Despite a 74% gain this year, Universal Insurance Holdings (UVE) has been largely flying under the radar. But this top stock could warrant a closer look.
The insurance company has advanced mostly along the 50-day moving average since September 2017. Shares dipped slightly below the support line during the broader market’s recent skid. But the stock is rebounding above the 50-day as it puts together a win streak.
That could be viewed as a buy opportunity, since it’s Universal’s first pullback to the 50-day line (or 10-week on a weekly chart) since a July breakout from a flat base. The buy point in that base was 36.95. But buying stocks during a market correction is highly risky. The stock also cleared a 46 entry of a subsequent flat base last month, but fell back into the base as the market fell.
Universal tends to trade tightly, a bullish sign. It is on the thin side, with an average daily volume of about 230,000 shares. The relative strength line is in new-high territory, which signals unusual strength.
The Fort Lauderdale, Fla.-based company offers property and casualty insurance products to homeowners in Florida and has expanded to 16 other states. In the past it primarily served Florida residents.
IBD Stock Checkup assigns Universal a 93 Composite Rating, which combines key fundamental and technical metrics into a single score. That ranks the insurer third from the top in the 71-stock Insurance-Property/Casualty/Title group, based on the Composite Rating. A 97 Relative Price Strength Rating makes the insurer the top stock in its group.
Its 93 Earnings Per Share Rating reflects a 6% slip in earnings in 2016. Growth resumed in 2017 at 7%. Analysts expect a 54% jump in annual profit this year, then a 7% decline in 2019. For Q3, they see $1.03 a share on $217.3 million in sales, for respective increases of 268% and 14%. Universal reports Oct. 29 after the close.
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