ROOT is an app-based insurance company offering home, auto, and renters’ insurance in all 50 states. With a market capitalization of just $156MM, it is below the small-cap threshold making this a micro-cap stock.
In other words, it's small. But it wasn’t always. The company was worth roughly $6 billion when it IPO’d in 2020 - roughly 400X larger than its current valuation.
But the stock is showing serious signs of a turnaround. There was a huge volume breakout in June when shares shot from $6 to $14 in one day. A move that extreme needs to be digested since profit taking is almost guaranteed to weigh on the price over the short term.
After a series of shallowing retracements which I have highlighted on the chart above, ROOT is setting up for a potential breakout higher. I want to see a break of the most recent highs near $12 to give the best odds of success.
If the breakout is valid, it should take off and not look back. Traders could use a 10% stop to give it a little room to work but don’t give it too much rope. This is a volatile stock that can make big fast moves in both directions.
In other words, it's small. But it wasn’t always. The company was worth roughly $6 billion when it IPO’d in 2020 - roughly 400X larger than its current valuation.
But the stock is showing serious signs of a turnaround. There was a huge volume breakout in June when shares shot from $6 to $14 in one day. A move that extreme needs to be digested since profit taking is almost guaranteed to weigh on the price over the short term.
After a series of shallowing retracements which I have highlighted on the chart above, ROOT is setting up for a potential breakout higher. I want to see a break of the most recent highs near $12 to give the best odds of success.
If the breakout is valid, it should take off and not look back. Traders could use a 10% stop to give it a little room to work but don’t give it too much rope. This is a volatile stock that can make big fast moves in both directions.