It's been a year since Freedom Holding (FRHC) provided investors with a buy zone; finally, a new buy area is emerging for the stock. Freedom is today's selection for IBD 50 Stocks to Watch and one of the fastest-growing financial stocks.
XThe stock is forming a cuplike base with a 61.87 buy point. After spending weeks trading around its 50-day moving average, Freedom Holding made a firm move above the line last week. It is now less than 10% from the potential buy point.
Although the stock soared more than 250% from its previous breakout a year ago, the new base is only second stage. That's because the stock did not form any bases until its current correction started in February. Historically, first- and second-stage bases produce growth stocks' largest gains.
A year ago, Freedom Holding's financials weren't strong enough to appear on the IBD 50. Earnings in the December 2019 quarter slid 53% and dropped 60% more in the March 2020 quarter. The company says in SEC filings that the coronavirus pandemic caused the decline. Earnings bounced back sharply with a 200% surge in EPS in the second quarter of 2020, followed by gains of 167% and 929%, according to MarketSmith.
Revenue growth slowed to 12% in Q4 of 2019. It then started an accelerating trend that saw the top line jump 34%, 93%, 111% and 239%. Numbers like that make Freedom one of the fastest-growing financial stocks.
Financial Stock A Newcomer To Wall Street
The company started trading on the Nasdaq in October 2019 and is still a newcomer on Wall Street. There is little analyst coverage of the company.
Freedom is incorporated in Nevada but is for all intents and purposes a Eurasian firm. Its subsidiaries offer brokerage, research, investment counseling, trading, market making, investment banking and underwriting services. Freedom's headquarters are in Almaty, Kazakhstan. The company operates administrative offices in Russia, Cyprus and the U.S. It also has retail locations in Russia, Kazakhstan, Ukraine, Uzbekistan, Kyrgyzstan and Germany.
The firm says its target market is upper-middle-class individuals and businesses, as well as institutional clients.
Freedom is expanding through organic customer growth and via acquisitions. In January, it closed the purchase of U.S.-based Prime Executions, a broker-dealer that gave Freedom its first access to U.S. markets. In 2020, Freedom's acquisitions included a bank in Kazakhstan and a Russian brokerage firm.
The financial stock is one of five in the investment banking and brokers industry group with perfect 99 Composite Ratings. The group is in the top 35 of 197 that IBD tracks.
Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia
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