Caterpillar (CAT) Highlighted As Momo Momentum Stock

Trade-Ideas LLC identified Caterpillar (CAT) as a momo momentum candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Caterpillar

(

CAT

) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Caterpillar as such a stock due to the following factors:

  • CAT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $366.3 million.
  • CAT has a PE ratio of 41.
  • CAT is currently in the upper 30% of its 1-year range.
  • CAT is in the upper 25% of its 20-day range.
  • CAT is in the upper 35% of its 5-day range.
  • CAT is currently trading above yesterday's high.
  • CAT has experienced a gap between today's open and yesterday's close of 1%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on CAT:

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. The stock currently has a dividend yield of 3.9%. CAT has a PE ratio of 41. Currently there is 1 analyst that rates Caterpillar a buy, 1 analyst rates it a sell, and 12 rate it a hold.

The average volume for Caterpillar has been 5.1 million shares per day over the past 30 days. Caterpillar has a market cap of $46.6 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.21 and a short float of 7.4% with 8.95 days to cover. Shares are up 17.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Caterpillar as a

hold

. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.

Highlights from the ratings report include:

  • 36.11% is the gross profit margin for CATERPILLAR INC which we consider to be strong. Regardless of CAT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.86% trails the industry average.
  • CAT, with its decline in revenue, underperformed when compared the industry average of 13.0%. Since the same quarter one year prior, revenues fell by 25.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The debt-to-equity ratio is very high at 2.45 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, CAT maintains a poor quick ratio of 0.85, which illustrates the inability to avoid short-term cash problems.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 78.2% when compared to the same quarter one year ago, falling from $1,245.00 million to $271.00 million.
  • Net operating cash flow has significantly decreased to $489.00 million or 61.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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