After a series of jumps for a year to nearly double its stock price as of July, SPS Commerce has formed a fresh base. It's a classic double-bottom pattern with the second bottom lower than the first, a bullish indicator. On Monday, the Relative Strength Rating for SPS stock climbed to 81, pushing it up into a top-tier group.
The 81 RS Rating means that SPS stock is among the top 19% of stocks, no matter what industry group, for price appreciation over the past 52 weeks. CAN SLIM investors look for stocks with an 80 or higher RS Rating. Often, the best stocks to buy and watch have an 80 or higher rating and go on to forge big gains. SPS just met that criteria.
SPS Stock Riding Supply Chain Recovery Momentum
SPS Commerce develops and sells supply chain management software to distributors, suppliers and manufacturers. After supply chains clogged up as commerce accelerated rapidly when the pandemic ended, supply chain management came into sharper focus for many companies.
SPS stock broke out earlier, but is now trading about 4% below the prior 188.76 entry from a double bottom. It's on track for a third straight up day though. One yellow flag: The latest consolidation is a later-stage base and, although they can go on to big gains, such bases succeed less frequently than earlier stage (first and second stage) bases.
SPS stock is a small-cap and that's a plus for now. Small cap companies have outperformed the market in recent weeks. Monday afternoon the Russell 2000 was up again while the Dow Jones, S&P 500 and Nasdaq were all down.
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Near Best EPS Rating, Top Fundamentals Rating
Meanwhile, among its other ratings Minneapolis-based SPS Commerce has a near-best 98 Earnings Per Share Rating out of 99. SPS stock has an 85 Composite Rating. It's a good rating although top stocks often have a 90 or better CR Rating. Look for it to improve.
Reflecting strong fundamentals, it has a superb A SMR Rating (sales + profit margins + return on equity) on an A-to-E scale with A tops. It carries a D- Accumulation/Distribution Rating on an A+ to E scale. The D- rating shows that big funds are selling more shares than buying.
However, there's interest among big money investors. The number of funds owning SPS stock rose from 584 in the March-ended quarter to 644 in the September quarter, the latest period there is data for.
SPS Commerce has reported double-digit profit and sales growth every quarter for the past year. The company reported 19% earnings growth last quarter, to 75 cents per share. Sales grew 18% to $135.7 million.
SPS stock holds the No. 8 rank among its peers in the Computer Software-Special Enterprise industry group. DoubleVerify and Atlassian are also among the group's highest-rated stocks.
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