MATTHEW GALGANI 2/28/2017
Big banks like Bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC) have soared since Donald Trump’s election, but IBD 50-member Home BancShares (HOMB) outranks them all in Forbes’ latest list of the ‘Best Banks In America.’
The Arkansas-based parent of Centennial Bank ranked No. 8 on this year’s list, which looked at 10 metrics to measure growth, credit quality and profitability.
At No. 57, JPMorgan ranked highest among the country’s four largest banks, followed by Wells Fargo (No. 63), Citigroup (C) (No. 72) and Bank of America (No. 97).
Other IBD 50 members that made the Forbes’ screen include Western Alliance Bancorp (WAL), Bank Of The Ozarks (OZRK) and Sterling Bancorp (STL), coming in at No. 4, No. 11 and No. 36, respectively.
Birds Of A Financial Feather
Financial sector stocks in general have been doing well since the November election, and Home BancShares’ Banks-Southeast industry group currently ranks a strong No. 15 among the 197 groups IBD tracks.
In fact, five of the top 10 industry groups and eight of the top 20 are bank or finance related.
But stocks that flock together may also head south for a Wall Street winter when institutional investors eventually shift their attention to other sectors.
Home BancShares has posted earnings growth ranging from 21% to 25% over the last five quarters, but revenue gains have been slowing, slipping from 27% to 9% across the last four reports.
While the number of funds with a position in the bank stock dipped last quarter, an A Accumulation/Distribution Rating and 1.3 Up/Down Volume Ratio still point to institutional demand.
Ready To Vault Higher?
After moving up sharply in November and early December, Home BancShares has been consolidating those gains in a second-stage flat base with a 28.71 entry.
The stock recaptured its 50-day line earlier this month and its 10-day moving average moved back above that longer-term benchmark in a sign of renewed technical strength.
On Monday, Home BanchShares rose just under 2% in rising and above-average volume, closing the day just pennies below the buy point.
The stock pulled back Tuesday, as the Nasdaq and S&P 500 also slipped lower. But volume was well below average and Home BancShares managed to hold support at its 10-day moving average.
Look for the stock to rebound and break out decisively in heavy volume, and see if its Relative Strength line heads into new high ground.
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