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Northrop Grumman Celebrates Man on the Moon Anew With a New High

Stocks in this article: NOC

Between 1969 and 1972 six lunar modules landed on the moon and a total of 12 astronauts walked on the moon. The first moon walkers were Neil Armstrong and Buzz Aldrin with Michael Collins remaining in the command spaceship.

Grumman changed its name to Grumman Aerospace in 1969 and in 1994 was acquired by Northrop Corporation forming Northrop Grumman.

Let's look at the daily chart:

Courtesy of MetaStock Xenith

Northrop Grumman traded as high as $126.38 so far today, which is an all-time intraday high. The stock is above its 21-day, 50-day and 200-day simple moving averages at $121.58, $121.38 and $116.19. The 12x3x3 daily slow stochastic has become overbought.

Let's look at the weekly chart:

Courtesy of MetaStock Xenith

Northrop Grumman has a positive weekly chart with its five-week modified moving average at $122.75. Its 200-week simple moving average lags at $76.58. The 12x3x3 weekly slow stochastic is rising at 67.80 on a scale of 00.00 to 100.00 where a reading above 80.00 is overbought and a reading below 20.00 is oversold. The weekly chart pattern appears parabolic making an earnings beat and positive guidance important.

Investors interested in buying this stock should consider using a good 'til canceled limit order to buy weakness to a semiannual value level at $120.36 then adding to that position at a lower semiannual value level at $102.05.

Investors worried about the downside risk should consider using a GTC limit order to sell strength to a quarterly risky level at $129.56.

At the time of publication the author held no positions in any of the stocks mentioned.

Follow @Suttmeier

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

TheStreet Ratings team rates NORTHROP GRUMMAN CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NORTHROP GRUMMAN CORP (NOC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 29.55% and other important driving factors, this stock has surged by 39.90% 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, NOC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • NORTHROP GRUMMAN CORP has improved earnings per share by 29.6% 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, NORTHROP GRUMMAN CORP increased its bottom line by earning $8.34 versus $7.80 in the prior year. This year, the market expects an improvement in earnings ($9.24 versus $8.34).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Aerospace & Defense industry average. The net income increased by 18.4% when compared to the same quarter one year prior, going from $489.00 million to $579.00 million.
  • The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com
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