Investors not living under a Wall Street rock are keenly aware of the buzz — and big bucks — swirling around Magnificent Seven stocks like Nvidia (NVDA), Meta Platforms (META) and Microsoft (MSFT). But large institutional investors have also just poured money into shares of Advanced Drainage Systems (WMS).
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Nvidia stock, Meta and Microsoft all made the latest list of new buys by the best mutual funds, which comes out Friday. Again on Thursday, Nvidia and Meta both continued to hit record highs.
Advanced Drainage Systems, or ADS, also made this monthly stock screen. These top money managers picked up over $13 million worth of shares of WMS stock. In other signs of demand, Advanced Drainage Systems sports a B+ Accumulation/Distribution Rating and a 1.3 up/down volume ratio. Plus, the stock has posted at least eight consecutive quarters of rising fund ownership.
Overall, ADS earns a strong 96 Composite Rating, meaning it’s outpacing 96% of all companies in terms of the most important stock-picking factors. While that doesn’t match the highest-possible 99 rating for Nvidia and Meta, it does top the 91 grade for Microsoft.
Note that the rankings for Nvidia’s fabless semiconductor group (No. 3) and ADS’ miscellaneous construction products group (No. 8) both make the top 10 industries among the 197 groups IBD tracks.
ADS Snaps Losing Streak To Post Rising Growth
Named by Newsweek as one of the most responsible companies in 2024, ADS provides water management solutions in the stormwater and on-site septic wastewater industries. Like water itself, the company’s operations seep across a wide range of industries, from aviation and agriculture to mining and transportation.
On Feb. 8, ADS reported its performance for the December-ended quarter. President and CEO Scott Barbour noted that “The secular trend of larger-scale and more frequent water-related climate events continues to drive demand for the sustainable water management solutions” that ADS and its subsidiary Water Technologies provide.
ADS reported $662.4 million revenue. While that marked just a 1% year-over-year gain, it ended the company’s streak of four straight quarters showing a slowdown.
Bottom-line growth spiked 38% to earnings of $1.37 per share, happily snapping a streak of two reports showing a slowdown in profits.
Shares of WMS stock gapped up over 14% on the news, leading to a 20% weekly gain and a breakout above a 145.68 buy point.
WMS Stock Tightens Up To Spring Higher
Refusing to see those share price gains go back down the drain, WMS stock has held strong in a tight range since reporting. It has now posted four weeks of very tight closes, setting up a possible buy point or add-on entry around 163.
On Thursday, shares of WMS edged up over 1% to close in buy range at just under 166.
Such action after a big jump is positive, showing large investors are sitting tight with expectations of more gains to come.
So as Nvidia, Meta and Microsoft grab the headlines, do what the best mutual funds are doing: Keep an eye on Advanced Drainage Systems.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
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