Education Leader Stride Rebounds From Critical Support Area, In New Buy Zone

15 hours ago 3

Wednesday's IBD 50 Stocks To Watch pick is education leader Stride (LRN), which is finding support at a key level and acting remarkably calm amid a volatile stock market. That makes Stride stock one of the best ideas to buy and watch right now.

Formerly known as K12, Stride changed its name in 2020. In addition to K-12 programs and curriculums, Stride offers one-on-one tutoring and career development, which provides training across three core areas: MedCerts, Tech Elevator and Galvanize.

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MedCerts helps adults develop careers with in-demand training in health care and technology. Tech Elevator provides a coding boot camp for future software developers. And Galvanize empowers learners and leaders pursuing skills as software engineers and in other fields.

On Oct. 22, Stride reported adjusted earnings of 94 cents per share on sales of $551.1 million, which represented year-over-year increases of 755% and 15%, respectively. The company boasts two quarters of accelerating earnings growth, from 23% to 41% to 755%. Accelerating earnings growth is a hallmark of big stock market winners.

While the company's next earnings report has yet to be confirmed, it is likely due out later this month based on previous announcements. For its December-ended quarter, Stride's earnings are expected to grow 25% to $1.92 per share on revenue of $569.8 million. That's a sales increase of 13%.

For the fiscal year ending in June, Wall Street expects the company's earnings will grow by 39%, with an increase of 11% in fiscal 2026, per IBD MarketSurge.

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Stride Stock Rebounds From Support

In mid-October, financial mismanagement allegations from short seller Fuzzy Panda sent shares tumbling below their long-term 200-day moving average. But shares shot higher following the company's report on Oct. 22, as they soared more than 39%.

After hitting a new high at 112.80 on Dec. 4, the stock has pulled back quietly. While shares are putting the finishing touches on a flat base that would have a 112.80 entry, they are first finding support around their 10-week line, which places a new buy point around 104. The 5% buy zone from that entry runs up to 109.20.

Bullishly, the relative strength line is just off new highs as well. That's a sign of strong outperformance vs. the S&P 500 and confirms that Stride stock is a market leader.

Another positive signal is that the current base formation will be a first-stage base. The stock's previous price action undercut the lows of the prior base, resetting the base count. Early-stage bases are more likely to net bigger gains than later-stage formations.

The IBD Stock Checkup shows that Stride stock boasts a perfect 99 IBD Composite Rating, another bullish attribute.

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