On Thursday, Broadcom (AVGO) reached an important technical milestone, with its Relative Strength (RS) Rating climbing into the 80-plus percentile with an improvement to 84, up from 78 the day before.
Broadcom makes a variety of analog chips for telecommunications, industrial, auto and computing markets. That includes custom artificial intelligence chips. The raised RS Rating lifts Broadcom stock into a higher percentile, an important move.
Market research shows that stocks that go on to make the biggest gains tend to have an RS Rating north of 80 as they begin their biggest price moves.
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Other Broadcom Ratings Really Shine
Among its other ratings Broadcom boasts a 96 Composite Rating out of 99. Ranging from 1 (worst) to 99 (best), the Composite Rating reveals how strongly a company is showing the seven telltale traits of winning stocks. The 96 rating shows that Broadcom is outperforming 96% of all other stocks in terms of the most important fundamental and technical stock-picking criteria.
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Broadcom also carried a near-best 98 Earnings Per Share Rating. Its SMR Rating (sales + profit margins + return on equity) is a top-notch A.
One yellow flag is its C- Accumulation/Distribution Rating on an A+ to E scale. The C- rating indicates that funds are selling slightly more shares than buying. That’s not surprising given the recent overall stock market correction. In fact, the number of funds holding Broadcom shares rose from 5,481 in June to 6,015 in December, the latest quarter figures are available for.
While AVGO stock is not near an ideal buy point right now, see if it is able to form and break out of a proper consolidation.
Ranks No. 2 In Group Of 39 Chipmakers
Earnings growth increased last quarter from 28% the prior quarter to 45%, or $1.60 per share. But sales growth fell from 51% to a still respectable 25%, to $14.9 billion. Analyst consensus is for EPS to climb 43% this quarter on a 19% hike in revenue, according to FactSet.
Broadcom earns the No. 2 rank among its peers in the 39-stock Electronics-Semiconductor Fabless industry group. Rambus (RMBS) is the No. 1-ranked stock in the group. Broadcom stock hit a record high at 251.88 on Dec. 16. It dropped to a 177.61 low on March 6, then turned up. Thursday afternoon AVGO stock closed just above 190, down for the day.
IBD’s unique RS Rating identifies market leadership by showing how a stock’s price action over the last 52 weeks compares to that of the other stocks in our database.
This article was created automatically with Stats Perform’s Wordsmith software using data and article templates supplied by Investor’s Business Daily. An IBD journalist may have edited the article.
Please follow James DeTar on Twitter @JimDeTar
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