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Trade-Ideas: Johnson Controls (JCI) Is Today's Momo Momentum 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 Johnson Controls ( JCI) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Johnson Controls as such a stock due to the following factors:

  • JCI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $230.9 million.
  • JCI has a PE ratio of 26.4.
  • JCI is currently in the upper 30% of its 1-year range.
  • JCI is in the upper 25% of its 20-day range.
  • JCI is in the upper 35% of its 5-day range.
  • JCI is currently trading above yesterday's high.
  • JCI has experienced a gap between today's open and yesterday's close of 0.1%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on JCI:

Johnson Controls, Inc. engages in building efficiency, automotive experience, and power solutions businesses worldwide. The stock currently has a dividend yield of 1.9%. JCI has a PE ratio of 26.4. Currently there are 10 analysts that rate Johnson Controls a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Johnson Controls has been 4.1 million shares per day over the past 30 days. Johnson Controls has a market cap of $28.1 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.63 and a short float of 1.6% with 2.00 days to cover. Shares are up 33.4% year to date as of the close of trading on Monday.

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 Johnson Controls as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Auto Components industry average. The net income increased by 32.5% when compared to the same quarter one year prior, rising from $431.00 million to $571.00 million.
  • JCI's revenue growth trails the industry average of 13.0%. Since the same quarter one year prior, revenues slightly increased by 2.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 67.04% to $1,034.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 30.35%.
  • Powered by its strong earnings growth of 31.74% and other important driving factors, this stock has surged by 42.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • JOHNSON CONTROLS INC has improved earnings per share by 31.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, JOHNSON CONTROLS INC reported lower earnings of $1.79 versus $2.36 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $1.79).

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