Trade-Ideas: Vulcan Materials (VMC) Is Today's Momo Momentum Stock

Trade-Ideas LLC identified Vulcan Materials (VMC) as a momo momentum candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Vulcan Materials

(

VMC

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

  • VMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $173.4 million.
  • VMC has a PE ratio of 76.
  • VMC is currently in the upper 30% of its 1-year range.
  • VMC is in the upper 25% of its 20-day range.
  • VMC is in the upper 35% of its 5-day range.
  • VMC is currently trading above yesterday's high.
  • VMC has experienced a gap between today's open and yesterday's close of 0.6%.

'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 VMC:

Vulcan Materials Company produces and sells construction aggregates, asphalt mix, and ready-mixed concrete primarily in the United States. It operates through four segments: Aggregates, Asphalt Mix, Concrete, and Calcium. The stock currently has a dividend yield of 0.4%. VMC has a PE ratio of 76. Currently there are 7 analysts that rate Vulcan Materials a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Vulcan Materials has been 1.5 million shares per day over the past 30 days. Vulcan has a market cap of $13.4 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 0.79 and a short float of 2.1% with 1.30 days to cover. Shares are up 52.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Vulcan Materials as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and solid stock price performance. We feel its 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 8.2%. Since the same quarter one year prior, revenues rose by 18.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VULCAN MATERIALS CO reported significant earnings per share improvement 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, VULCAN MATERIALS CO increased its bottom line by earning $1.56 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($2.09 versus $1.56).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Construction Materials industry average. The net income increased by 85.0% when compared to the same quarter one year prior, rising from $66.94 million to $123.81 million.
  • Net operating cash flow has significantly increased by 70.86% to $216.70 million when compared to the same quarter last year. In addition, VULCAN MATERIALS CO has also modestly surpassed the industry average cash flow growth rate of 63.43%.
  • Powered by its strong earnings growth of 82.35% and other important driving factors, this stock has surged by 58.31% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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