Mortgage lenders are seeing improvement despite the market's tumble this year. Rocket Cos. is the leader in that sector. Amid rapid expansion including plans to combine with Mr. Cooper, Rocket stock hit an important milestone Monday. Its Relative Strength (RS) Rating jumped into the 90-plus percentile with an improvement to 96, up from 89 the day before.
Rocket Among Top 4% For Stock Price Performance
The upgraded 96 RS rating shows that shares of top-ranked Rocket stock outperformed 96% of all other stocks over the past year. Decades of market research reveal that the market's biggest winners tend to have an RS Rating over 80 as they begin their largest price moves.
However, with the market firmly in correction territory, stocks in the mortgage lending sector have been diving too. Rocket was down about 5% Monday afternoon, although it bounced off of lows for the day. Analysts are cautioning investors to be very careful on buys right now, avoiding them or perhaps just taking a small exploratory position in a high-conviction stock.
How To Use Stock Charts To Stay Profitable And Protected
Detroit-based Rocket is an online lender. Its stock went public in August 2020. On March 10 this year, Rocket said it agreed to buy real estate broker Redfin in a stock deal valued at $1.75 billion. The purchase would potentially add 50 million monthly visitors to Rocket sites. Then on March 31 Rocket announced It will buy lender Mr. Cooper for $9.4 billion, also through a stock swap deal.
Among its other ratings Rocket holds a terrific and best-possible 99 Composite Rating, a good 80 EPS Rating and a best possible A SMR Rating (sales + profit margins + return on equity). Perhaps most importantly it has an outstanding A- Accumulation/Distribution Rating, showing that ETFs, mutual funds and the like are avid buyers of its stock. Institutional investors account for about 70% of all trades.
In terms of fundamentals Rocket last quarter reversed from a 1-cent loss a year earlier to a 4-cent per share profit. Revenue surged 155% year over year to $1.77 billion.
Way Ahead Of The Ailing Market Overall
Rocket stock is way ahead of the overall market. It dropped to a 10.06 low on Jan. 13 then — in stark contrast to the market overall — it turned upward. Monday afternoon Rocket traded at about 14.6o, after touching its highest price since Nov. 11. It's up roughly 40% from its January low, though it was down for the day amid the tariffs fears-based market rout.
While Rocket Cos. is not near an ideal buying range right now, see if it is able to form and break out of a proper consolidation.
Rocket holds the No. 1 rank among its peers in the 20-stock Finance-Mortgage & Related Services industry group. LendingTree and Velocity Financial are also among the group's highest-rated stocks. The group ranks a middling No. 98 on IBD's list of 197 industries. However that's improved from a weak 159 ranking three months ago.
IBD's unique RS Rating identifies technical performance by using a 1 (worst) to 99 (best) score that shows how a stock's price performance over the trailing 52 weeks matches up against all other stocks in our database.
This article was created automatically with Stats Perform's Wordsmith software using data and article templates supplied by Investor's Business Daily. An IBD journalist may have edited the article.
Please follow James DeTar on Twitter @JimDeTar
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