Toast is Monday's pick for IBD 50 Growth Stocks To Watch as shares climb ahead of the restaurant software maker's earnings report. Toast stock moved strongly Monday after sinking during Friday's stock market sell-off.
The IBD 50 name reports its second-quarter earnings Tuesday after the market close. Earnings are expected to surge higher.
Toast develops and operates software and devices used by restaurants. Its platform handles point-of-sale purchases, payment processing, online ordering, invoice management and payroll services.
On Thursday, the company unveiled its newest handheld point-of-sale device, Toast Go 3. It allows staff to take orders, process payments, and print receipts over both Wi-Fi and cellular networks.
Toast ranks No. 1 out of 35 stocks in the Finance-Credit Card/Payment Processing group, which holds the 85th spot out of the 197 industry groups that Investor's Business Daily tracks.
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Toast Stock Climbs As Earnings Loom
Toast stock rebounded Monday morning after Friday's drop when it tested and found support at its 21-day exponential moving average.
The stock broke out in early July but faded and tested its 10-week moving average for two weeks before recovering. Shares are back above the 5% buy zone of a flat base with a 45.56 buy point, according to MarketSurge pattern recognition.
Shares have gained around 33% so far this year and have outperformed 93% of names in the Investor's Business Daily database. Its IBD Timeliness Rating of A indicates potential positive relative price performance over the next 12 months.
Its IBD Accumulation/Distribution Rating of B+ indicates fairly heavy institutional buying over the last 13 weeks. Mutual funds increased their positions in June, with 1,285 buying shares in the month, up from 1,220 in March.
Five Investor's Business Daily Mutual Fund Index names own shares of Toast stock. But T. Rowe Price New Horizons Fund cut its position to 7.26 million shares in June from 15.55 million shares in March.
Profits Are Expected To Explode
Toast turned profitable in 2024. Analysts forecast second-quarter profit to soar to 23 cents per share, up from 3 cents a year ago.
Second-quarter sales are projected to rise 23%, which is slightly below the company average of 26% over the last four quarters. Meanwhile, revenue is expected to increase an average of 21% over the next four quarters.
Full-year 2025 earnings projections call for 87 cents per share, then increase to $1.07 in 2026.
The software maker has a three-year sales growth rate of 38%, according to IBD Stock Checkup. Toast stock holds a robust 97 IBD Composite Rating.
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