The DividendRank formula at Dividend Channel ranks a coverage universe of thousands of dividend stocks, according to a proprietary formula designed to identify those stocks that combine two important characteristics — strong fundamentals and a valuation that looks inexpensive. McGrath RentCorp (MGRC - Get Report) presently has an excellent rank, in the top 25% of the coverage universe, which suggests it is among the top most "interesting" ideas that merit further research by investors.But making McGrath RentCorp an even more interesting and timely stock to look at, is the fact that in trading on Thursday, shares of MGRC entered into oversold territory, changing hands as low as $29.51 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30. In the case of McGrath RentCorp, the RSI reading has hit 27.9 — by comparison, the universe of dividend stocks covered by Dividend Channel currently has an average RSI of 54.5. A falling stock price — all else being equal — creates a better opportunity for dividend investors to capture a higher yield. Indeed, MGRC's recent annualized dividend of 0.98/share (currently paid in quarterly installments) works out to an annual yield of 3.11% based upon the recent $31.58 share price. A bullish investor could look at MGRC's 27.9 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. Among the fundamental datapoints dividend investors should investigate to decide if they are bullish on MGRC is its dividend history. In general, dividends are not always predictable; but, looking at the history chart below can help in judging whether the most recent dividend is likely to continue.
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Stocks
Twitter Bulls Have History on Their Side Right Now
Twitter's stock personifies the idea that an object in motion tends to stay in motion.
Cramer Called It: Why Amazon Is So Critical to Kohl's
Kohl's shares spike after retailer expands returns deal with Amazon. Jim Cramer called it weeks ago during his Action Alerts Plus Members Only call. Watch the clip.
Walt Disney Rises After Being Added to BofA's 'US 1' List
The firm raises its price target on Walt Disney to $168 from $144.