Futu Holdings is Wednesday's pick for IBD 50 Stocks To Watch as the financial services stock trades in a buy zone from an early entry. The Hong Kong-based online broker's bottom line has greatly improved and profit estimates are on the rise.
Futu owns the platforms Futubull and moomoo. Its customers range from the U.S. to Australia and Japan.
The brokerage surged around 10% Wednesday morning in heavy volume as some Chinese stocks continued to act strongly.
The IBD 50 stock ranks No. 1 out of 35 stocks in the Finance-Investment Banking/Brokers group, which holds the No. 16 spot out of 197 groups.
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Financial Services Provider Hits Early Buy Point
The stock is building the right side of a deep cup-without-handle base with an official 130.50 buy point, according to MarketSurge pattern recognition.
But Futu stock topped its recent November and December highs Wednesday morning, creating early entries. Shares topped an early buy point at 111.88, putting it in a buy zone up to 117.47.
The stock is on pace for its fourth up week out of the last five. Shares have climbed 43% so far this year. Futu's relative strength line is on a steep incline. The IBD Relative Strength Rating is 95.
Futu's Bottom Line Continues To Improve
Futu missed third-quarter earnings estimates but topped sales views on Nov. 19. Its profit growth improved to 21% from a drop of 10% in the first quarter of 2024 and a 9% increase in Q2. Third-quarter sales growth accelerated to 31% from 4% and 26% over the last two quarters.
The financial services firm's paying clients increased 33.1% in Q3 and its total users rose 48.1%. Even more impressive was its 74.7% boost in total trading volume.
Analysts expect profit and revenue to grow even faster. The consensus fourth-quarter earnings estimate is for a robust 76% increase, with EPS gains of 56%, 33% and 29% the next three quarters. Revenue growth is expected to jump 50% in Q4, then 41%, 18% and 8% in the following quarters.
Analysts' 2024 profit growth estimates have recently been revised up to 22%, and to 30% for 2025.
Mutual funds have bolstered their positions in the fintech stock, with 634 owning shares in December, up from 566 in September. Its Accumulation/Distribution Rating of A indicates heavy institutional buying over the last 13 weeks.
And its 1.5 up/down volume ratio shows positive demand for the financial stock over the last 50 days.
Lastly, it holds a best-possible 99 Composite Rating.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
