As the market indexes and Magnificent Seven stocks like Apple, Tesla and Nvidia remain mired below their key moving averages, NatWest and three other foreign banks have popped onto the Investor's Business Daily Breakout Stocks Index. Including NatWest, each of these bank stocks have weathered the market storm better than tech titans like Nvidia stock, holding tough above their 50-day moving averages.
NatWest has drawn particular attention among institutional investors. In addition to teasing a potential breakout, below are three more reasons to keep an eye on NatWest stock as the Mag 7 — and the indexes — struggle.
NatWest Eyes Breakout In Befuddled Market
Based in the United Kingdom and with a history stretching back over 300 years, NatWest operates in three areas: Retail Banking, Commercial & Industrial and Private Banking. On the retail side, the bank operates across three brands — NatWest, Royal Bank of Scotland and Ulster Bank.
President Donald Trump's unleashing of tariffs and a simmering feud with Federal Reserve Chairman Jerome Powell continue to rattle Wall Street. The trade war, particularly with China, has clearly impacted global powerhouses like Apple, Nvidia and Tesla.
Meanwhile, NatWest has stood strong against those headwinds, joining Icici Bank, HDFC Bank and Grupo Financiero Galicia on the IBD Breakout Stocks Index.
While risk management and protection of capital rule the day in this environment, NatWest continues to show strength as it takes aim at a 12.65 buy point in an early stage consolidation. Those stock rose over 3% Tuesday to close just shy of that entry at 12.57.
Here are three more reasons NatWest has emerged as a stock to watch:
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1. Top Funds Bet On NatWest
NatWest just made this month's list of new buys by the best mutual funds. These top-performing money managers scooped up $57.1 million worth of NatWest stock. It was the only company in IBD's Banks-Money Center industry group to make the list. And none of the Magnificent Seven stocks made the cut.
Another sign of demand is NatWest's 2.3 up/down volume ratio. That more than doubles the 1.0 or better score needed to indicate demand.
2. Dividend Yielding Over 4%
While earnings and sales growth have been sporadic in recent quarters, NatWest has earned a place among dividend stocks to watch. The bank stock currently yields 4.26% on an annualized basis.
That easily tops the other foreign bank stocks on the IBD Breakout Stocks Index. Grupo Financiero Galicia does not pay a dividend. Icici and HDFC both yield less than 1%.
Mag 7 stocks Apple and Nvidia both yield well under 1% while Tesla does not pay a dividend.
3. NatWest Shows Strength In Weak Market
Another reason to keep an eye on NatWest stock is its clear market leadership, as shown by its soaring relative strength line.
While fellow foreign bank stocks Icici, HDFC and Grupo Financiero Galicia also have rising RS lines, only NatWest earns a coveted blue dot in MarketSurge for its exceptional relative strength.
Risk Management: How Invested Should You Be Right Now?
Earnings Ahead
While NatWest continues to shine in this down market, the current environment isn't the only call for caution. NatWest is set to report earnings on May 2.
Analysts forecast 15% sales growth to $4.96 billion. Earnings estimates call for a 30% gain to 34 cents per share.
As NatWest continues to trade near a potential buy point, note that it's risky to buy any stock just before a company reports. Investors can reduce risk by waiting to see how a company reports — and how Wall Street reacts — before initiating a new position.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities exchange traded fund from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to invest in the entire index in addition to, or rather than, buying individual stocks. Learn more here about the ETF and Innovator.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
