IPO Stock With 302% Growth Enters Buy Zone

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After the IPO market made a nice comeback in 2017 with successful new issues from Roku ( ROKU ), SendGrid ( SEND ), Canada Goose ( GOOS ), AnaptysBio ( ANAB ) and others, Argentina-based cement maker Loma Negra ( LOMA ), which went public in November, has kicked off the new year by jumping into a new buy zone.

[ibd-display-video id=2402943 width=50 float=left autostart=true] Along with Canada Goose and SendGrid, Loma Negra has already earned a spot on IBD's IPO Leaders list. Canada Goose is up over 50% from a breakout in October, while SendGrid closed out 2017 with a 13% gain on Dec. 29 and added another 2% in first session of the new year. But note that the email service provider gave back much of the gains it made early Tuesday and reversed to a 2.7% loss on Wednesday.

Loma Negra ended 2017 with four straight up days and added another strong gain, just under 7%, on Tuesday. Like SendGrid, Loma Negra gave back a large chunk of its earlier gains, but ended the day with a strong rebound before retreating 2.6% on Wednesday.

Meanwhile, Roku has posted two consecutive up days, while AnaptysBio managed to close above the 100 mark on Wednesday.

Triple-Digit Earnings Growth

Although Loma Negra had its IPO last year, the company has been in business in Argentina since 1926, producing and distributing cement, concrete and lime products primarily for the construction industry.

The company has generated average EPS growth of 302% over the last three quarters. Revenue gains have averaged 38% during the same period.

Loma Negra sports a strong 41% return on equity, but also carries a heavy debt load, with a debt-to-equity ratio of 586%.

A 90 Composite Rating (up from an 85 on Tuesday) earns Loma Negra the No. 1 ranking among its peers in the cement, concrete and aggregates industry group, ahead of Eagle Materials (EXP), U.S. Concrete (USCR), Martin Marietta Materials (MLM) and Vulcan Materials (VMC).

U.S. Concrete is trading at the upper end of a new buy zone, while Eagle Materials rose over 3% Tuesday, pushing it out of buy range. After rising nearly 3% Tuesday, Vulcan Materials added another 1.8% Wednesday, putting it just below a 135.02 buy point.

Molding New Breakout?

After going public at 19 per share, Loma Negra has just completed an IPO base with a 24.02 entry as its relative strength line pokes its head into new high ground.

While the stock has not been trading long enough to establish an Accumulation/Distribution Rating, which takes a minimum of 13 weeks, its 2.7 up/down volume ratio points to demand for shares.

The latest report shows 48 funds have taken a position in the stock, including highly rated Fidelity OTC (FOCPX).

In early trading Tuesday, Loma Negra bolted past the buy point in heavy volume, rising as much as 4% above the entry. After retreating during the day, the stock rebounded strongly at the close to end the day 4% above the buy point.

On Wednesday, Loma Negra continued that roller coast action by heading higher during the day only to reverse sharply to a loss. On the positive side, the stock did manage to bounce off the day's lows and close 1% above the buy point.

See if Loma Negra can continue to climb in strong volume, but also keep in mind that new IPO stocks can be volatile and may go through multiple bases before establishing a sustainable upward climb.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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