As rival Dick's Sporting Goods bounces above its 50-day moving average, Academy Sports & Outdoors has jumped back into a buy zone.
While growth in both retailers has been less than stellar, Academy Sports again landed a spot on the IBD Breakout Stocks Index, which gets updated weekly. ASO stock was also featured in this column on Nov. 23 as it briefly cleared a buy point.
In a sign of institutional demand, Academy Sports made the latest list of new buys by the best mutual funds. Plus, 28 funds with an A+ rating from IBD own ASO stock.
Who Joins ASO On The IBD Breakout Stocks Index?
Academy Sports In Demand Despite Growth Challenges
From its beginning as a tire store in 1938, Academy Sports has rolled on to become one of America's largest sporting goods and outdoor stores. With nearly 270 stores across 18 states, the retailer's product assortment focuses on key categories of outdoor, apparel, sports and recreation, and footwear through both leading national brands and a portfolio of private-label brands.
During the third quarter, Academy opened four stores and has since opened three more in the fourth quarter. That brings the total number of stores opened in 2022 to nine, for a total of 268 stores. The company expects to open 80 to 100 locations over the next five years.
It's a positive sign that the institutional demand noted earlier remains solid despite lackluster sales and earnings growth over the last three quarters. ASO stock also has a B Accumulation/Distribution Rating, indicating more buying than selling over the trailing 13 weeks.
Yet, as evidenced by a lowly No. 115 group ranking for Retail-Leisure Products among the 197 industries IBD tracks, ratings for Academy Sports and Dick's Sporting Goods show that both companies have their challenges.
Academy's 84 EPS Rating and 86 Composite Rating reflect blemishes in its fundamental performance. On Tuesday's big jump, Dick's Sporting Goods edged past ASO, improving to an 87 Composite Rating. But its EPS Rating lags its rival with a score of 71.
Although Academy Sports showed a 3% slowdown in earnings and a 6% slowdown in sales in Q3, the company beat Wall Street estimates, lifting the stock. Dick's also beat estimates despite an 18% decline in earnings growth.
ASO Stock Rebounds Into Buy Zone
From its IPO in October 2020 through November 2021, Academy Sports racked up multiple new highs. It then fell into an extended slump before forming a cup base with a 51.61 buy point last month.
ASO stock soared over 15% after a better-than-expected earnings report on Dec. 7. The stock quickly deflated but found support above its 50-day moving average. In the last trading day before Christmas and the first market session after, ASO stock has bounced solidly higher.
On Tuesday, Academy Sports rose more than 4% in below-average but rising volume. The stock closed the session in the buy zone, 4% above the recent 51.61 entry.
DKS stock rose more than 6% in volume 22% above average. Now back above its 50-day line, Dick's Sporting Goods is trying to get back to a 119.91 buy point after triggering a sell rule.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
