The Israel-Hamas war, coming amid Russia's continuing invasion of Ukraine, is lifting defense stocks like Northrop Grumman. On Thursday Northrop Grumman stock cleared an important technical benchmark, seeing its Relative Strength (RS) Rating jump into the 80-plus percentile with an improvement to 82, up from 76 the day before.
It's a noteworthy jump because market research shows that the market's biggest winners typically have an 80 or better RS Rating in the early stages of their moves.
Northrop Grumman Stock Up Sharply This Month
The Falls Church, Va.-based company provides military systems and aircraft for defense, aerospace, ship and government markets. Northrop Grumman stock is trying to complete a consolidation with a 556.27 entry. See if it can clear the breakout price in heavy trading.
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Among its other ratings, watchlist candidate Northrop Grumman stock has a strong 90 Composite Rating. Additionally, it carries a 76 Earnings Per Share Rating and a strong B+ Accumulation/Distribution Rating. The B+ rating shows that significantly more funds are buying its shares than selling.
Unlike many companies that bottomed in fall 2022, Northrop Grumman stock kept climbing until January this year. It fell in early 2023 and dropped to a 414.56 low on Oct. 6. On Oct. 9 it jumped 11.4%. It's continued rising sharply since early October and closed at 477.48 Thursday, down 1.1% for the day but up 15% from its early October low.
Earnings Popped Last Quarter
Earnings for the defense contractor grew 25% last quarter to a hefty $5.78 per share. EPS growth has been uneven though. In the previous three quarters, Northrop Grumman posted EPS gains of 25%, 6% and 3% before returning to the 25% pop last quarter. Keep an eye out for the company's next round of numbers on or around Oct. 26.
Meanwhile, revenue grew 9% to $9.775 billion last quarter. The three quarters before that its sales rose 16%, 6% then 9%.
Northrop Grumman stock earns the No. 17 rank among its peers in the 67-stock Aerospace/Defense industry group. Woodward and AAR Corp. are among the group's highest-rated stocks. The group itself ranks a decent No. 44 on IBD's list of 197 industry groups.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.
IBD's proprietary RS Rating identifies technical performance by showing how a stock's price action over the last 52 weeks measures up against that of other stocks on the major indexes.
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