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IPO Stock Of The Week pick and software leader JFrog (FROG) is approaching its latest buy point. FROG stock is expected to boast huge earnings growth this year and is a recent addition to the IPO Leaders screen.
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The Sunnyvale, Calif.-based company sells programming tools that automate software development. Its tools also automate software updates, speeding up the deployment of new apps. JFrog calls its management system “liquid software.”
According to the company’s website, “Effectively, software will become liquid in that products and services will be connected to ‘software pipes’ that constantly stream updates into our systems and devices; liquid software continuously and automatically updating our systems with no human intervention.”
In the first quarter, reported May 3, the company earned 6 cents a share vs. 1 cent in the year-ago quarter, a 500% increase. Revenue grew 25% to $79.8 million.
While the company doesn’t have an impressive long-term earnings track record — the stock has a middling 81 Earnings Per Share Rating, according to IBD Stock Checkup — its recent trend of earnings growth is encouraging.
JFrog made a profit every year since 2019 and is projected to see its earnings surge 417% to 21 cents per share in 2023. Analysts estimate EPS to rise another 45% to 30 cents in 2024, according to FactSet data.
IBD Stock Checkup also shows that FROG stock has perfect 99 IBD Composite Rating. The rating blends key fundamental and technical metrics to help investors easily find top stocks.
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IPO Stock Eyes New Buy Point
In recent weeks, the IPO stock leader decisively regained its 50-day moving average, creating the right side of a cup base that has a 28.06 buy point, according to IBD MarketSmith chart analysis. With the stock about 14% away from its buy point, look for a handle to show a lower entry.
A handle needs at least five trading sessions, or one week, to form. Volume should quiet down.
While the relative strength line is rebounding, it remains far from its old highs, so it’s not quite showing market-beating strength. The RS line measures a stock’s price action vs. the S&P 500.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
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