Investors may have big-buzz IPO Leaders like Cava Group (CAVA), Duolingo (DUOL), Monday.com (MNDY) and Dutch Bros (BROS) on their radar. But what about BBB Foods (TBBB), the Mexican “hard discount” grocery retailer that just had its initial public offering in February and already earns a spot on this screen?

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BBB Foods, or 3B, says the company name comes from the saying “Bueno, Bonito y Barato,” which translates to “Good, Nice and Affordable.”

Begun in 2005, 3B says it is the first “hard discount” supermarket in Mexico. The key to the hard-discount model is offering a limited selection of products that enables retailers to provide basic goods in high volume to streamline operations.

The IPO Leader operates more than 2,000 stores across 15 Mexican states. In addition to grocery staples, 3B carries products for personal care, household cleaning, pets and more.

As Cava stock, Duolingo, Dutch Bros and other IPO stocks to watch show strength, here are four reasons to keep a close eye on 3B as well. Duolingo is looking to break out, with TBBB stock speaking that same language as it pops into buy range.

1. Mexican Retailer And IPO Delivers Growth

From 2020 to 2022, 3B saw its revenue increase at a compounded annual growth rate of 34.4%. Its store count expanded significantly during the same period.

Sales growth has ranged from 24% to 72% over the last eight quarters.

Albeit based on prior-year quarters that showed a loss, the retailer has generated four straight quarters of triple-digit earnings growth. For 2024, analysts forecast a 105% gain in earnings to 40 cents per share.

2. IPO Leader Forming IPO Base

While fellow IPO stocks Cava and Monday.com are extended, Dutch Bros and Duolingo join 3B in setting up new potential buy points.

3B has formed an IPO base showing a 22.54 entry. The stock has so far closed higher for six of its seven weeks as a publicly traded company. On Thursday, the Mexican retailer punched past that buy point into buy range. Shares of TBBB stock rose nearly 3%, closing in buy range at 22.78.

Investors should note that such brand-new IPOs can be volatile. So while IPO bases can deliver impressive gains, be sure to follow sound rules for buying stocks and selling stocks.

3. Relative Strength Line At New High

In a sign of market leadership, 3B has already hit a new high, earning it a blue dot in MarketSurge, formerly known as MarketSmith.

Stocks that go on to make the biggest gains tend to have their RS lines at or near a new 52-week high around the time of a breakout.

4. An IPO In Demand

Having only been publicly traded since Feb. 9, 3B has yet to establish a track record of institutional sponsorship. But the stock’s 1.8 up/down volume ratio indicates demand for shares of TBBB.

For this metric, any number above 1.0 points to demand. By comparison, Cava sports a 1.9, while Monday.com earns a 1.6. The up/down volume ratio also shows demand for Dutch Bros (1.2) and Duolingo (1.1).

Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.

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