Eyes On Capital One Financial (COF): Highlighted Storm The Castle Stock

Trade-Ideas LLC identified Capital One Financial (COF) as a "storm the castle" (crossing above the 200-day simple moving average on higher than normal relative volume) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Capital One Financial

(

COF

) 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 $229.9 million.
  • COF has traded 824,595 shares today.
  • COF is trading at 2.64 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 the 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 2%. COF has a PE ratio of 11. 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 2.8 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. The stock has a beta of 1.14 and a short float of 1.2% with 2.31 days to cover. Shares are down 3.6% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Capital One Financial 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, increase in net income and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • COF's revenue growth has slightly outpaced the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 4.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.90, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Consumer Finance industry average. The net income increased by 3.0% when compared to the same quarter one year prior, going from $1,081.00 million to $1,114.00 million.
  • CAPITAL ONE FINANCIAL CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CAPITAL ONE FINANCIAL CORP increased its bottom line by earning $7.59 versus $7.27 in the prior year. For the next year, the market is expecting a contraction of 4.8% in earnings ($7.23 versus $7.59).
  • In its most recent trading session, COF has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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