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Chipotle Holds Gains After Breakout; Floor & Decor’s New Buy Signal

Chipotle stock is one of several top stocks to watch in the latest Weekly Review screen, a list of industry group leaders with an Earnings Per Share and Relative Price Strength Rating of 85 or higher. It’s one of several powerful screens found in the IBD Stock Screener.




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Chipotle Mexican Grill (CMG) hasn’t looked back after a bullish earnings report last month. Other noteworthy stocks in Wednesday’s screen include Jabil (JBL), Alphabet (GOOGL) and Floor & Decor (FND).

Chipotle Stock Holds Strong

A bullish earnings report last month fueled a breakout for Chipotle stock last month. Shares gapped up and rose 11.5% on July 21. Chipotle held gains and closed near its session high, the best price action to see when a stock gaps up.

Chipotle hit a high of 1,912.75 and formed a three-weeks-tight pattern after that, creating an alternate entry of 1,912.85. Volume has dried up as Chipotle stock holds above the three-weeks-tight entry.

Brian Niccol, formerly the CEO of Taco Bell, took over the Chipotle CEO post in March 2018. The company has returned to growth mode thanks to a focus on digital sales.

In Q2, adjusted profit of $7.46 a share was up sharply from 40 cents in the year-ago quarter. Sales growth accelerated for the second straight quarter, rising 39% to $1.89 billion. Same-store sales climbed 31.2%.

Digital sales rose 10.5%, making up 48.5% of total revenue.

2 Other Stocks To Watch

Jabil, a provider of electronic manufacturing services, is still in buy range after a low-volume breakout over a 59.05 buy point. It’s good to see unequivocal signs of institutional buying when a stock breaks out of a base. But it wasn’t there when Jabil topped the buy point in late July, and Jabil hasn’t made much progress after the breakout.

A Composite Rating of 94 is helped by two straight quarters of triple-digit earnings growth. In Jabil’s latest reported quarter, adjusted earnings jumped 251%, with sales up 14% to $7.2 billion.

Floor & Decor, a retailer of hard surface flooring and related accessories, cleared a 109.95 buy point in heavy volume last month. It nearly erased a double-digit percentage gain from the buy point, but the stock eventually found support at the 10-week moving average.

The company operates 147 warehouse-format stores across 33 states, with the potential for 400 stores, according to the company.

FND has a Composite Rating of 99, the highest possible, helped by four straight quarters of strong earnings growth, ranging from 81% to 462%.

In the latest reported quarter, sales jumped 86% to $860.1 million — the fourth straight quarter of accelerating growth — with same-store sales up 68.4%.

Alphabet Holds Near Highs

The Google parent is the leading FAANG stock at this point, but it’s too extended after a breakout in early July, when it topped the 2,500 level.

The stock gapped up to a new high in late July after the company reported a 189% increase in quarterly profit. Sales jumped 62% to $61.9 billion.

Total Google ad revenue increased to $50.44 billion, up 69% from the year-ago quarter.

YouTube ad revenue soared 83% to $7 billion and remains a gold mine for the company. CEO Sundar Pichai said YouTube Shorts, a TikTok competitor, recently passed 15 billion daily views, up from 6.5 billion daily views in March.

Cloud revenue — which includes infrastructure and data analytics platforms as well as collaboration tools like Google Docs and Sheets — increased 54% to $4.63 billion.

Follow Ken Shreve on Twitter @IBD_KShreve for more stock market analysis and insight.

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