Discovery Communications (DISCA) Is Today's Storm The Castle Stock
Trade-Ideas LLC identified Discovery Communications ( DISCA) 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 Discovery Communications as such a stock due to the following factors:
- DISCA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $98.0 million.
- DISCA has traded 2.9 million shares today.
- DISCA is trading at 6.14 times the normal volume for the stock at this time of day.
- DISCA 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 DISCA: Discovery Communications, Inc. operates as a media company worldwide. It operates through U.S. Networks; International Networks; and Education and Other segments. DISCA has a PE ratio of 17. Currently there are 3 analysts that rate Discovery Communications a buy, 2 analysts rate it a sell, and 12 rate it a hold. The average volume for Discovery Communications has been 3.3 million shares per day over the past 30 days. Discovery has a market cap of $11.1 billion and is part of the services sector and media industry. The stock has a beta of 1.64 and a short float of 32.9% with 5.62 days to cover. Shares are down 0.3% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates Discovery Communications as a
. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk. Highlights from the ratings report include:
- Net operating cash flow has increased to $625.00 million or 47.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 9.03%.
- The gross profit margin for DISCOVERY COMMUNICATIONS INC is currently very high, coming in at 86.51%. Regardless of DISCA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DISCA's net profit margin of 13.30% compares favorably to the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Media industry and the overall market on the basis of return on equity, DISCOVERY COMMUNICATIONS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, DISCA has underperformed the S&P 500 Index, declining 11.20% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full Discovery Communications Ratings Report.
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