When looking for the best stocks to buy and watch, winning investors focus on those with rising relative price strength. One stock that fits that bill is Brown & Brown, which got an upgrade to its Relative Strength (RS) Rating from 78 to 81 Wednesday. Brown & Brown stock traded roughly unchanged Wednesday afternoon.
Daytona Beach, Fla.-based Brown & Brown saw its earnings climb dramatically over the past year, from 28% growth to 8%, 33% and then a whopping 42% last quarter. Revenue grew at a less robust but decent pace too, from 22% to 23%, 25% and 15% in its latest quarter.
Brown & Brown Stock Joins Elite Group
Brown & Brown stock's upgrade to the 80-plus RS Rating group indicates it may be poised for bigger things. Market research reveals that the market's biggest winners typically have an 80 or better RS Rating as they begin their biggest price moves.
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Watchlist candidate Brown & Brown stock traded as low as 52.82 on Aug. 15 as it formed a long cup base last year. Wednesday it traded around 74.40, up about 41% in five months. It's trying to complete a flat base with a 76.25 entry. See if it can clear the breakout price in volume at least 40% above average.
Among its other key ratings, Brown & Brown has a terrific 95 Composite Rating, putting it in the top 5% of stocks for a broad range of technical and fundamental metrics. Its Earnings Per Share Rating is a near-best 98 and its SMR Rating is A on an A-to-E scale with A superb and E dreadful.
Most Ratings Shine, One Is Lackluster
One yellow flag is its D+ Accumulation/Distribution Rating, which shows that big funds are selling more of its shares than buying. However, it's caught the Street's attention. The number of funds that hold Brown & Brown stock rose from 1,408 in the March-ended quarter to 1,534 in December.
Earnings grew 42% to 71 cents per share last quarter on 15% higher revenue, to $1.07 billion. The company says on its website it will hold a call with analysts the morning of Jan. 23 to discuss its fourth quarter results.
Brown & Brown stock earns the No. 2 rank among its peers in the Insurance-Brokers industry group. Smaller rival Erie Indemnity is No. 1 and relative giant Gallagher, with about $9 billion annual revenue, is No. 3 among the group's highest-rated stocks.
Investors trying to find the best stocks to buy and watch can use its relative price strength number as an indicator of leadership or lack of it.
Investor's Business Daily's Relative Strength Rating identifies share price action with a 1 (worst) to 99 (best) score. The grade shows how a stock's price behavior over the last 52 weeks compares to all the other stocks in our database.
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