Two New Faces Appear In Growth Stock Screen, But May Require Patience

After weeks of stagnation, IBD Sector Leaders has a couple of fresh faces. But investors may need to be patient with these growth stocks.

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Although both have fundamentals good enough to make this high-bar screen, neither is in a favorable chart pattern.

Arhaus (ARHS) is extended after clearing an alternate buy point at 10.54 about a week ago. The next buy area is not evident on the chart, at least not yet.

Last Monday, shares gapped up after management raised its 2022 sales forecast to $1.22 billion-$1.23 billion, from a previous forecast of $1.17 billion-$1.19 billion. The premium-furniture retailer also guided fourth-quarter revenue to $351 million-$356 million, 45.5%-46.5% higher than the year-ago period.

Growth Stock Performance Improves

Arhaus earnings jumped 40% and 59% in the two most recent quarters, according to MarketSmith. Analysts expect Q4 earnings for the multichannel retailer to rise 35% to 19 cents per share, according to FactSet. Sales increased 44% to 66% the past four quarters. For Q4, sales are expected to climb 45% to $345.9 million.

In the Q3 report, the company cited improving supply chains and expanding demand among the growth factors.

The stock hasn’t passed IBD’s rigid screening process until now because it traded below 10 per share throughout 2022, even though the company came public at 13 in November 2021.

Digital Advertiser Finds Support

Israel-based Perion Networks (PERI) provides digital advertising services for streaming video, search engines and social media. It has the highest Composite Rating out of 41 companies in the Commercial Services-Advertising industry group. Perion operates in China, several European countries and Russia, but gets most of its revenue (88%) in the U.S., according to FactSet.

This growth stock also lacks a clear entry after clearing a five-week consolidation that’s a bit short for a cup base.

Nonetheless, the stock pulled back to its 10-week moving average and jumped off support, yielding a rough buy zone from 25.85 to 28.45. PERI traded around 29 Thursday.

On Jan. 4, it released preliminary Q4 results showing a 30% rise in revenue and 63% bulge in adjusted EBITDA. It will announce full results Feb. 8.

Market share jumped in the quarter, booking a 25% year-over-year customer increase.

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