IBD 50 Stocks To Watch: Earnings Powerhouse Builds Bullish Base After 650% Run

Cowen (COWN) is the IBD 50 Stocks To Watch pick for Monday as it closes in on new buy point in a bullish base. It comes after the stock soared more than 650% on its 2020 lows.


Cowen provides services in areas including investment management, investment banking, research, sales and trading. It operates alternative investment and broker-dealer segments. The company has been posting strong earnings of late, with the firm benefiting from a boom in investing.

Cowen Stock Analysis

Cowen stock has formed a somewhat awkward cup base formation. It is now closing in on an ideal buy point of 43.27. It is worth watching closely in case a lower handle entry emerges.

This is a second stage base. Investor’s Business Daily research finds such early stage bases have a higher chance of success. The stock more than doubled from its breakout in October, so it may have a hard time making another major run.

Cowen stock’s relative strength line is moving higher once more after taking a breather. This came after a mighty run from late September until late March.

The financial stock has a very strong IBD Composite Rating of 97. This puts it in the top 3% of stocks tracked by IBD overall.

It boasts an potent mix of stock market and earnings performance. So far in 2021 COWN stock is up 7%. It has ran as much as 651% above its 2020 low of 5.75.

Its earnings is its strongest suit, with its EPS Rating a near-perfect 98. In the past three quarters earnings have grown by 563%, 1,154% and, in the most recent quarter, went from a prior-year loss of 44 cents per share to a profit of $4.24.

Longer term growth is also impressive. The Stock Checkup shows EPS has grown by an average 99% over the past three years. This is well clear of the 25% growth sought by CAN SLIM connoisseurs.

The stock has seen six consecutive quarters of increasing fund ownership. In total, 61% of its stock is held by funds according to MarketSmith. A further 4% being held by management.

CEO Thinks Cowen Stock Is ‘Cheap’

Cowen has been buying back its own stock. It purchased $20.6 million on 605,703 shares in Q1. On April 27 the firm’s board authorized an increase in the share buyback authorization. $50 million is currently available for purchase under the program.

During the firm’s most recent earnings call, CEO Jeffrey Solomon said the firm should take advantage of what he sees as a bargain stock. When a firm buys back stock it tends to increases the value of its shares outstanding because there’s a smaller amount of shares available for trading.

“For us to be able to be in a position where we can generate positive cash flow and buy back stock, we will continue to do that … . We think the stock is cheap, and so, as we have positive cash flow, we will continue to be aggressive at buying back stock,” he said.

Follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.


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