Synopsys is the No. 1 ranked company in the software group as it continues to report outstanding profit and sales growth. On Tuesday, its stock Relative Strength (RS) Rating, climbed to 85, up from 79 the day before, putting it in a rarefied group. Synopsys stock was up 1.5% Tuesday afternoon.
Synopsys Stock Strength Increasing
The new 85 RS Rating means that Synopsys stock has outperformed 85% of all stocks on price performance over the past year. It's a big leap because market research shows that the best stocks often have an RS Rating north of 80 in the early stages of their moves.
Synopsys makes semiconductor design and manufacturing software and products made on its software are found in virtually all major markets including autos, medical, fintech, manufacturing and government. Its stock climbed about 123% from a Covid market intraday low 104.90 in late March 2020 to around 339 Tuesday.
Among its other crucial ratings, Mountain View, Calif.-based Synopsys boasts a 93 EPS Rating, putting it in the top 7% of companies for recent and long-term profit growth. Additionally it has a 95 Composite Rating and a B+ Accumulation/Distribution Rating, on an A+ to E scale. The B+ rating signifies that analysts are briskly buying Synopsys shares.
Regarding fundamentals, the company has posted rising EPS growth in each of the last two reports. Sales gains have also risen during the same period. Last quarter, Synopsys reported a 58% surge in EPS to $2.40 on 31% higher revenue of $1.27 billion.
Raised Outlook For 2022
On the company's Feb. 16 first quarter earnings call, co-CEO Aart de Geus said, "Synopsys began fiscal year 2022 with excellent momentum, supported by strength across all product groups and geographies." De Geus added the company "delivered financial results at or above guidance targets, returned $250 million to shareholders through stock repurchases, and are raising our outlook for the year."
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Synopsys stock, an IBD 50 list stock, is working on a cup-without-handle pattern with a 377.70 buy point. See if it can clear the breakout price in heavy volume.
Synopsys stock earns the No. 1 rank among its peers in the Computer Software-Design industry group. PDF Solutions and Cadence Design Systems are also among the top five companies in the group.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.
IBD's unique RS Rating tracks market leadership by using a 1 (worst) to 99 (best) score that shows how a stock's price action over the last 52 weeks matches up against the rest of the market.
