Tuesday’s IBD 50 Stocks To Watch pick, Charles River Labs (CRL), is in a new buy area amid its ongoing rebound from a key support level. Shares in the leader in clinical-level medical research looked to extend their win streak to four sessions Tuesday, rallying nearly 1% midday.
Stocks To Buy And Watch: Charles River Labs
Massachusetts-based Charles River Labs provides research models and services to the pharmaceutical, medical device and biotech industries. In fact, the company supported 85% of drugs approved by the Federal Drug Administration (FDA) in 2019.
On Jan. 4, Charles River Labs acquired next-generation antibody discovery company Distributed Bio. With the acquisition, Charles River Labs aims to expand Distributed Bio’s SuperHuman antibody libraries and integrated antibody optimization technologies.
The Distribution Bio acquisition, along with the acquisitions of Cognate BioServices, Retrogenix and Vigene Biosciences, enhance the company’s portfolio, allowing Charles River the ability to offer expanded services to clients.
In the most recent quarter, Charles River reported earnings of $2.53 per share on sales of $824.6 million. The company’s quarterly earnings grew 37% year over year, while revenue rose 17%. As a result, the company boasts three quarters of accelerating sales growth. Accelerating sales growth is a bullish fundamental metric that top-tier growth companies exhibit during big stock moves.
Medical Leader’s IBD Stock Ratings
The stock shows a solid 90 EPS Rating and a strong A SMR Rating, according to IBD Stock Checkup. The Earnings Per Share Rating tracks a company’s earnings strength. The SMR Rating analyzes a company’s sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst).
IBD Stock Checkup also shows that Charles River stock shows a strong 96 Composite Rating out of 99. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.
CRL Stock Hits New Buy Area
Charles River stock is rebounding from its 50-day support level, placing the leader in a new buy area, according to IBD MarketSmith chart analysis.
The latest buy area comes on the heels of an April 6 breakout past a 303.89 buy point in a flat base. Rebounds from the 50-day, or 10-week line, are best used as add-on areas, as opposed to initiating a new position. When adding to an existing position, make sure to buy fewer shares to avoid drastically raising your average cost.
Bullishly, the stock’s relative strength line is nearing new highs, a sign of stock market outperformance. The stock’s performance during the recent stock market volatility is noteworthy. The RS line measures a stock’s price performance vs. the general market. It is the blue line on every IBD chart.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
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