The prognosis of many market watchers is for interest rates to slowly rise. That would benefit banks, whose earnings are tied to interest rates. On Monday the Relative Strength (RS) Rating for HDFC Bank (HDB) climbed to 74, up from 69 the prior trading session. Although that’s an improvement, it lags its other ratings, which have risen faster.
First let’s look at the RS Rating. History shows that the best stocks often have an RS Rating of over 80 in the early stages of their moves. See if India-based HDFC Bank can continue to rebound and hit that benchmark. HDFC operates 5,416 branches in more than 2,800 cities.
Other HDFC Ratings Higher
Among other key ratings, HDFC Bank boasts an 85 EPS Rating, on a 1 to 99 scale with 99 superb. The strong EPS Rating reflects four quarters in a row of double-digit profit growth in the midst of the Covid outbreak. Its 82 Composite Rating, a compilation of five key ratings, is good but not great. The best growth stocks have a Composite Rating of 90 or better. However, its B+ Accumulation/Distribution Rating, on an A+ to E scale, shows that funds and other institutions are eagerly buying shares.
In terms of fundamentals, earnings grew 19% last quarter, to 63 cents per share. That was up from 10% growth in the prior report. Revenue climbed 10% in its most recent quarter, to $5.59 billion.
HDFC Bank is trying to complete a consolidation with an 84.80 entry. See if it can break out in heavy volume.
When looking for the best stocks to buy and watch, one factor to watch closely is relative price strength.
IBD’s proprietary rating identifies market leadership with a 1 (worst) to 99 (best) score. The grade shows how a stock’s price performance over the last 52 weeks compares to all the other stocks in our database.
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