A gain of approximately 43.19% in 2018 for shares of Broadridge Financial Solutions, Inc. (BR) was likely helped by strong institutional buying accompanying the move. Broadridge released earnings on Aug. 7, missing revenue estimates and earnings estimates. What makes this company interesting is that, even with the miss, the stock rocketed higher – aggressively. Trading activity like this is telling you something – the market has a favorable outlook on this stock. The way a stock trades can sometimes tell you a lot more about the forward fundamental picture than looking at a company's financials.
In the view of Macro Analytics for Professionals (MAP), the strongest indicator of positive price momentum is obtained by measuring potential institutional accumulation. In 2018, Broadridge has logged 19 of these rare signals. We like to see bullish activity in the shares alongside solid forward fundamentals. This indicates that, over time, demand for the stock should increase. (See also: Top 3 Growth Stocks for 2018.)
In the chart below, Broadridge stock broke out to new 52-week highs on big volumes. Shares should continue the upward trajectory:
MAP's process focuses on identifying companies with healthy fundamentals accompanied by outsized, unusual institutional activity to try and measure potential accumulation/distribution at the single-stock level. By studying these data points, we can hypothesize which equities institutions are trafficking in and marry this information with fundamentally sound companies. We want the odds on our side when looking for the highest-quality stocks.
When deciding on the strongest candidate for long-term growth, we consider many technical areas important to success. A few of these factors for Broadridge are as follows:
On top of a great technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Broadridge has solid earnings growth rates:
Broadridge checks the box on strong technicals and fundamentals while showing bullish institutional momentum in 2018. We believe that the current level for the shares is in position for further upside. All of this points to further long-term bullish action for the stock.
The Bottom Line
Broadridge stock represents a potential buying opportunity for the long-term investor. Given the solid earnings growth and multiple unusual accumulation signals, this stock could be worth a spot in a growth-oriented portfolio.
To learn more about MAP's institutional signals, please visit our "About Us" page.
Disclosure: The author holds no position in Broadridge shares at the time of publication.