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Trade-Ideas: Sherwin-Williams Company (SHW) Is Today's Strong On High Relative Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Sherwin-Williams Company ( SHW) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Sherwin-Williams Company as such a stock due to the following factors:

  • SHW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $200.7 million.
  • SHW has traded 272,011 shares today.
  • SHW is trading at 2.12 times the normal volume for the stock at this time of day.
  • SHW is trading at a new high 3.01% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in SHW with the Ticky from Trade-Ideas. See the FREE profile for SHW NOW at Trade-Ideas

More details on SHW:

The Sherwin-Williams Company engages in the development, manufacture, distribution, and sale of paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North America, South America, Europe, Asia, and the Caribbean region. The stock currently has a dividend yield of 1.1%. SHW has a PE ratio of 29.6. Currently there are 5 analysts that rate Sherwin-Williams Company a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Sherwin-Williams Company has been 619,500 shares per day over the past 30 days. Sherwin-Williams has a market cap of $18.9 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.52 and a short float of 2% with 1.55 days to cover. Shares are up 9.2% year to date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Sherwin-Williams Company as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, notable return on equity, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:

  • SHW's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SHERWIN-WILLIAMS CO has improved earnings per share by 16.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SHERWIN-WILLIAMS CO increased its bottom line by earning $6.01 versus $4.14 in the prior year. This year, the market expects an improvement in earnings ($8.00 versus $6.01).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Chemicals industry and the overall market, SHERWIN-WILLIAMS CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to -$91.13 million or 41.14% when compared to the same quarter last year. In addition, SHERWIN-WILLIAMS CO has also vastly surpassed the industry average cash flow growth rate of -164.26%.
  • 46.58% is the gross profit margin for SHERWIN-WILLIAMS CO which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, SHW's net profit margin of 5.36% significantly trails the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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