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IBD Stock Of The Day: Cowboy And Rodeo Play Breaks Out — With Caveat

Boot Barn Holdings

Boot Barn Holdings

BOOT


$4.18


4.38%


IBD Stock Of The Day: Cowboy And Rodeo Play Breaks Out — With Caveat105%

IBD Stock Analysis

  • Trying to clear 99.74 ascending base buy point
  • Relative strength line just below highs
  • Sales growth accelerating, but quarterly earnings next week
IBD Stock Of The Day: Cowboy And Rodeo Play Breaks Out — With Caveat

Composite Rating

IBD Stock Of The Day: Cowboy And Rodeo Play Breaks Out — With Caveat

Industry Group Ranking

IBD Stock Of The Day: Cowboy And Rodeo Play Breaks Out — With Caveat

Emerging Pattern

IBD Stock Of The Day: Cowboy And Rodeo Play Breaks Out — With Caveat

Ascending Base

* Not real-time data. All data shown was captured at
12:52PM EDT on
10/21/2021.

Boot Barn (BOOT) is the IBD Stock of the Day. Shares of the retail chain, which sells boots and Western-themed apparel, have cleared a buy point ahead of earnings next week.




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Some analysts say the company stands to gain from the return of concerts, rodeos and other events as well as a rebound in Texas’ economy. But the stock has had a tendency to retreat after breaking out.

Boot Barn Stock

Boot Barn stock was up 4.6% at 99.89 in the stock market today, just above an ascending base buy point of 99.74 in strong volume. Shares hit 103.40 intraday.

The stock’s relative strength line sits near record highs. The company has best-possible Composite and EPS Ratings of 99, according to MarketSmith.

Boot Barn stock has risen more than 131% so far this year.

However, BOOT stock over the past year has broken out or cleared consolidations and then pulled back to its 50-day line, before moving higher again.

Investors might find out whether it can break that pattern when Boot Barn reports fiscal second-quarter earnings on Wednesday. Wall Street expects the chain’s earnings per share to nearly quadruple to 91 cents. Sales are seen climbing 57% to $290 million.

‘Healthy’ Consumer Backdrop

Boot Barn, in years past, has pitched itself as a retailer that caters to the non-coastal set — customers who wear cowboy hats and jeans and boots.

Cowen analysts who cover Boot Barn stock say the company, which has more than 270 stores largely in the southern and western U.S., operates without a national competitor. And as oil demand rebounds from the pandemic, they note it has “significant exposure” to Texas and the nation’s oil patch.

Overall, the consumer backdrop remains healthy,” Cowen said in a research note this week. 

They said the number of customers grew during the pandemic. The company has also strengthened its women’s boots segment. Additionally, Boot Barn could be better equipped to work around the world’s backlogged supply chain, as the retail world braces for a holiday season.

The report says 50% of Boot Barn’s products come from China, where manufacturing setbacks weren’t as severe in other parts of Asia. Twenty-five percent of those products are sourced in Mexico.

“Furthermore, we do think the functional and low-fashion nature of BOOT’s products lends itself well for substitution, which suggests the retailer could have an easier time dealing with potential disruptions,” Cowen said of Boot Barn stock.

“That being said, we acknowledge risk is greater in 3Q and 4Q than 2Q on port congestion and other bottlenecks.”

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