Stocks To Watch: This 2017 IPO May Design New Breakout Run

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2600 Holds in Flat Session


When it comes to leading retailers, Wall Street’s attention is often focused on Amazon.com ( AMZN ), Alibaba ( BABA ) and Wal-Mart ( WMT ), but here’s another retail stock to watch: 2017 IPO Floor & Decor ( FND ).

[ibd-display-video id=2385970 width=50 float=left autostart=true] Founded in 2000 and headquartered in Georgia, Floor & Decor is a specialty retailer selling hard surface flooring and related accessories.

While Wal-Mart is up around 18% from its Oct. 10 breakout and Amazon is trading 6% above the 1,083.41 buy point it cleared on Oct. 27, Alibaba has pulled back below the 177.10 entry it broke past on Sept. 13.

Meanwhile, Floor & Decor is working on its second base since going public on April 27, currently trading 10% below the buy point.

No. 1 Stock In Highly Ranked Industry

With a 97 Composite Rating, Floor & Decor holds the No. 1 spot among its peers in the Retail/Wholesale-Building Products industry group, which ranks No. 32 among the 197 groups IBD tracks. Central Garden & Pet ( CENTA ) comes in No. 2.

Floor & Decor sports a three-year annual EPS growth rate of 83%. Revenue has grown at a 34% clip over the same period.

Institutional demand for shares is reflected in the stock’s A- Accumulation/Distribution Rating, a 1.7 up/down volume ratio and two quarters of rising fund ownership.

Floor & Decor has already earned a spot on the IBD 50 list of top growth stocks .

Laying Foundation For New Breakout?

Floor & Decor rose quickly following its market debut, then formed and broke out of an IPO base on June 19. But the stock peaked a few days later at 46.99 and pulled back to begin forming its current cup-shaped pattern.

Alibaba’s post-IPO action in 2014 followed a somewhat similar pattern, with the Chinese e-commerce giant making a 20% run from its IPO base. But Alibaba then reversed and went into a multi-year slump before launching a big new move earlier this year.

Alibaba’s action is a good reminder of how new IPO stocks can be volatile and why you want to tread carefully when buying them.

After eight consecutive up days, Floor & Decor pulled back Wednesday, falling over 3%. While volume was slightly above average, it was lower than on the prior up days, so see if the stock can resume its climb in strong trade.

Also note that while forming the 24-week long base, the company has had two secondary public offerings, including one that closed on Nov. 20 for 7,475,000 shares at 36 per share.

In early trading Thursday, Floor & Decor was up over 2%, putting it about 8% below the potential 47.09 buy point.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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