Every Wednesday, I write about stocks hitting 52-week highs or lows.
In yesterday’s trading, 146 stocks hit 52-week highs, while 64 hit 52-week lows. Of the highs, 88 were listed on the NYSE, while the Nasdaq had 58. The NYSE high/low ratio was 86%/14%, while Nasdaq’s was 54%/46%.
With tech stocks listing on both exchanges these days, it’s hard to know if the difference is due to a rotation away from tech stocks, although it’s tempting to assume so.
Occasionally, I’ll look at the Stocktwits followers for a particular stock hitting a 52-week high to see if there’s an opportunity to get in before more investors jump on the bandwagon.
Here’s what the Stocktwits newsletter has to say about this idea:
“Stocks that are outperforming tend to continue to outperform. Stocks that have a low Stocktwits following are, by definition, undiscovered by the crowd. Stocks that have both Relative Strength and Low Stocktwits Following can really outperform as more investors discover them,” its latest Trends with No Friends stated in its Aug. 27 newsletter.
A look through its list of 52-week highs, over 30 financial stocks were hitting 52-week highs, ranging from a low of five followers to a high of 89,711.
I like these three financial stocks with a smaller following.
Orix Corporation
Orix Corporation (IX) hit its 37th 52-week high yesterday over the past 12 months. It has 91 Stocktwits followers.
While I’ve never written about the Japanese financial conglomerate for Barchart before, I’ve followed it for a few years, recommending the value play in May 2020. At the time, it traded around 1.67 times cash flow. Its shares have doubled since, boosting the P/CF multiple to 4.17x. Despite that, if you’re a long-term investor, here’s why I still like it.
If you go to its investor relations site, you'll see it has 10 operating segments, so you might consider it a financial conglomerate. However, when you look at its Q2 2024 results, the diversification is relatively balanced among the 10.
In terms of assets, the largest is Insurance at 2.88 trillion yen ($57.6 billion) and the smallest is Orix Europe at 702.89 billion yen ($14.06 billion). Profit-wise, Private Equity Investment is the largest at 32.03 billion yen ($640.5 million), while the smallest is a loss of 482 million yen ($9.6 million) for its Environment and Energy segment.
Its revenues increased 5% in the second quarter to 708.1 billion yen ($14.16 billion), with 86.4 billion yen ($1.73 billion) net income, 38% higher than Q2 2023.
It’s easy to see why the stock has gained 35% over the past year. The love affair with Japanese stocks has helped, but I can’t help rooting for this type of business because it’s not easy getting 10 different segments to consistently move in the same direction.
This is an unknown Berkshire Hathaway (BRK.B).
Inter & Co
Inter & Co (INTR) hit its 29th 52-week high yesterday over the past 12 months. It has 148 Stocktwits followers.
I'm a fan of Latin American stocks. I always have been. The one thing about these stocks is that —they are often available under $10. Don’t confuse low-priced with low quality. The holding company operates Banco Inter and the Inter Super App. It was a financing business from 1994 to 2015 when it became a full-service digital bank. Today, it has over 33 million clients.
Inter reported its Q2 2024 results in early August. Its loan portfolio was 33 billion Brazilian real ($5.96 billion), 10.7% higher than at the end of 2023. That led to a 417.9 million Brazilian real ($75.5 million) profit, 372.8% higher than a year earlier, on revenue of 2.88 billion Brazilian real ($520.1 million), 32.4% higher than Q2 2023.
While it has over 33 million clients, the active ones count. Since Q2 2022, it has grown its active clients by 72% from 10.7 million to 18.4 million at the end of June.
Unlike large American banks, you still can find prominent financial institutions controlled by a family or billion in Latin America. In Inter’s case, 80% of the votes are held by Costellis International, the holding company for Brazilian billionaire Rubens Menin Teixeira de Souza, one of Banco Inter’s founders.
To me, that makes it more attractive, not less.
Brookfield Corporation
Brookfield Corporation (BN) hit its 40th 52-week high yesterday over the past 12 months. It has 226 Stocktwits followers.
I saved the best for last.
Brookfield is run by CEO Bruce Flatt, who’s worked at the alternative asset manager for the past 34 years, including 22 as chief executive.
Since becoming CEO, its stock has appreciated by more than 2,500%, which doesn’t consider the spinoffs it’s done over the years--the most recent being selling— 25% of Brookfield Asset Management (BAM) in December 2022. Brookfield Corp. shareholders got one share in BAM for every four shares held by the parent. BAM shares are up about 30% in the 20 months since, with more gains in the future.
Six of the nine analysts covering its stock rate it a Buy, with a target price not much higher than where it’s currently trading.
Flatt’s quarterly and annual letter to shareholders is an excellent way to learn about all of the pies it’s got its hands in. Here’s an excerpt from Q2 2024.
“Our investment philosophy has been and continues to be built on the following key principles:
• Acquire high-quality assets and businesses.
• Invest on a value basis, with the goal of growing cash flows and compounding capital.
• Enhance the value of investments through our operating expertise.
• Build sustainable cash flows to provide certainty, reduce risk, and lower our cost of capital,” Flatt stated.
It’s a fantastic business run by some exceptionally talented people.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
