Lamb Weston Holdings Inc. stock (NYSE:LW) jumped an impressive 11% over the past week, outperforming the broader market S&P 500, which lost 2%. Taking a look at the last one month’s change, LW stock is up 23%. The primary reason behind the stock’s jump was a 12% increase in Lamb Weston’s Revenue In the recently released Q2 2022 report (quarter ended November 28, 2021) due to strong demand from the food services segment. The food service division, which is the second largest business segment, typically supplies smaller restaurants. Division sales increased 30% during the quarter; Of that, 22 percentage points were on account of volume gains, while the rest came from price increases. The larger global division of Lamb Weston, which supplies the largest restaurant chains, saw 9% sales growth, with four percentage points of that coming from higher volumes and the remainder coming from price increases. The largest restaurants are well organized, but smaller restaurants are beginning to come to life again. This shows that Lamb Weston is benefiting as the world has been hit by the pandemic early.
Now, is LW stock set to rise further or can we expect some correction? We believe that LW stock has only a 23% chance of growth in the next month (21 trading days) based on our machine learning analysis of stock price trends over the past five years. View our analysis LW stock growth potential, Check out our analysis to see how the LW compares with its peers Lamb Weston Holdings Vs Lancaster Colony,
- There have been two instances in the last five years when LW stock has seen a previous 21-day rise 23% or more.
- Given how unlikely such an exception stock price movement is, we saw 13 examples Where abnormal observed in LW stock 20% or more jump in a period of 21 days. 3 of these cases As a result of LW stock Emerging in a subsequent one-month period (21 business days).
- This historical pattern represents 3 out of 13, or About 23% growth potential Lamb Weston in stock next month
Understanding the growth prospects of LW Stock under various scenarios
Q1: When is a better time to buy Lamb Weston stock – after a decline or after a rise?
Consider two situations,
Case 1: Lamb Weston’s stock falls -5% or more in one month
Case 2: Lamb Weston stock rises 5% or more in one month
lw stock fare better after case 2, with 50.2% Probability of growth in the next month (21 trading days) under Case 1 (where the stock has suffered a 5% loss over the previous month), vs, a 63.5% Increased probability for case 2. This would suggest that it is better to buy LW stock after its recent rise.
Q2: Is Lamb Weston’s stock more likely to rise after a sharp drop?
Calculations from the Trefis machine learning engine show that for most stocks, the downside potential diminishes as the downtrend accelerates. However, after unusually high drops of -10% or more, growth chances usually improve. This is intuitively understandable, as the markets are often dominated by the bad news surrounding a company.
For LW stock, the probability of a positive return in the next month (21 trading days) after a decline of N% over the past 21 trading days is detailed in the table below, as well as a positive return probability for the S&P 500:
Q3: What about the potential for Lamb Weston’s stock to rise after its recent rally?
The LW probability of a positive return in the next month (21 trading days) after gaining N% in the last 21 trading days is detailed in the table below, as well as the probability of a positive return for the S&P500:
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