This Potential Breakout Stock Is Outperforming 95% Of The Market – Investor's Business Daily

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Health savings account leader HealthEquity (HQY) is among the companies outperforming 95% of all stocks, and may be closing in on a new breakout move.

XAutoplay: On | OffHealthEquity has a 95 Composite Rating, which means the Utah-based company is outpacing 95% of all stocks in terms of the most important stock-picking criteria, such as earnings and sales growth, profit margins and institutional sponsorship.

Google parent and FANG stock Alphabet (GOOGL), leading Chinese internet stock 58.com (WUBA) and CarMax (KMX) are also among the companies that recently joined the 95-plus Composite Rating club.

Alphabet is still in buy range after breaking out on a strong Q3 earnings report, while CarMax, which also jumped on its latest report in September, may be setting up a follow-on buying opportunity.

Guidewire Software (GWRE), which also now has a 95 Composite Rating and was featured in the Oct. 27 IBD Stock Analysis, is 3% below a potential 81.56 buy point.

90% Earnings Growth

HealthEquity soundly beat analyst estimates for its fiscal 2017 Q2 (ended July 31), when it reported a jump in earnings growth from 27% to 31%. Revenue also rose, from 26% to 29%.

The company, which provides online platforms for customers to manage their health savings accounts, has been growing EPS at a 90% annual clip over the last three years. Sales have risen at a 41% rate during the same period.

HealthEquity also sports a solid 25% annual pretax profit margin.

Institutional demand for shares is reflected in a B Accumulation/Distribution Rating, 1.3 Up/Down Volume Ratio and six quarters of rising fund ownership.

HealthEquity is expected to report Q3 numbers in early December, with analysts looking for a 30% gain in earnings.

Third’s The Charm?

HealthEquity was last featured in the IBD Stock Analysis on Oct. 6, just before it pulled back to add a handle to its current base and create a new buy point at 52.97.

The stock has launched two failed breakouts since January, so keep that in mind if the stock breaks out for a third time.

HealthEquity found good support at its 50-day line on Oct. 25 and has continued to climb since then, retaking its 10-day moving average along the way.

In morning trade Thursday, the stock was up around 1% in light volume, putting it just 4% below the entry.

Look for HealthEquity to clear the buy point in volume at least 40% above average.

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