Samsara is Wednesday's pick for IBD 50 Growth Stocks To Watch as the GPS tracking provider is trying to recover after an earnings sell-off. Samsara stock is building a cup base and reclaimed a critical moving average Monday.
The IBD 50 stock ranks No. 1 out of 124 stocks in the Computer Software-Enterprise group, which holds the No. 7 spot out of the 197 groups that IBD tracks.
Samsara provides sensors and cloud-based software to manage vehicle fleets and industrial operations, including GPS tracking and vehicle performance monitoring. Its cloud connectivity platform helps improve fleet and fuel efficiency. It also develops artificial-intelligence-powered safety programs and vehicle cameras.
Samsara's customers are in the construction, transportation, warehousing and manufacturing industries and the government.
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Samsara Stock Builds New Base
Samsara is building the right side of a cup base with a 57.51 buy point, according to MarketSurge pattern recognition.
The stock experienced a harsh sell-off following Samsara's earnings release on Dec. 5. Shares plunged below the 50-day moving average in heavy volume, triggering a sell signal at the time.
A considerable portion of the base then formed below the 50-day moving average — a sign of weakness — but the stock reclaimed the line Monday. Its volatile relative strength line has been improving after a steep downturn in early December.
The stock started trading on Dec. 15, 2021, at an initial offering price of $23 per share.
GPS Tracking Provider's Profits Look To Soar
The company beat fiscal third-quarter adjusted earnings and sales estimates on Dec. 5. It also gave January-quarter and fiscal 2025 profit guidance above views, with a revenue forecast mostly in-line with estimates. But investors were looking for more.
Samsara's sales growth has averaged around 37% over the last three quarters, easing from five quarters of 40%-plus increases. Projections show revenue growth ranging from 21% and 25% over the next four quarters.
The company turned profitable in fiscal 2024, with earnings of 7 cents per share. Estimates for the fiscal year ending this month call for earnings per share of 22 cents, or a 217% boost, then rising to 28 cents in the next fiscal year.
Mutual funds have been adding Samsara, with 818 owning shares in December, up from 774 in September.
A handful of IBD Mutual Fund Index names own shares, including T. Rowe Price New Horizons Fund (PRNHX) and Fidelity Contrafund (FCNTX).
Samsara stock boasts a best-possible 99 IBD Composite Rating.
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