Financial stocks top Monday's IBD Screen of the Day, which has scanned the market, looking for the highest relative strength charts.
This algorithm generates a list of stocks with relative strength lines at new 52-week highs. Relative strength compares a stock's price action to the S&P 500, with a rising line indicating its outperforming the benchmark and could break out.
Analyzing Arthur J. Gallagher Stock
Arthur J. Gallagher, a $39.4 billion property and casualty insurance broker, is trading inside the 5% buy zone of a cup-with-handle base.
Shares for this financial stock are near the lower edge of the 184.98 buy zone after pulling back last week.
AJG stock is well-situated above the 21-day moving average, with its relative strength line near a new high on the weekly chart.
The 95 Relative Strength Rating exceeds the minimum of 90 when looking for the top financial stocks to buy. This reading indicates it has outperformed 95% of all S&P 500 stocks in the last 12-months.
The company provides cost-effective property and casualty risk management products and services.
Arthur J Gallagher's core operations consist of two segments. First, its brokerage segment focuses on property and casualty insurance, as well as employee benefits. Second, its risk management segment addresses managed care, liability, auto and property insurance.
Gallagher's brokerage segment is the largest of the two, accounting for 87% of total revenue, according to a recent investor presentation.
This insurance middleman has booked consistent EPS growth for the past 6 years.
The trend is expected to continue in 2022, with projected 26% growth. Analysts are also looking for 11% 2023 growth.
Financial Stocks To Buy And Watch: LPL Financial
LPL Financial, another stock with relative strength at new highs, is trading inside a 5% buy zone from a 220.90 buy point. Shares are slightly lower on Monday, down 0.1%. The stock has found support at its 21-day exponential moving average so far in Monday's market.
The stock has risen substantially since hitting 169.68 in mid-July, reclaiming support at its 10-week line.
According to MarketSmith, LPL is expected to report substantial 2022 earnings growth, with EPS rising 45% on a year-over-year basis to $10.19 per share. In addition, EPS is expected to grow 59% in 2023.
Medical equipment systems firm Axonics also shows outstanding relative strength. The group ranks No. 17 out of IBD's 197 industry groups.
The stock is overextended from a 59.30 cup-with-handle breakout, after reaching the 20% profit zone. However, that might not matter because shares just completed a three-weeks-tight pattern, perhaps offering a new low-risk buy point.
The high point of the three-weeks-tight is 74.17, yielding a potential entry 10 cents higher at 74.27.
The relative strength line can serve as an excellent tool for determining the viability of these follow-on buy points.
