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

Ecolab

(

ECL

) 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 Ecolab as such a stock due to the following factors:

  • ECL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $124.1 million.
  • ECL has traded 553,897 shares today.
  • ECL is trading at 2.81 times the normal volume for the stock at this time of day.
  • ECL 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 ECL:

Ecolab Inc. provides water, hygiene, and energy technologies and services for customers worldwide. The company operates in four segments: Global Industrial, Global Institutional, Global Energy, and Other. The stock currently has a dividend yield of 1.2%. ECL has a PE ratio of 27. Currently there are 12 analysts that rate Ecolab a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Ecolab has been 1.1 million shares per day over the past 30 days. Ecolab has a market cap of $32.6 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.88 and a short float of 2.3% with 5.37 days to cover. Shares are up 3.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Ecolab as a

buy

. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, expanding profit margins, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • ECOLAB INC has improved earnings per share by 24.2% 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, ECOLAB INC increased its bottom line by earning $3.93 versus $3.15 in the prior year. This year, the market expects an improvement in earnings ($4.52 versus $3.93).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 22.2% when compared to the same quarter one year prior, going from $191.00 million to $233.40 million.
  • The gross profit margin for ECOLAB INC is rather high; currently it is at 53.07%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.07% trails the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, ECOLAB INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Despite the weak revenue results, ECL has outperformed against the industry average of 11.7%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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