Wednesday's IBD 50 Stocks To Watch pick, Goosehead Insurance, is one of the best stocks to buy and watch right now, as it approaches a new buy point.
The Westlake, Texas-based independent insurance agency says it differentiates itself by building its business around its clients. As such, it offers clients plenty of choices by representing more than 80 insurance companies, and works with clients via seven corporate sales offices and over 600 franchise partners.
On July 26, Goosehead reported strong second-quarter earnings and revenue. The company's earnings surged 156% to 41 cents a share vs. the year-ago period. Sales grew 31% to $69.3 million.
"I'm very pleased to report that we continue to successfully navigate challenging industry conditions with a sluggish housing market and an extraordinarily hard insurance market. Meaning we've been working both smarter and harder but have delivered strong profitable growth," said CEO Mark Jones in the earnings call.
GSHD Stock's IBD Ratings
Boasting a solid long-term fundamental track record and great earnings results in the two most recent quarters, GSHD stock shows a perfect 99 Earnings Per Share Rating, according to IBD Stock Checkup. This rating takes into account EPS growth and stability of earnings over the past three years. The two most recent quarters are weighted more heavily.
GSHD stock displays a near-perfect 96 IBD Composite Rating, with solid long-term fundamentals coinciding with strong stock-price performance since January 2023. The IBD Composite Rating is designed to help investors easily gauge the quality of a stock's fundamental and technical metrics.
Goosehead: One Of Best Stocks To Buy And Watch
On Aug. 29, Goosehead shares surged more than 15% after S&P Dow Jones Indices said the insurance leader will be a new addition to the S&P SmallCap 600. That move propelled the stock above its 50-day line and up the right side of a new base.
Goosehead stock is forming a cup base with a 76.36 buy point, per IBD MarketSmith chart analysis. Meanwhile, investors should keep an eye out for a potential handle to form, which would offer a lower entry. GSHD shares dropped 1.3% midday Wednesday.
A key technical indicator to watch is the relative strength line. Currently, the stock's RS line is near a new high, a sign of big outperformance vs. the S&P 500. The RS line measures a stock's price performance vs. the S&P 500 and is the blue line plotted on every IBD chart.
GSHD stock also earns an RS Line Blue Dot on its weekly chart on MarketSmith, as its RS line is in new high territory as the stock nears a buy point.
Solid fundamentals, along with the bullish gains in recent weeks, make GSHD one of the best stocks to buy and watch in today's stock market.
However, the stock market outlook remains under pressure, with a 20%-40% recommended exposure range, per IBD's The Big Picture. That means that investors should be mostly playing defense until the market outlook improves.
Best Stocks To Buy And Watch
Three recent IBD 50 Stocks To Watch picks are among the best stocks to buy and watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Arch Capital | 84.83 | Cup | |
| HubSpot | 558.62 | Cup with handle | |
| Salesforce | 228.79 | Cup with handle |
Source: IBD Data As Of Sept. 13, 2023
Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on the best stocks to buy and watch and the stock market.
