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After Mowing Down Buy Point, Toro Sets Up Bullish Pattern Ahead Of Earnings

Toro (TTC) has formed a four-weeks-tight pattern, which is a variation of the bullish three-weeks-tight pattern. That makes Toro a growth stock to watch.




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This secondary pattern emerged after shares rebounded from a 65-week cup-with-handle base with a 107.86 buy point. That shows strong price performance since the growth stock was able to hold on to its gains after breaking out.

The outdoor equipment maker has made it to the IBD 50.

Growth Stock’s Ratings Are Strong

Toro makes outdoor maintenance products like landscaping systems, mowers, sprinklers and yard tools for homes, golf courses and sports grounds.

The stock has a near-ideal Composite Rating of 95 which matches its Relative Strength Rating. The relative strength line has risen sharply in recent weeks though it has yet to reach its 52-week high. The growth stock ranks first in the Building-Hand Tools industry group. The group itself holds the 42nd place among IBD’s 197 groups.

The growth stock also has a good SMR Rating of B. Part of that comes from Toro’s stellar 35% return on equity in the last fiscal year, according to MarketSmith.

Sales of $1.1 billion grew 19% in the July-ended quarter, while earnings per share of $1.19 rose 29% from the previous year. Toro also paid a dividend of 30 cents a share to shareholders of record as of  Oct. 5. Analysts polled by FactSet expect $1.7 billion in sales for the October-ended quarter with earnings of $1.07 a share. Results are due on Dec. 21.

Toro’s Market Leadership

Toro has made several acquisitions. In June, the Bloomington, Minn.-based company’s BOSS Products acquired the liquid de-icing equipment business of Voigt Smith Innovation. BOSS makes snowplows and salt and sand spreaders for homeowners and snow and ice contractors.

Earlier, the company acquired Intimidator Group,  an Arkansas-based private company. Toro added Intimidator’s well-recognized brand of Spartan Mowers to its product basket.

In 2021, Toro acquired Colorado-based Left Hand Robotics to improve its autonomous plowing and mowing technologies.

In March, Singapore’s leading golf company, Sentosa Golf Club, entered into a 10-year contract with Toro and Toro’s local business, Jebsen & Jessen. Toro will provide golf, landscape and irrigation equipment and on-site services and training.

The growth stock’s Accumulation/Distribution Rating of B- shows that there is a strong interest among mutual funds. Institutional owners have 54% of shares outstanding. More funds have been buying shares of Toro over the past three quarters.

Exchange traded funds hold TTC shares as well: the Invesco Water Resources ETF (PHO) and VanEck Agribusiness (MOO).

Please follow VRamakrishnan @IBD_VRamakrishnan for more news on stocks.

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