Acuity Brands (AYI)
From Cabot Wealth Advisory 1/29/15 Sign up for Cabot Wealth Advisory—it’s free!
Today, I'll give you a stock that's already reported its earnings and hit new price highs because of it. And the story is great, too. Acuity Brands (AYI) is a leading lighting supplier for commercial, industrial and residential use, and its growth is being driven by the surge in demand for longer-lasting, more efficient LED bulbs.
Here's what I wrote in Cabot Top Ten Trader on January 19:
"LED bulbs always seemed like the big idea that was going to take the lighting industry by storm, but the providers of that technology never quite hit it big (Cree is a good example), as competition ate into margins and prices. Instead, the sellers and outfitters of those LEDs-like Acuity Brands-have been the big beneficiaries. Acuity makes all sorts of lighting systems for any customer (residential, commercial and industrial), and is the only pure play on the long-term shift toward LED lighting solutions (which saves money over many years) in North America; it's also thriving as a result of networked lighting solutions, where, say, a customer can dim the lights with his smartphone. Still, while the overall lighting industry is growing at a mid-single digit pace, LED sales are driving Acuity's business-in the firm's just-reported second quarter, total sales rose a decent 13%, but sales of LED luminaires were up about 75% from a year ago, and made up about 42% of total business. That's obviously the growth driver, and it's causing profit margins to expand (8.9% last quarter, up from 7.2% a year ago) and earnings growth to swell (it's been accelerating during the past two quarters). It's not revolutionary, but analysts see earnings growth remaining strong for the next couple of years as the LED revolution continues."
Like many growth stocks, AYI had a great 2013, a big correction during 2014, and was sitting near its March 2014 price peak when earnings were reported earlier this month. The result: Shares leapt to new highs on good volume and, importantly, have held those gains despite the still-shaky market. I think you could nibble on the stock around here with stop in the mid-130s.
However, by taking a risk-free trial subscription to Cabot Top Ten Trader, you'll receive further updates on Acuity Brands and additional strong stocks with high profit potential. Despite market's recent volatility, we're starting to see some growth stocks perk up. Cabot Top Ten Trader will help you get in on the ground floor of the future market leaders.
|Acuity Brands (AYI)
1170 Peachtree Street NE
Atlanta, Georgia 30309
Index Membership: N/A
Industry: Diversified Electronics
Full Time Employees: 7,000