Growth stocks to watch and worth considering for your portfolio include Kinsale Capital Group. This midcap growth stock is closing in on a potential breakout and is today's IBD 50 Stocks To Watch pick.
Richmond, Va.-based Kinsale Capital Group has been forming a cup base with a 245.27 buy point buy point. MarketSmith pattern recognition calls the pattern the handle of a huge base. But the 27% decline makes it more suitable as a cup base than a handle.
An uptrend grew stronger around mid-February after the company reported better-than-expected earnings. Kinsale stock gained over 8% on Feb. 18 as shares moved closer to the new buy point. It was a move that took shares above important moving averages, such as the 50-day line. Shares currently sit over 10% above this level.
One important factor to note is the current base formed entirely above the 200-day line in a market where most stocks dipped below this level. The stock's relative strength line has reached new highs on the weekly chart.
Growth Stocks To Watch: Kinsale Capital
Kinsale Capital has quietly been among the faster-growing insurance stocks. This group has done particularly well recently in the upward-moving interest rate environment over the past several weeks. This week, the 10-year Treasury note yield traded above 2.3%, which is higher than it's been in years.
Kinsale focuses on the excess and surplus lines market, which works to insure high-risk businesses that other insurers tend to pass up. The company's year-over-year earnings growth is in the high double- and triple-digit range. Over the past four quarters, EPS grew 46%, 52%, 279% and 54%, according to MarketSmith. Meanwhile, revenue rose 72%, 30%, 35% and 32% in the four most recent quarters.
The company carries a three-year annual growth rate of 35%, which meets the minimum for CAN SLIM investing. Profit estimates for the insurance company's earnings are for increases of 13% and 16% this year and next.
"We concluded 2021 with another strong quarter, highlighted by growth in gross written premiums of 36% and a combined ratio under 75%. By providing superior customer service combined with disciplined underwriting and low costs, we expanded our margins," said CEO Michael P. Kehoe.
"We are confident the favorable market momentum will persist in 2022," he added.
