just 14 are in the supplements and dietary products business. Among those, BellRing has the highest Composite Rating, a 91.
BellRing stock's earnings line in IBD MarketSurge shows a steady upward path. The company's three-year EPS growth rate is 177% while the sales growth rate is 43%, according to IBD Stock Checkup.
Analysts expect current-quarter sales to climb 17% to $577.6 million, according to FactSet. Earnings are expected to rise 18% to 53 cents a share.
On Feb. 3, the company breezed past December-quarter earnings estimates, as EPS jumped 35% to 58 cents, and sales rose 24% to $532.9 million. Management raised its fiscal-year sales forecast to $2.26 billion-$2.34 billion and adjusted EBITDA to $470 million-$500 million.
BellRing Sets Stock Buyback
The company's Premier Protein brand led quarterly sales, up 26.3% on a 21.4% increase in volume. The protein shakes brand reached all-time highs for household penetration, CEO Darcy H. Davenport said in the earnings announcement.
On March 6, BellRing set a $300 million share repurchase program for the next two years.
BellRing stock has nearly tripled since an initial breakout in January 2023, when it emerged from a 15-month sideways pattern. While it's hard to expect another big run from the stock, it did reset its base count when it undercut a prior pattern last year.
BellRing Brands stock has a 21-day average true range (ATR) of 3.48%.
The average true range is a metric available on IBD's MarketSurge that 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, unpredictable market, IBD suggests stocks with ATRs of 3% or below.
