Trade-Ideas LLC identified

L-3 Communications Holdings

(

LLL

) 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 L-3 Communications Holdings as such a stock due to the following factors:

  • LLL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $51.5 million.
  • LLL has traded 197,192 shares today.
  • LLL is trading at 5.87 times the normal volume for the stock at this time of day.
  • LLL 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.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in LLL with the Ticky from Trade-Ideas. See the FREE profile for LLL NOW at Trade-Ideas

More details on LLL:

L-3 Communications Holdings, Inc., through its subsidiary, L-3 Communications Corporation, provides intelligence, surveillance, and reconnaissance (ISR) systems; aircraft sustainment; and simulation and training products and services in the United States and internationally. The stock currently has a dividend yield of 2.3%. LLL has a PE ratio of 17. Currently there are 3 analysts that rate L-3 Communications Holdings a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for L-3 Communications Holdings has been 576,500 shares per day over the past 30 days. L-3 has a market cap of $9.2 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.92 and a short float of 2.5% with 4.83 days to cover. Shares are down 9.2% year-to-date as of the close of trading on Tuesday.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates L-3 Communications Holdings as a

buy

. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • The debt-to-equity ratio is somewhat low, currently at 0.76, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems.
  • After a year of stock price fluctuations, the net result is that LLL'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. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • LLL, with its decline in revenue, slightly underperformed the industry average of 1.5%. Since the same quarter one year prior, revenues slightly dropped by 7.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Aerospace & Defense industry average. The net income has decreased by 12.4% when compared to the same quarter one year ago, dropping from $137.00 million to $120.00 million.

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE.