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Bull of the Day: Futu Holdings Limited (FUTU)

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Zacks Rank #1 (Strong Buy) stock Futu Holdings Limited ((FUTU - Free Report) ) is a Chinese financial technology (fintech) company that primarily operates in the online brokerage and wealth management industry. Futu Holdings has five main segments, including:

Online Brokerage Services

FUTU allows clients to trade various financial assets including stocks, options, and other securities.

Wealth management

The company offers research reports, portfolio management options, and advisory services to help users make informed investment decisions.

Mobile Apps

FUTU clients can conveniently trade Through the “Futu NiuNiu” and “Futubull” mobile apps

International Brokerage

Futu allows its Chinese customers to diversify to global markets.

Thriving Despite China’s Economic Woes

If you have been paying attention to global markets, it’s no secret that the Chinese economy is struggling. Over the past five years, the Chinese government caused uncertainty and turmoil in its economy by cracking down on big tech stocks such as Alibaba ((BABA - Free Report) ) and employing strict “zero COVID” lockdown policies, which crushed the economy. To make matters worse, exports have slowed dramatically while an overbuild of infrastructure has caused a massive housing bubble. With more than half of Chinese household wealth stuck in real estate, the collapsed housing market has caused an economic meltdown to spread through the Chinese economy like wildfire. Unfortunately, for investors, equities markets have not escaped. In fact, the iShares China ETF ((FXI - Free Report) ), a proxy for large-cap Chinese equities, is still well off of its climactic highs from late 2007!

With the nasty economic backdrop, most investors would likely expect a company like Futu to underperform. However, the company is firing on all cylinders. Despite a weak equity market, FUTU’s quarterly EPS has grown consistently.

Zacks Investment Research
Image Source: Zacks Investment Research

Looking ahead, Zacks Consensus Estimates suggest that earnings will grow at a healthy 39.08% clip for full-year 2023.

Zacks Investment Research
Image Source: Zacks Investment Research

Bullish Chart Pattern

Futu’s price and volume action aligns with its strong fundamental foundation. The stock is drastically outperforming the Chinese equity market and is carving out a bullish cup with handle base structure on the weekly chart.

Zacks Investment Research
Image Source: TradingView

Finding Opportunity Amidst Crisis

When it comes to investing, crisis often equates to opportunity. Though struggles remain in Chinese equities, investors may want to consider FUTU because it provides international diversification, a contrarian investment, and large reversion to the mean potential.

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