The Harvey, Ill.-based company makes electrical conduits, cable management systems, metal framing and related products used in commercial construction projects worldwide. That puts it among top stocks to watch as a prime infrastructure play, as the U.S. and rest of the world try to recover from the coronavirus pandemic.
In early August, Atkore reported triple-digit gains in fiscal Q2 adjusted earnings and revenue as profit soared 491% and sales popped 122%. It also raised its full-year adjusted EBITDA forecast to $855 million-$875 million and its adjusted net income per share outlook to $12.25-$12.55.
“Just as we did in the first half of the year, our entire team continues to effectively navigate what remains a very dynamic operating landscape through the third quarter,” CEO Bill Waltz said on the earnings call. “We expect a combination of these dynamics and the macro trends will sustain the pricing tailwinds through Q4 and into early fiscal 2022.”
Stocks To Watch: Group Leader
IBD Stock Checkup assigns Atkore a 99 Composite Rating, which gives investors a quick way to gauge a stock’s key growth traits. That puts it at the top of the construction products/miscellaneous group, which includes other stocks to watch such as Builders FirstSource (BLDR), TopBuild (BLD) and Trex (TREX).
A 99 Earnings Per Share Rating, part of the overall composite score, also leads the group. It reflects a 44% five-year compound earnings growth rate. Analysts expect profit to surge 229% for the current fiscal year ending in September to $12.44 a share. Over the last three quarters, Atkore has delivered average earnings growth of 258%.
On the technical side, a 97 Relative Strength Rating puts Atkore in the top 3% of all stocks. The relative strength line, which compares a stock’s performance to the S&P 500, is just off record highs and is turning slightly higher.
Building New Entry?
Atkore stock cleared a 90.18 buy point of a cup base Aug. 10 in heavy trade, according to MarketSmith chart analysis. It extended its gains and hit a high of 98 before easing back below the entry. The stock has since broken out again and sits in a potential buy range up to 94.69.
Atkore has struggled to rally from the buy point, but could set up an alternate entry near 98 if the stock engages in more sideways action. That could result in a base-on-base pattern. But it’s too early to tell for now.
The base is second stage, which means there could be plenty of room to run. Stocks tend to make their biggest advances out of such early stage bases.
The stock has rallied more than 100% this year. And that’s on top of a 279% rally from its March 2020 coronavirus crash lows to its Dec. 31 close. From the March 2020 low to its May 10 high, Atkore surged 730%.
Follow Nancy Gondo on Twitter at @IBD_NGondo
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