KBR is the IBD Stock Of The Day. The engineering and construction firm is forming a base as its relative strength line hits new highs. That makes it a good watchlist stock amid the market correction and the general uncertainty tied to Russia's invasion of Ukraine.
KBR is a Houston-based company that provides highly skilled engineering and construction services, mostly to government and civil infrastructure projects. The company, spun out of Halliburton, had focused on the oil and gas markets until 2006. It now offers services like supply chain management and heavy equipment transport to the aerospace, defense and industrials businesses.
Both energy and defense stocks have largely outperformed the market in recent weeks amid growing tensions in Eastern Europe.
KBR Stock
Shares rose 0.9% to 48.51 on the stock market today. KBR stock is forming a cup base with a 50.09 buy point, according to MarketSmith analysis.
The stock's Relative Strength line has jumped to a new high, a signal of market outperformance during the market correction. The relative strength line tracks a stock's performance vs. the S&P 500 index.
A separate measure, the Relative Strength Rating, for KBR is 94. The RS Rating shows how a stock's price performance over the last 52 weeks holds up against all the other stocks in IBD's database.
While KBR stock shows strength, investors need to be cautious when the market is in a correction. It is risky to buy stocks during a market downturn as a drop in major indexes can cause individual stocks to tumble even if they have strong fundamentals.
The Dow tumbled Thursday on Russia's invasion of Ukraine before rebounding late Thursday and Friday as Russia faced resistance in its attack on the Ukrainian capital of Kyiv.
KBR Earnings Mixed
On Tuesday KBR reported fourth-quarter earnings of 69 cents per share on revenue of $4.5 billion. Analysts polled by FactSet expected EPS of 65 cents on revenue of $2.53 billion.
The stock has a three-year EPS growth rate of 13% and a three-year sales growth rate of 9%.
KBR is the top-ranked stock in IBD's Building-Heavy Construction group. It has a 96 Composite Rating out of 99 and a 91 EPS Rating. The Composite Rating compiles scores on key fundamental and technical metrics: earnings and sales growth, profit margins, return on equity, and relative price performance. Investors should focus on stocks with a Composite Rating of 90 or higher.
Institutional investors are buying into KBR. The stock has a B- Accumulation/Distribution Rating, which shows more buying than selling by institutional investors over the last 13 weeks.
Follow Gillian Rich on Twitter at @GillianRich for defense news and more.
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