There are growth stocks and there are defensive plays. While tech stocks frequently fall into the first group, especially in strong bull markets, insurers are seen as more defensive picks that can grow in a cautious environment like the current one. One insurance company, W.R. Berkley, falls into that category as the recent sector rotation seems to be favoring this often overlooked group.
As a result, W.R. Berkley is today's selection for IBD 50 Stocks To Watch.
W.R. Berkley is setting up in a proper flat base with a split-adjusted buy point of 59.46. That price is also its all-time high, according to IBD MarketSurge chart analysis tools.
That is impressive, considering that several growth stocks are well off their highs, thanks to the recent sell-off that has investors searching for a market bottom. Not surprisingly the company's relative strength line, which compares the stock with the S&P 500, has risen even though the stock remains in the 19-week long base.
Insurance Company Holds Above Key Metric
Another indicator of outperformance: W.R. Berkley is holding above the 50-day moving average while the S&P 500 index and the exchange traded fund that tracks it, the SPDR S&P 500 Trust, are below it.
A set of strong technical ratings also shows the stock's leadership. While the EPS Rating is an ideal 99, the Composite Rating also indicates strength and stands at 96 for W.R. Berkley. Meanwhile, the Relative Strength Rating is within an acceptable range at 83, and has improved from 76 four weeks ago.
In June, the company's board approved a 3-for-2 stock split that went into effect on July 10.
Sales and earnings growth for the insurance company have been steady over the past five quarters. Q2 sales grew 11% to $3.3 billion while earnings of $1.04 per share were 37% higher than the prior year.
W.R. Berkley offers property and casualty insurance. Mutual funds own 52% of outstanding shares. The Janus Henderson Enterprise T Fund(JAENX) is one fund that holds shares of the insurance company.
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