Shares of offshore drilling contractor Valaris shot up 8.5% Monday to near its all-time high. It's risen steadily since it reported a 775% increase in profits last quarter on strong sales. The IBD Relative Strength (RS) Rating for the oil industry stock got an upgrade from 68 to 84 Tuesday. Valaris stock was down fractionally Tuesday afternoon.
Valaris Stock Rises Into Elite Group
The surprising 16-point leap in its RS Rating puts Valaris stock in the top 16% of all stocks for price performance this past year.
Market history reveals that the market's biggest winners often have an RS Rating north of 80 as they launch their biggest runs. U.K.-based Valaris is at the starting pole in that race now.
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Valaris broke out earlier, but has fallen back below the prior 77.09 entry from a cup with handle. Its stock dipped to 63.80 on May 1 ahead of its earnings report. It's risen about 20% in the six weeks since then and traded around 76 Tuesday afternoon, just under the prior buy point.
On Feb. 11 last year, Valaris stock hit an all-time high at 80, and it's rapidly rising toward that price again. Please note though that the latest pattern is a later-stage base. Although such bases can succeed they are less likely to do so than first and second stage bases. That's because some momentum has usually been lost since it's last breakout.
In terms of fundamentals, the small-cap company has posted two quarters of rising earnings growth. Top line growth has also moved higher during the same period. Last quarter EPS rose 775% to 35 cents, vs. 4 cents a year earlier, on 22% higher revenue to $525 million.
Other Ratings Also Top Notch
Valaris stock also boasts a 95 Composite Rating out of 99. The Composite combines five fundamental and technical ratings into one easy to use rating.
It also sports a strong B+ Accumulation/Distribution Rating showing strong buying by institutional funds like university funds and mutual funds. Its 78 Earnings Per Share Rating reflects weaker growth prior to the second half of 2023.
Valaris stock earns the No. 1 rank among its peers in the 12-stock Oil & Gas-Drilling industry group. Seadrill and ChampionX are also among the group's highest-rated stocks.
IBD's unique Relative Strength Rating identifies share price movement with a 1 (worst) to 99 (best) score. The grade shows how a stock's price behavior over the trailing 52 weeks stacks up against all the other stocks in our database.
Please follow James DeTar on X, formerly known as Twitter, @JimDeTar
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