Capital One Financial (COF) 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
(
) 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 Capital One Financial as such a stock due to the following factors:
- COF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $221.7 million.
- COF has traded 1.4 million shares today.
- COF is trading at 1.64 times the normal volume for the stock at this time of day.
- COF 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 COF:
Capital One Financial Corporation operates as the bank holding company for Capital One Bank (USA), National Association (COBNA); and Capital One, National Association (CONA), which provide various financial products and services in the United States, the United Kingdom, and Canada. The stock currently has a dividend yield of 1.5%. COF has a PE ratio of 10.2. Currently there are 14 analysts that rate Capital One Financial a buy, no analysts rate it a sell, and 5 rate it a hold.
The average volume for Capital One Financial has been 3.1 million shares per day over the past 30 days. Capital One Financial has a market cap of $42.9 billion and is part of the financial sector and financial services industry. Shares are down 5.2% year-to-date as of the close of trading on Wednesday.
Analysis:
rates Capital One Financial as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 4.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CAPITAL ONE FINANCIAL CORP has improved earnings per share by 15.1% 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, CAPITAL ONE FINANCIAL CORP increased its bottom line by earning $7.59 versus $7.27 in the prior year. This year, the market expects an improvement in earnings ($7.62 versus $7.59).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Consumer Finance industry average. The net income increased by 17.3% when compared to the same quarter one year prior, going from $852.00 million to $999.00 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- You can view the full Capital One Financial Ratings Report.
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