Trade-Ideas LLC identified

Allison Transmission Holdings

(

ALSN

) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Allison Transmission Holdings as such a stock due to the following factors:

  • ALSN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.1 million.
  • ALSN has traded 31.37310000000000087538865045644342899322509765625 options contracts today.
  • ALSN is making at least a new 3-day high.
  • ALSN has a PE ratio of 32.
  • ALSN is mentioned 0.94 times per day on StockTwits.
  • ALSN has not yet been mentioned on StockTwits today.
  • ALSN is currently in the upper 20% of its 1-year range.
  • ALSN is in the upper 35% of its 20-day range.
  • ALSN is in the upper 45% of its 5-day range.
  • ALSN is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on ALSN:

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells commercial and defense fully-automatic transmissions for medium- and heavy-duty commercial vehicles, and medium- and heavy-tactical U.S. defense vehicles. The stock currently has a dividend yield of 2%. ALSN has a PE ratio of 32. Currently there are 7 analysts that rate Allison Transmission Holdings a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Allison Transmission Holdings has been 1.4 million shares per day over the past 30 days. Allison Transmission has a market cap of $5.1 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.16 and a short float of 2% with 2.40 days to cover. Shares are up 14.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Allison Transmission Holdings as a

buy

. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $117.90 million or 47.19% when compared to the same quarter last year. In addition, ALLISON TRANSMISSION HLDGS has also vastly surpassed the industry average cash flow growth rate of -8.63%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.3%. Since the same quarter one year prior, revenues slightly dropped by 8.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for ALLISON TRANSMISSION HLDGS is rather high; currently it is at 56.09%. Regardless of ALSN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ALSN's net profit margin of 10.45% compares favorably to the industry average.
  • ALLISON TRANSMISSION HLDGS's earnings per share declined by 26.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ALLISON TRANSMISSION HLDGS reported lower earnings of $1.03 versus $1.25 in the prior year. This year, the market expects an improvement in earnings ($2.41 versus $1.03).
  • After a year of stock price fluctuations, the net result is that ALSN's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, the stock's 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 the other strengths this company displays justify these higher price levels.

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