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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.

Trade-Ideas LLC identified

Advance Auto Parts

(

AAP

) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Advance Auto Parts as such a stock due to the following factors:

  • AAP has more that 20x the normal benchmarked social activity for this time of the day compared to its average of 2.65 mentions/day.
  • AAP has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $153.3 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on AAP:

Advance Auto Parts, Inc., through its subsidiaries, operates as a specialty retailer of automotive replacement parts, accessories, batteries, and maintenance items. The stock currently has a dividend yield of 0.2%. AAP has a PE ratio of 23. Currently there are 11 analysts that rate Advance Auto Parts a buy, no analysts rate it a sell, and 7 rate it a hold.

TheStreet Recommends

The average volume for Advance Auto Parts has been 898,600 shares per day over the past 30 days. Advance Auto Parts has a market cap of $11.2 billion and is part of the services sector and retail industry. The stock has a beta of 1.34 and a short float of 6.8% with 4.30 days to cover. Shares are down 5.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Advance Auto Parts as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels 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:

  • AAP's very impressive revenue growth greatly exceeded the industry average of 12.1%. Since the same quarter one year prior, revenues leaped by 58.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ADVANCE AUTO PARTS INC 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, ADVANCE AUTO PARTS INC increased its bottom line by earning $6.71 versus $5.33 in the prior year. This year, the market expects an improvement in earnings ($8.50 versus $6.71).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 71.4% when compared to the same quarter one year prior, rising from $49.27 million to $84.43 million.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat 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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