IBD 50 Stocks To Watch: Williams-Sonoma Finds Key Support, Offers Alternate Entry

Among leading growth stocks, our pick for today’s IBD 50 Stocks To Watch feature is Williams-Sonoma (WSM), which just gained support at the all-important 50-day moving average.


This offers investors an alternate entry as shares are currently extended from a recent flat base that reveals a 114.75 buy point.

The 10-week moving average can also offer a similar additional buy point. On Tuesday, the 10-week line stood near 121.76, a few points above the current value of the 50-day moving average at 119.33.

The firm is best known for operating over 600 home furnishings and accessories stores in the U.S., Puerto Rico, Canada, Australia and the United Kingdom. The furniture retailer represents several popular brands such as Williams-Sonoma, Pottery Barn, Pottery Barn Kids and West Elm among others.

The company maintains a near-perfect IBD Composite Rating of 98. The stock is ranked third in the retail home furnishings industry group.

Williams-Sonoma Stock

The firm has posted year-over-year EPS growth of 107% and 151% in the two most recent quarters. Meanwhile, sales growth went from 0% to 9% to 22% over the past three quarters, showing a bullish acceleration.

Williams-Sonoma reported earnings and revenue that topped Wall Street’s fourth-quarter estimates for the recent third quarter. The 151% earnings growth equated to $2.56 an adjusted share. The San Francisco-based company said revenue rose 22% to $1.7 billion.

Analysts expect the company to show EPS rising 58% for the January-ending quarter, with earnings of $3.36 a share on sales of $2.1 billion, according to IBD data. That would represent a revenue increase of 18%. The company is likely to report fiscal Q4 results in mid-March.

Analysts also see the company’s earnings for full-year 2021 growing 75% to $8.48 per share.

The retail home furnishings store operator said in its most recent earnings release that it saw an acceleration in e-commerce sales as well as rising demand across all stores.

“In the third quarter, sales again outperformed expectations with demand comp up nearly 31% compared to a net comp of 24%,” said Laura Alber, Williams-Sonoma president and CEO. “And, we delivered these sales more profitably, with operating margins reaching record levels at 15.7%.”

Growth Stock Finding Support

Shares of this IBD 50 growth stock are currently extended from a flat base with a 114.75 buy point. It’s trading roughly 12% above this entry, and thus extended from this breakout level.

The stock’s relative strength line has been trending sideways over the past week and remains off its recent high. On the positive side, Williams Sonoma saw its mutual fund ownership at the end of the October quarter reach 858 funds, up from 698 in the same quarter a year earlier.

But investors should be aware that Williams-Sonoma’s Relative Strength Rating of 76 so far doesn’t meet the minimum requirement of 80 we like to see for growth stocks.

Follow Fox on Twitter at @foxonstocks for more analysis of Williams-Sonoma stock and other growth stocks.


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