Alphabet Inc. (GOOGL - Free Report) , is engaged in technology business. Also a Zacks Rank Buy, this company has outperformed the Zacks Internet Services industry over the last year. Although a very diversified company, it continues to maintain its dominant share of the competitive and fast growing search and online advertising markets, another big positive.
Showing posts with label Bank stocks. Show all posts
Showing posts with label Bank stocks. Show all posts
Monday, April 3, 2017
Top Stock Picks for the Week of April 3rd: CMA & GOOGL
Comerica Inc. (CMA - Free Report) , is a registered bank holding company with a Zacks Rank of Buy. It has seen solid earnings estimate revisions over the past month, suggesting analysts are becoming more bullish on the firm’s prospects. It also benefits from a strong industry, currently 42 out of more than 250 industries.
Friday, March 3, 2017
Bank Of America: Here's How The Bullish Channel Might Play Out
About: Bank of America Corporation (BAC), Includes: KBE, XLF
Summary
Bank of America is trading in a bullish channel that puts resistance at $27 (mid-term) and $28.50 for the top of the channel.
Bank of America has broken its 7.5% range set in January and has traveled nearly the distance in that range (the $25 to $26) zone.
Since BAC is moving on momentum, monitoring momentum indicators will be key going forward to ensure higher prices match higher momentum levels.
Thanks to President Trump, we've seen a bump in stocks once again. Bank stocks like those listed in the SPDR S&P Bank ETF (NYSEARCA:KBE) and the Financial Select Sector SPDR ETF (NYSEARCA:XLF) are rallying and of course a big winner is Bank of America Corporation (NYSE:BAC).
With these rapid and unprecedented gains, it's important to have a risk management strategy in case the market turns.
In full disclosure, this analysis is not a recommendation to buy or sell at a specific level. I'm not a financial advisor. My goal is to help you identify areas of risk in your portfolio, identify areas of resistance and support, and areas where volatility is likely to rise.
If you receive me articles via email as a follower on Seeking Alpha, you'll know on January 24th, we discussed the resistance area of $25 to $26 upon a break of the 7.5% range that BAC was stuck in at that time. I'm not going to rehash the article, but I'd like to show how momentum stayed strong throughout this move higher.
Here' the chart below and three key points from the January article:
- If BAC stock breaks out of the current 7.5% range, this range-break can sometimes, (not always) propel the stock to travel the length of the range.
- As a result, a range-break could translate to a 7.5% move higher to the $25 area.
- A higher move in RSI could correspond to BAC price break to the $25 price target.
The Relative Strength Index (RSI) is a momentum indicator and an overbought-oversold indicator.
In the chart above (from January), the bounce off the 50 level is a bullish signal.
Typically, in a bull-run, we want to see RSI above 50 for a strong move higher. If it breaks below 50, we typically get a pullback. However, if RSI breaks below 40, we tend to see a more significant correction.
Updated Daily Chart Bank of America:
- We can see the breakout out of the 7.5% range (at the moment) stalling a little $25.50 level of resistance.
- The pink trendlines represent the bullish channel BAC is currently trading within; the bottom pink line connects the lows and the top pink line connects the highs of the move.
How I drew the line: I took the trendline from the lows, and "cloned" it (so to create the exact-same angle). Next, I moved the newly cloned pink line to the top of the price action to create the top pink trendline. By having both pink lines at the same angle, it gives us a more accurate picture of the top and bottom of the bullish channel.
- The blue line (also cloned from the bottom trendline) represents a near-term resistance of the $27 area.
- The channel top (pink trendline) comes in around $28.50 (at the time of this writing).
At both the blue and pink trendlines ($27 to $28.50), BAC could see an increase in volatility and stops (take-profit orders) and it's important investors have a risk-management strategy as we approach these levels.
Matching RSI Momentum with Price Action:
When I worked on a trading desk a few years back, one of the best pieces of advice I received from a successful FX trader was "always look to the left on a chart."
In other words, as price or momentum moves higher or lower, watch to see if the current levels are passing the prior levels to the left. If the current levels are not passing levels to the left, resistance is likely to follow, perhaps a pullback, or maybe price might need a few attempts to pass the levels on the left.
- With RSI, we can see momentum broke the blue trendline connecting the RSI highs in momentum (bullish sign).
- Also, we bounced off the 50 line (green line) as we highlighted the necessity in the January article.
What to watch for:
- Be sure to match momentum with price so that RSI makes higher highs while BAC makes higher highs.
- As a result, we want to watch to see RSI move higher and trade into the yellow zone, (passes the prior highs in January & February).
Sunday, December 11, 2016
Bull of the Day: Bank Of America (BAC)
Bank of America (BAC - Free Report) is on some kind of unbelievable run. The stock is up about 35% over the last month and investors are bidding it up looking for more! Let's take a look at the fundamentals of this stock and explore why it is a Zacks Rank #1 (Strong Buy) and the Bull of the Day.
