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Trade-Ideas: General Dynamics (GD) 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 General Dynamics ( GD) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified General Dynamics as such a stock due to the following factors:

  • GD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $181.3 million.
  • GD has traded 1.2 million shares today.
  • GD is trading at 2.63 times the normal volume for the stock at this time of day.
  • GD is trading at a new high 3.02% 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.

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More details on GD:

General Dynamics Corporation, an aerospace and defense company, provides business aviation; combat vehicles, weapons systems, and munitions; military and commercial shipbuilding; and communications and information technology products and services worldwide. The stock currently has a dividend yield of 2.7%. Currently there are 14 analysts that rate General Dynamics a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for General Dynamics has been 1.9 million shares per day over the past 30 days. General Dynamics has a market cap of $29.7 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 1.09 and a short float of 1.8% with 2.32 days to cover. Shares are up 21.6% year to date as of the close of trading on Tuesday.

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

Highlights from the ratings report include:

  • Compared to where it was 12 months ago, this stock has enjoyed a nice rise of 27.23% which was in line with the performance of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GD should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $501.00 million or 21.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.81%.
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that GD's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
  • GENERAL DYNAMICS CORP's earnings per share improvement from the most recent quarter was slightly positive. 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, GENERAL DYNAMICS CORP swung to a loss, reporting -$1.03 versus $6.94 in the prior year. This year, the market expects an improvement in earnings ($6.75 versus -$1.03).
  • GD, with its decline in revenue, slightly underperformed the industry average of 4.4%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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