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Trade-Ideas: PVH (PVH) Is Today's "Storm The Castle" 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 PVH (PVH) 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 PVH as such a stock due to the following factors:

  • PVH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $229.1 million.
  • PVH has traded 384,613 shares today.
  • PVH is trading at 1.97 times the normal volume for the stock at this time of day.
  • PVH 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 PVH with the Ticky from Trade-Ideas. See the FREE profile for PVH NOW at Trade-Ideas

More details on PVH:

PVH Corp. operates as an apparel company in the United States and internationally. Currently there are 8 analysts that rate PVH a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for PVH has been 993,900 shares per day over the past 30 days. PVH has a market cap of $10.3 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.34 and a short float of 2.5% with 1.26 days to cover.

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 PVH as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 14.1%. Since the same quarter one year prior, revenues rose by 25.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • PVH's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.87 is weak.
  • PVH CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PVH CORP reported lower earnings of $1.46 versus $5.87 in the prior year. This year, the market expects an improvement in earnings ($7.50 versus $1.46).
  • The gross profit margin for PVH CORP is rather high; currently it is at 55.98%. Regardless of PVH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PVH's net profit margin of -1.82% significantly underperformed when compared to the industry average.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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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