ESNT – a break out and not only play

Essent Group (ESNT) a mortgage insurance business exhibits strong fundamentals & technical characteristics. There is a clear buying momentum from institutional investors, with heavy volume and yesterday it broke out with 5 times the usual volume.

At these price levels (price is 46.63), there is still some room to run and our model gives a chance of more than 70% to reach 55-60 the next 4-5 months. On the other hand we have to mention the almost 2% daily volatility of the stock and its 15% max daily loss in the past 18 months.  The beta is 1.56 and obviously we need a good market to achieve our target. Due to its volatility , we would start with a small initial position.

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