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Trade-Ideas: Macy's (M) Is Today's "Storm The Castle" Stock

Stocks in this article: M

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 Macy's ( M) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Macy's as such a stock due to the following factors:

  • M has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $242.3 million.
  • M has traded 6.4 million shares today.
  • M is trading at 2.06 times the normal volume for the stock at this time of day.
  • M crossed above its 200-day simple moving average.

'Storm the Castle' stocks are worth watching because trading stocks that begin to experience a breakout can lead to potentially massive profits. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock is then free to find new buyers and momentum traders who can ultimately push the stock significantly higher. 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 on. 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 M with the Ticky from Trade-Ideas. See the FREE profile for M NOW at Trade-Ideas

More details on M:

Macy's, Inc., together with its subsidiaries, operates stores and Internet Websites in the United States. The stock currently has a dividend yield of 2.2%. M has a PE ratio of 13.0. Currently there are 8 analysts that rate Macy's a buy, no analysts rate it a sell, and 8 rate it a hold.

The average volume for Macy's has been 4.6 million shares per day over the past 30 days. Macy's has a market cap of $16.8 billion and is part of the services sector and retail industry. The stock has a beta of 0.79 and a short float of 3% with 2.13 days to cover. Shares are up 14.2% year to date as of the close of trading on Wednesday.

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 Macy's as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, notable return on equity, reasonable valuation levels and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • MACY'S INC has improved earnings per share by 7.5% 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, MACY'S INC increased its bottom line by earning $3.29 versus $2.91 in the prior year. This year, the market expects an improvement in earnings ($3.85 versus $3.29).
  • 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. When compared to other companies in the Multiline Retail industry and the overall market, MACY'S INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the Multiline Retail industry average, but is less than that of the S&P 500. The net income increased by 0.7% when compared to the same quarter one year prior, going from $279.00 million to $281.00 million.

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