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Eyes On Ralph Lauren Corp Class A (RL): Highlighted 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 Ralph Lauren Corp Class A ( RL) 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 Ralph Lauren Corp Class A as such a stock due to the following factors:

  • RL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $150.4 million.
  • RL has traded 198,457 shares today.
  • RL is trading at 1.59 times the normal volume for the stock at this time of day.
  • RL 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 RL with the Ticky from Trade-Ideas. See the FREE profile for RL NOW at Trade-Ideas

More details on RL:

Ralph Lauren Corporation designs, markets, and distributes lifestyle products worldwide. The company operates in three segments: Wholesale, Retail, and Licensing. The stock currently has a dividend yield of 1.1%. RL has a PE ratio of 19.0. Currently there are 8 analysts that rate Ralph Lauren Corp Class A a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Ralph Lauren Corp Class A has been 950,400 shares per day over the past 30 days. Ralph Lauren Corp Class A has a market cap of $9.9 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.31 and a short float of 2.9% with 1.80 days to cover. Shares are down 9% 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 Ralph Lauren Corp Class A as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, growth in earnings per share and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • RL's revenue growth has slightly outpaced the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 13.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • RL's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RL has a quick ratio of 2.10, which demonstrates the ability of the company to cover short-term liquidity needs.
  • RALPH LAUREN CORP has improved earnings per share by 22.6% 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, RALPH LAUREN CORP increased its bottom line by earning $8.42 versus $8.00 in the prior year. This year, the market expects an improvement in earnings ($8.72 versus $8.42).
  • Net operating cash flow has increased to $147.00 million or 20.88% when compared to the same quarter last year. In addition, RALPH LAUREN CORP has also vastly surpassed the industry average cash flow growth rate of -87.08%.

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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