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Stocks To Buy And Watch: Consulting Leader Gartner Eyes Entry

Tuesday’s IBD 50 Stocks To Watch pick, Gartner (IT), continues to hold above a key support level ahead of next week’s earnings report. The stock climbed about 1% midday Tuesday.




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Stocks To Buy And Watch: Gartner

Stamford, Conn.-based Gartner is a provider of information technology market research and advisory services. The market research industry group ranks No. 27 out of 197 groups and is on a tear in 2021, up more than 26% through Monday’s close. The group includes leading names in information technology, media ratings, financial, real estate, insurance and other data.

“What is consistent across each of the companies, regardless of what end market they’re selling into or what macroeconomic exposure they have, is they have really attractive business models,” William Blair analyst Andrew Nicholas told Investor’s Business Daily last month. “These are companies that have highly recurring, predictable revenue and generally leverage some form of proprietary data, which enables them to have really strong competitive positions.”

In the most recent quarter, reported on Aug. 3, Gartner earned $2.24 a share on sales of $1.16 billion. Year over year, earnings and sales grew 87% and 20%, respectively.

“Research is our largest and most profitable segment,” Gartner Chief Executive Eugene Hall said on an Aug. 3 conference call with analysts. “Our research segment serves executives and their teams across all major enterprise functions in every industry around the world,” he said. “Our market opportunity is vast across all sectors, sizes, and geographies.”

For the third quarter — to be reported early Nov. 2 — analysts expect the company to earn $1.56 per share on revenue of $1.12 billion, according to IBD data.


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Consulting Leader’s IBD Stock Ratings

Gartner ranks No. 26 in the IBD 50. (The IBD 50 is a list of leading growth stocks with strong relative price strength and top-notch fundamentals.)

The stock shows a solid 94 Earnings Per Share Rating, out of a best-possible 99, and a good but not great B SMR Rating, according to IBD Stock Checkup. The EPS Rating tracks a company’s short- and long-term earnings performance. The SMR Rating analyzes a company’s sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst).

IBD Stock Checkup also shows that IT stock boasts a perfect 99 IBD Composite Rating. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.


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IT Stock Eyes New Buy Point

IT stock is back above its key 50-day moving average following a sharp rebound in mid-October. That leaves Gartner in a follow-on buy zone from the 50-day line to about 340.

Shares are close to building a flat base with a 327.30 buy point, according to IBD MarketSmith chart analysis. The forming base is just a bit shorter than five weeks, or 25 trading sessions, long. You could view the current action as a shelf consolidation. Keep in mind the risk is higher with earnings results on the near horizon. Check out this Investor’s Corner on how to trade during earnings season.

The stock’s relative strength line is just off new highs, a bullish signal during the current stock market uptrend.

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.

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