IPO Stock Of The Week pick and software leader JFrog is breaking out past a fresh buy point. FROG stock is on the IPO Leaders screen.
The Sunnyvale, Calif.-based company sells programming tools that automate software development. Its tools also automate software updates, speeding up the deployment of new apps. JFrog calls its management system "liquid software."
According to the company's website, "Effectively, software will become liquid in that products and services will be connected to 'software pipes' that constantly stream updates into our systems and devices; liquid software continuously and automatically updating our systems with no human intervention."
In the third quarter, reported Nov. 2, the company earned 2 cents a share vs. the year-ago period's penny-a-share loss. Revenue grew 30% to $77 million. The company's fourth-quarter results are due Feb. 8. Analysts expect JFrog to earn 1 cent a share on sales of $81.1 million.
Because the company doesn't boast an impressive earnings track record, the stock has a mediocre 42 Earnings Per Share Rating, according to IBD Stock Checkup. Weaker earnings are common for newer issues.
Yet, Jfrog made a profit every year since 2019 and is projected to have earned 1 cent per share for 2022. Analysts estimate EPS to rise to 9 cents in 2023.
IBD Stock Checkup also shows that FROG stock has a weak 71 IBD Composite Rating. The rating blends key fundamental and technical metrics to help investors easily find top stocks.
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IPO Stock Breaks Out Past New Buy Point
In recent weeks, the IPO stock leader decisively regained its 50-day moving average, creating the right side of a consolidation base that has a 26.72 buy point, according to IBD MarketSmith chart analysis.
Shares edged above the buy point Friday, but volume was lower than average. Ideally, the breakout day should occur in heavy volume to indicate big institutional demand. The 5% buy area goes up to 28.06.
On a bullish note, the relative strength line is also nearing new highs as the stock was on track for a seven-day win streak. A strong RS line during the early stages of a new uptrend is a sign of significant stock market outperformance.
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
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