After experiencing a correction, the stock market has rebounded strongly, with the S&P 500 up almost 10% from its March lows. In the screen of relative strength lines at new highs, numerous stocks that have been on our radar are now stocks to watch.
Stock charts in which the relative strength line makes new highs before the stock hits a buy point are considered bullish choices. In any breakout, the RS line should make new highs, or be close to new highs.
Insurance broker Brown & Brown is in a buy range from a 70.85 buy point. The company has been expanding on a steady path of acquisitions, most recently completing purchases of Orchid Underwriters and CrossCover Insurance Services last week.
Brown & Brown was previously highlighted as a stock with inflation protection and little underwriting risk due to the unique nature of its contracts. A three-year EPS growth rate of 21% is strong, and the company currently ranks first in IBD's insurance brokers industry group.
The company will report first-quarter earnings on April 25. Analysts expect EPS of 75 cents with revenue of $888 million.
Archaea Energy Powers Forward, A Stock To Watch
Archaea Energy is now in a buy range after breaking out of a cup base, trading past its 22.11 buy point. Shares are trading with a relative strength line at all-time highs and a Relative Strength Rating of 98. This is despite a recent secondary offering of almost 13 million shares, which did little to damper investors spirits.
The renewable gas producer is expected to become profitable this year with an estimated EPS of 60 cents after reporting a 49-cent loss a year prior. For investors willing to take some added risk, Archaea represents a volatile but potentially rewarding play in the energy sector.
Other Stocks To Watch
Mexican telecom giant American Movil remains in a buy range. It was highlighted on IBD's New High list on Friday, when it broke out of a base.
Impressive subscriber growth marked a strong year for the company. For investors looking for some geographical diversification in a defensive sector, American Movil is a strong contender. Be sure it stays above its 21.47 buy point. The buy zone goes to 22.54.
Shares of staffing and insurance company Paychex are teasing a 139.07 buy point after forming a cup pattern. With shares consolidating at this level, a strong breakout would represent a buying opportunity. A move above the buy point on Thursday faded but shares remain near the entry.
Paychex currently ranks second in IBD's outsourcing services industry group.
