Wingstop hit an all-time high after its earnings report but has since pulled back to a key support level. The chicken wings restaurant stock is the IBD 50 Stocks To Watch pick for today.
Wingstop has around 2,000 locations in 44 states and internationally, and plans to add about 240 net new locations this year. Its ultimate goal is 7,000 locations.
The restaurant chain is ranked 9th out of 53 stocks in the Retail-Restaurants industry group. The group is ranked a high 8th out of 197 IBD industry groups.
WING is on the Leaderboard's Leaders watchlist.
Wingstop Gives A New Buying Opportunity
WING soared 9.4% in heavy volume after its first-quarter earnings report on May 3. Shares hit an all-time high 223.77 the next day before pulling back and closing near the lows of the day.
Shares trended slightly downward for a month before bouncing off their 50-day or 10-week moving average on June 2.
The 10-week-line rebound created an opportunity to add to an existing position by entering at an alternate buy point of 198.16, with a range up to 217.98.
Shares remain in the 5% buy zone of a prior choppy, undefined base with a 193.74 buy point. WING is hovering around its 21-day exponential moving average after retaking the line on Monday.
The stock is biding time, trading in sideways action on light volume as it awaits a catalyst to spark renewed interest.
WING gained around 45% so far this year, outpacing the S&P 500's 11% gain. Shares are about 10% off the May high but over 180% above the 71.21 52-week low.
The 97 Relative Strength Rating means the stock outperformed 97% of stocks in the IBD database in the last 12 months. Its Group Relative Strength Rating is a best-possible A+.
Earnings Beat Once Again
Wingstop exceeded analysts' first-quarter earnings and sales expectations on May 3. EPS grew 79% as bone-in chicken wing costs decreased 52.8% over last year's quarter.
The company has a three-year EPS growth rate of 27%, according to the IBD Stock Checkup.
Meanwhile, quarterly sales increased 43% year over year. Its digital sales reached a record 65.2% of total sales, while domestic same-store sales rose 20.1%.
Sales growth has ranged from 41% to 46% in the last three quarters.
Management gave updated guidance, including "high single-digit" domestic same-store sales growth in 2023. Analysts expect 15% full-year EPS growth this year and 16% in 2024.
Mutual funds own a high 73% of shares, with 650 funds owning the stock in March, up from 629 in December and 596 in September. Six funds found on the exclusive IBD Mutual Fund Index hold shares of WING stock.
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