After soaring 283% from its coronavirus lows in March 2020, videoconferencing and computer peripherals leader Logitech (LOGI) has entered a buffering stage as it tries to stay connected to a key support level.
Riding that wave, Logitech, Chegg, Etsy and PayPal stock all earned a spot on the IBD Breakout Stocks Index. Now the question is, will these stocks breakdown or find support as they test their 10-week moving averages?
To a very large degree, the answer will correlate with the performance of the general stock market. Over 100 years of stock market history shows that three of four stocks tend to follow the direction of the Nasdaq, Dow and S&P 500. So be sure to track the performance of Logitech, Chegg, PayPal and Etsy in conjunction with how the major indexes behave.
Follow sound sell rules to protect your profits and keep all losses small if Logitech, other leading stocks and the general stock market start to falter. You can use this selling checklist as a guideline.
Analysts See Logitech Delivering 164% EPS Growth In 2021
The huge demand for remote learning and work-at-home Wi-Fi connections has helped Logitech notch two straight quarters of triple-digit earnings growth. The Swiss company posted EPS gains of 274% and 192% in Q3 and Q4, respectively.
Sales growth also spiked, jumping to 85% in Q4 to mark a fourth consecutive quarter of acceleration.
Consensus analyst estimates call for 164% earnings growth in fiscal 2021, but then a decrease of 26% in 2022.
Although Logitech did not make the latest list of new buys by the best mutual funds, 13 funds with an A+ rating from IBD own shares in LOGI stock. The stock sports a B+ Accumulation/Distribution Rating and the highest-possible 99 Composite Rating.
Etsy also earns a 99 Composite Rating, while PayPal (96) and Chegg (95) earn passing grades in Stock Checkup.
Logitech Trying To Keep Streaming Higher
LOGI stock gapped down Tuesday as the stock market, particularly the Nasdaq, encountered selling pressure. But Logitech is showing resilience as it finds support at its 50-day and 10-week lines. It bounced off the 50-day line in volume well above average to close at the top of the day’s price range.
To gauge how Logitech is performing compared to the rest of the market, track the trajectory of its relative strength line. The RS line has slipped off its highs, but see if it can rebound to show it’s outperforming the S&P 500, which serves as an indicator for the general stock market.
While Logitech has made an impressive run since March 2020, it and other leaders, such as PayPal, Etsy and Chegg, are now being tested.
Pay particular attention to how Logitech and other members of the IBD Breakout Stocks Index act at key benchmarks such at their 50-day and 10-week moving averages. We’ll see how the rest of the week plays out, but on Tuesday, Logitech, PayPal, Etsy and Chegg all came off their lows and closed above their 50-day lines.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities ETF from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this allows you to essentially invest in the entire index in addition to or rather than buying individual stocks. Learn more here about the ETF and Innovator funds.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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