Commvault Systems is Tuesday's pick for IBD 50 Growth Stocks To Watch as the cybersecurity stock is in a buy zone. Shares reached a new high Tuesday before paring back gains.
Commvault stock ranks No. 1 out of 21 stocks in the Computer-Software Database group, which holds the No. 72 spot out of the 197 industry groups Investor's Business Daily tracks.
The IBD 50 stock climbed to start the session Tuesday morning in heavy volume but slipped around 10:05 a.m. ET., and is seeking direction. Shares have climbed 11 out of the last 12 sessions. The stock has gained around 22% so far this year.
Commvault's platform provides data security and management including threat detection, disaster recovery and backup services. It partners with cybersecurity names such as CrowdStrike Holdings and CyberArk Software.
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Commvault Stock Sits In Buy Zone
Commvault stock is in the 5% buy zone reaching to 187.66 of an undefined base with a 178.72 entry point, according to MarketSurge pattern recognition.
Shares retook the 10-week moving average in early February and are around 12% above that line. Commvault's relative strength line is also near its high, a positive sign for the stock.
Commvault Systems topped fiscal third-quarter earnings and sales estimates on Jan. 28. It also raised its fiscal 2025 revenue projections and gave a fiscal fourth-quarter sales outlook above views.
Its third-quarter profit growth accelerated to 21% from 18% and 19% over the prior two quarters. In addition, Commvault's third-quarter sales growth also increased to 21% from 13% and 16% over the prior two periods. IBD research shows accelerating earnings and sales growth is a positive trait for a winning stock.
Profit Growth To Slow For Cybersecurity Stock
Forecasts call for profit growth to slow to 17% in the current quarter then ease to 13% over the next four quarters.
In addition, sales growth is projected to rise into the 15%-to-18% range over the next three quarters.
Fiscal 2025 profit growth estimates have recently been revised up to 19% and 14% for fiscal 2026. Commvault stock holds a 6 out of 99 possible IBD Earnings Stability factor — with a lower number being better — indicating stable earnings over the last three to five years.
Its Accumulation/Distribution Rating of B+ indicates fairly heavy institutional buying over the last 13 weeks. Mutual funds have been adding shares, with 800 funds owning Commvault stock in December, up from 769 in September and 725 in June. And its 1.7 up/down volume ratio shows positive demand for shares over the last 50 days.
Lastly, the cybersecurity stock holds a near-ideal 98 Composite Rating and a 95 Earnings Per Share Rating.
