The IBD Stock Screener helps investors identify stocks that are doing well, based on proprietary metrics. One easy way to find these leadership issues is to look at what mutual funds are buying. Blue chip telecom stock T-Mobile US stands out on this list and is Tuesday's Screen of the Day.
According to CAN SLIM strategy, strong and rising institutional buying interest identifies stocks with bullish fundamental and technical outlooks.
T-Mobile's recent price action also shows bullish sentiment, with shares rallying over 7% on strong volume Friday in a breakaway gap and breaking out of a double-bottom base with a 142.79 buy point.
Shares also lifted above the 5% buy zone, indicating they are too extended to buy at the moment, but investors haven't missed an opportunity.
Breakaway gaps can set up alternate entries. The telecom stock traded at a high of 150.95 within five minutes of Friday's gap open. A new entry may develop close to that point, with the 5% buy zone stretching up to 158.50.
Strong Ratings Boost Telecom Stock
The Bellevue, Wash., based mobile communications leader provides voice and data to customers throughout the U.S. Deutsche Telecom is its largest shareholder. It completed a major acquisition with telecom giant Sprint in 2020.
T-Mobile ranks second in the Telecom Services-Wireless group, which holds the 31st position among IBD's 197 industry groups. It has a 88 Composite Rating and 94 Relative Strength Rating.
The "C" SMR Rating needs improvement. This measures the company's ability to generate increasing revenue and profits over the most recent quarters and years. It also looks at how much of shareholder's money is returned to them.
Meanwhile, T-Mobile's 94 Earnings Per Share Rating indicates a strong ability to generate increasing net income for its shareholders.
Shares of the telecom stock spiked after a strong third quarter report.
Earnings of 40 cents per share beat views of 30 cents while sales of $19.48 billion slightly missed $20 billion estimates. The company increased its guidance for the year as well. However, 2022 earnings growth is expected to fall 51% compared to 2021.
Mutual Fund Ownership Grows
The telecom stock has earned a solid "B" accumulation/distribution rating.
Mutual funds have been purchasing more T-Mobile shares, with 2394 owning the stock in December 2021. That number has grown in the last three quarters, from 2,408 to 2,587 to 2,601 in the latest reporting period.
Several ETFs also hold TMUS shares, including Invesco S&P 500 Equal Weight Communication ETF and Communication Services Select Sector SPDR ETF.
