Thursday's IBD 50 Stocks To Watch pick, payments leader Toast, is setting up for a move higher after clearing a resistance level in recent days. That makes Toast stock one of the best to watch right now.
Based in Boston, Toast works with restaurants of all types around the country, from fast-casual. quick delivery and food trucks, to pizza, fine dining and hotel restaurants. Through its cloud-based platform, the Toast tool kit offers point-of-sale solutions, payment processing, payroll management and more to help restaurants run and grow their businesses.
Toast saw its business soar amid the Covid pandemic as consumers shunned dining in restaurants and instead ordered takeout and delivery. And 2024 is expected to be the year it turns in its first annual profit. The company expects to go from a loss of 46 cents in 2023 to a profit of 44 cents per share this year.
On May 7, Toast reported a first-quarter loss of 15 cents per share, unchanged from its year-ago loss. Revenue rose 31% to $1.07 billion.
"Toast is off to a strong start in 2024. Our first quarter results demonstrate strong top-line growth and margin expansion that we will continue to build on throughout the year," Chief Executive Aman Narang said in the company's earnings press release.
Current-quarter estimates are for earnings of 11 cents per share, swinging to a profit vs. the year-ago period's loss of 19 cents, according to IBD MarketSurge.
Be sure to read how to adjust to changing market conditions, with IBD's new exposure levels.
Toast Stock Eyes New Buy Point
Following a short-lived breakout in May, Toast stock is bullishly back above its 50-day moving average line and building the right side of a potential cup base. After this week, the base will be six weeks long, which is the shortest length of a proper cup formation. That will make the buy point 27.90.
Meanwhile, keep an eye out for a potential handle over the coming weeks to offer a lower entry. With IBD's recommended equity exposure range at 80%-100%, investors have the flexibility to buy breakouts among top stocks.
Toast stock shows a modest 76 out of 99 IBD Composite Rating, according to IBD Stock Checkup, with the company set to turn profitable this year. Solid price action since November 2023 is helping offset weak earnings performance, but the stock remains nearly 8% off its 52-week high.
Finally, the relative strength line is taking a breather after a recent spike in May. Looking for resurgent strength in the RS line to indicate confirmation of stock market leadership.
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Best Stocks To Watch
Three IBD 50 Growth Stocks To Watch picks from earlier this year are among the best stocks to watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Hilton | 215.79 | Flat base | |
| Booz Allen Hamilton | 150.59 | Flat base | |
| Palantir Technologies | 26.57 | Cup with handle |
Source: IBD Data As Of June 26, 2024
Follow Scott Lehtonen on X, formerly known as Twitter, at @IBD_SLehtonen for more on the best stocks to buy and watch and the stock market.
