Simple Stock Watch: RAX

Rackspace Holdings (RAX) has corrected along with the general market. But it seems like it’s possibly shaping the right side of the current consolidation – that would be a good thing!

This company provides Web hosting services for small businesses. Wall Street sees earnings growth of 50% or more in each of the next two fiscal years. Not too shabby! Actually, that’s the kind of growth to be on the lookout for.

After the close Wednesday, the company reported better-than-expected fourth-quarter earnings.

Since rallying to a new price high in December, it’s corrected about 30%. That’s quite a bit more than the S&P 500’s 9% decline since January, but it’s typical for younger growth companies to fall more than the general market. They frequently rise faster, too, when a new rally begins!

So don’t rush in to buy yet – it’s too soon. But RAX is one to keep watching.

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The information in this article is provided for informational purposes only and should not be considered direct investment advice.  No guarantee is made that the strategies or securities discussed herein will be profitable. The information provided reflects the views of the author as of a particular time and are subject to change at any time without notice.