Why I Like It
A good earnings history when compared to the Zacks Consensus Estimate.This is a large-cap stock is a market leader.
Higher interest rate environment is good for the banks
The stock has seen a big "Trump Bump" now if the economy gets one too this stock will continue to move higher.
Follow Brian Bolan on twitter at @BBolan1 and on StockTwits at the same address.
The Recent Numbers
I like to do a review of the most recent quarter for stocks that I highlight as Bulls of the Day. BAC reported the September 2016 quarter back in mid October.
The most recent quarter was a beat on top and bottom. The company posted EPS of $0.41 when the Zacks Consensus Estimate was calling for $0.34. That translates into a positive earnings surprise of 20.6%.
Revenue came in $836M ahead of expectations for a 4% positive revenue surprise. As a result, the stock was bid up by more than 1.6% in the session following the report.
Description
Bank of America is a financial services company. Bank of America Corp was founded in 1874 and is based in Charlotte, North Carolina.
Earnings History
The company has a strong history of beating the Zacks Consensus Estimate. There has only been one miss in the last six reports. The rest of the reports were all beats.
The chart above show the beats and misses for BAC over the last several years. I see only one miss per year in each of the last three years.
Estimates
The estimate picture looks really good, with the Zacks Consensus Estimate for 2016 moving from $1.27 in September to $1.47 in October.
The 2017 number moved from $1.55 in September to the current level of $1.61.
That same chart from above show the earnings estimates moving higher for 2016 and 2017. This is just what investors want to see.
One More Chart
Let's take a look at one the great features of the Zacks website, you can find this function for every stock on the "Financial Overview" section. You can chart all sorts of things against, well all sorts of things but I like to chart them against the stock price.
For BAC, and any bank, it is helpful to think about the ROA and how the stock has traded with the quarterly movement in that measure.
To me, a higher interest rate environment will likely boost ROA and the stock seems to follow that trend.
by Brian Bolan
Tuesday, May 12, 2015
3 Regional Banks to Add to Your Portfolio as Rates Rise
Interest rates, which have been at a near-zero levels since the 2008 financial crisis, are not expected to remain muted for long. Though the Federal Reserve has not come up with any timeline for a rate increase, the recovery of overall economic conditions increases the possibility.
In the latest policy statement, the Federal Open Market Committee (“FOMC”) stated that “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.”
However, the U.S. economy, which was recovering steadily in 2014, suddenly witnessed sluggishness in the first quarter of 2015, with the real GDP increasing a mere 0.2% (versus 2.2% growth in 4Q14). Further, Wednesday’s disappointing private-sector jobs report from ADP for Apr 2015 depicted that slowdown of the first quarter is continuing in the current period as well. We believe that this dismal picture will also get reflected in government jobs data slated to release later today.
Despite economic indicators suggesting a sluggish pace of recovery, the Fed remains optimistic that the economy will recover soon. The Fed blamed “transitory factors” for the slowdown in the first quarter and noted that “…the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate.”
Further, ambiguity about the imminent rate hike is leading to volatility in the market. In spite of this volatility, investors can make some wise decisions by investing in stocks of those sectors that are clamoring for higher interest rates, one of them being the regional banks.
Regional banks benefit from a steep yield curve, i.e. when the spread between long-term and short-term rates is wide. So when the Fed finally decides to hike rates, the two major criteria – improving economy and inflation at 2% – must stand fulfilled. Both these conditions also drive long-term interest rates, most probably more than the Fed raises short-term rates. Further, an improving economy means that credit quality will likely improve, which will also aid banks' profitability.
How to Select Banking Stocks?
We have selected 3 regional bank stocks that are currently well positioned to gain from this rate hike. To select these stocks we have used our new style score system. The attractiveness of these banking stocks as an investment option at this stage is confirmed by their Value Style Score of ‘A’ or ‘B.’ Also, these stocks carry a favorable Zacks Rank.
Boston Private Financial Holdings, Inc. (BPFH - Snapshot Report), headquartered in Boston, MA, offers a full range of banking, commercial and residential lending, and trust and investment management services to its domestic and international clientele.
Zacks Rank: #2 (Buy)
Value Score: B
Dividend Yield: 2.88%
First Commonwealth Financial Corp. (FCF - Snapshot Report), based in Indiana, PA, offers a wide range of consumer and commercial banking services to individuals as well as small and mid-sized businesses in the U.S.
Zacks Rank: #2 (Buy)
Value Score: B
Dividend Yield: 3.09%
Glacier Bancorp, Inc. (GBCI - Snapshot Report) is based in Kalispell, MT and operates as the bank holding company for Glacier Bank that offers commercial banking services to individuals, small to medium-sized businesses, community organizations, and public entities in the U.S.
Zacks Rank: #2 (Buy)
Value Score: B
Dividend Yield: 2.69%
by Zacks Equity Research
Source: http://www.zacks.com/stock/news/174303/3-regional-banks-to-add-to-your-portfolio-as-rates-rise
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