This Specialty Retailer Outranks Rivals

Fachada de tienda The Home Depot

 

With the market uptrend coming under pressure, it’s difficult for any stock to move higher. But specialty retailer Tile Shop (TTS) is trying to lay the foundations of a new run.

Based in Plymouth, Minnesota, Tile Shop sells manufactured and natural stone tiles, setting and maintenance materials, and related accessories in 116 stores across 31 states.

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Its 94 Composite Rating earns it the No. 2 spot within the building products retailers’ group, which also includes Beacon Roofing Supplies (BECN), Lowe’s (LOW) and Home Depot (HD). Beacon ranks No. 1, with Lowes and Home Depot coming in at No. 3 and No. 8, respectively.

While the group currently rates a lowly No. 102 among the 197 groups IBD tracks, Tile Shop’s A- Accumulation/Distribution Rating and 2.9 up/down volume ratio indicate institutional demand for the stock.

Turnaround Story

After several quarters of negative earnings growth, Tile Shop has bounced back, with average quarterly EPS growth of 136% across the last three reports.

Revenue growth has ranged from 10% to 16% over the last eight quarters, and the company raised its full-year sales guidance when it announced Q1 numbers on April 19. Tile Shop also noted a strong 13.2% rise in comparable-store sales in the first quarter.

Analysts expect earnings to rise 41% this year, followed by a 24% gain in 2017. Estimates for both years were recently revised higher.

Stepping Stones

After going public in August 2012, Tile Shop more than doubled in price in less than a year. The stock then went into a long and deep slide in late 2013, finally establishing a floor last January.

Tile Shop is now working on a shallow cup-shaped pattern as part of a first-stage base on base.

The stock has so far found support at the 10-week moving average line, right above its earlier 17.60 entry, which could mean it’s laying down the kind of stepping stones that winning stocks form as they climb higher. But as the general market comes under selling pressure, the stock is again testing those levels of support.

See if the market uptrend can regain its strength and Tile Shop can hold its ground and clear the 19.11 buy point on volume at least 40% above average.

Fuente: Investors.com.


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