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Storm The Castle Stock Of The Day: Rock-Tenn Company (RKT)

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 Rock-Tenn Company ( RKT) 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 Rock-Tenn Company as such a stock due to the following factors:

  • RKT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $100.3 million.
  • RKT has traded 263,861 shares today.
  • RKT is trading at 5.06 times the normal volume for the stock at this time of day.
  • RKT 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.

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More details on RKT:

Rock-Tenn Company manufactures and sells corrugated and consumer packaging products in the United States, Canada, Mexico, Chile, Argentina, Puerto Rico, and China. The company operates in three segments: Corrugated Packaging, Consumer Packaging, and Recycling. The stock currently has a dividend yield of 1.4%. RKT has a PE ratio of 10.0. Currently there are 7 analysts that rate Rock-Tenn Company a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Rock-Tenn Company has been 785,500 shares per day over the past 30 days. Rock-Tenn has a market cap of $7.4 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.71 and a short float of 1.2% with 0.64 days to cover. Shares are down 2.5% year-to-date as of the close of trading on Friday.

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 Rock-Tenn Company as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, notable return on equity, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • RKT's revenue growth has slightly outpaced the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 3.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 27.11% and other important driving factors, this stock has surged by 29.63% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, RKT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Containers & Packaging industry and the overall market, ROCK-TENN CO's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $304.50 million or 9.72% when compared to the same quarter last year. In addition, ROCK-TENN CO has also modestly surpassed the industry average cash flow growth rate of -0.07%.

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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