The old saying that small is beautiful fits some small-cap financial stocks poised for growth. Among them is Federated Hermes stock. The broad-portfolio company provides investment products and advisory services to institutional investors and individuals, and to financial advisors. Formerly known as Federated Investors, the company has $625 billion under active management and provides stewardship advice for $1.5 trillion in assets. On Thursday, the Relative Strength (RS) Rating for Federated Investors climbed to a new percentile, rising to 74 from 65.
The 74 RS Rating, of 99, means Federated Hermes stock is outperforming 74% of all stocks, regardless of industry group. It's a good but not great number. Market research shows that stocks that go on to make the biggest gains tend to have an RS Rating of at least 80 in the early stages of their moves. However, some of its key ratings are significantly stronger.
Heavy Buying Of Federated Hermes Stock
Among the company's best ratings is its A- Accumulation/Distribution Rating, which gauges institutional investor buys on an A+ to E scale. The A- A/D Rating means that funds and other big institutions are heavily buying its shares.
Federated Hermes stock also has an 89 Composite Rating. IBD's Composite Rating combines five separate proprietary ratings of fundamental and technical performance into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
In terms of fundamentals, earnings grew 19% last quarter to 75 cents per share. It was the third consecutive quarter of double-digit profit growth. In contrast, revenue slid 5% to $341.2 million. The dip came after three quarters of positive revenue growth ranging from 2% to 12%.
Commenting on first quarter results, CEO J. Christopher Donahue said in an April 29 earnings release, "Strong investment performance and client interest in a range of our actively managed strategies distributed in key regions around the world generated net positive fund sales in Q1 2021," helping Federated Hermes reach record equity assets under management and a record for fixed-income assets under management.
Finance Group Peers
The company earns the No. 27 rank among its peers in the Finance-Investment Management industry group. Virtus Investments and Blackstone are among the group's highest-rated stocks.
Looking For Winning Stocks? Try This Simple Routine
Federated Investors is now considered extended and out of buy range after clearing a 31.46 buy point in a second-stage consolidation. See if the stock forms a new chart pattern or follow-on buying opportunity like a three-weeks tight or pullback to the 50-day or 10-week line.
When you're researching the best stocks to buy and watch, keep a close on eye on relative price strength.
This proprietary rating measures technical performance by showing how a stock's price movement over the last 52 weeks measures up against that of the other stocks in our database.
