IPO Stock Of The Week and solar leader Nextracker tried to break out past a new buy point in recent sessions, but triggered a key sell rule in today's stock market sell-off. NXT stock is on the IBD IPO Leaders stock screen.
IPO Stock To Watch: Nextracker
Nextracker makes solar power tracker systems used to maximize the performance of large-scale utility systems. Trackers redirect solar panels throughout the day so they continuously align with the sun at an optimal angle.
The company reported $1.45 billion in revenue in 2022, up 22% from the prior year, according to the Nextracker IPO filing. Nextracker earned 34 cents per share, down from 2021's 84 cents.
Annual earnings are expected to jump 176% in 2023 and an additional 46% in 2024, according to FactSet.
NXT stock shows a decent 88 out of a perfect 99 IBD Composite Rating. This ranking blends key fundamental and technical metrics to help investors easily find top stocks.
This IPO Stock's First Breakout Fails
The IPO stock leader broke out past an IPO base's 33.05 buy point on March 3, according to IBD MarketSmith chart analysis. But shares had trouble decisively clearing that resistance point in volatile trade this week. And the stock briefly tumbled Friday, triggering the 7%-8% loss rule below the buy point.
Nextracker's weakness underscores the volatility in the general stock market and the dangers for growth investors. On Thursday, IBD's The Big Picture downgraded the market trend to "uptrend under pressure."
IPOs often draw a lot of investor attention. That can create results in unusual chart patterns. Volatility can rise as investors size up demand for the new stock. Yet there are opportunities in these cases, if you can spot the correct characteristics.
In a good IPO base, the decline from peak to trough usually doesn't top 20%, but highly volatile markets can produce declines of up to 50%. The length is often less than five weeks and can be as short as seven days.
Despite the breakout failure, this solar leader remains one of the top stocks to watch in the ongoing market volatility.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
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