Like the mountain bikers and off-road racers who use its products to navigate bumpy terrain, Fox Factory (FOXF) has had its shares of ups and down during the coronavirus crash and rebound. Now with earnings due next month, FOXF stock is trying to rev up a new breakout.
Helping to pave the way for a renewed run, FOXF stock reset its base count last month when it undercut the low of 139.41 in its prior chart pattern. That makes its current consolidation a first-stage base.
With earnings scheduled for Nov. 10, Fox Factory has retaken its 10-week moving average as it steers toward a 172.35 buy point.
As it gets set to report, Fox Factory has earned a spot on the IBD Breakout Stocks Index.
Fox Factory Rides Onto List Of New Buys By Top Funds
With 20 locations across four continents, Fox Factory makes high-performance suspension products used on bicycles, on-road vehicles, all-terrain vehicles (ATVs), snowmobiles, commercial trucks and specialty vehicles.
The company has posted four quarters of earnings growth acceleration, including gains of 102% in Q1 vs. a year earlier and 140% in the second quarter. Fox Factory has also posted four quarters of rising revenue growth.
Analysts expect EPS growth to be flat in Q3 but see a 47% increase for the full year and a 12% gain in 2022.
Leading money managers have taken note. FOXF stock earned a spot on the latest list of new buys by the best mutual funds. In another sign of institutional demand, 29 funds with an A+ rating from IBD have reported a position in Fox Factory.
FOXF Stock Navigates New Base With Q3 Earnings Due
During its rocky climb off the coronavirus lows since March 2020, FOXF stock has mostly found support at its 10-week line. It fell below that benchmark while forming its current base. Fox Factory has moved back above that key moving average, but pulled back Tuesday to test it in below-average volume. See if that line become a floor of support or turns into a ceiling of resistance.
The relative strength line reflects that bumpy ride. Look for the RS line to throttle higher as the buy point and Q3 earnings near. Also look for the 21-day moving average to get back above the longer-term 50-day line to indicate rising technical strength.
In any breakout attempt, look for FOXF stock to jump past the entry in volume at least 40% above average to show conviction for the move.
IBD Breakout Opportunities ETF
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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