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

KAR Auction Services

(

KAR

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

  • KAR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.6 million.
  • KAR is making at least a new 3-day high.
  • KAR has a PE ratio of 32.2.
  • KAR is mentioned 1.29 times per day on StockTwits.
  • KAR has not yet been mentioned on StockTwits today.
  • KAR is currently in the upper 20% of its 1-year range.
  • KAR is in the upper 35% of its 20-day range.
  • KAR is in the upper 45% of its 5-day range.
  • KAR 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.

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

More details on KAR:

KAR Auction Services, Inc., together with its subsidiaries, provides vehicle auction services in North America. It operates in three segments: ADESA Auctions, IAA, and AFC. The stock currently has a dividend yield of 2.8%. KAR has a PE ratio of 32.2. Currently there are 7 analysts that rate KAR Auction Services a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for KAR Auction Services has been 855,200 shares per day over the past 30 days. KAR Auction Services has a market cap of $5.4 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.59 and a short float of 0.3% with 0.56 days to cover. Shares are up 10.5% year-to-date as of the close of trading on Thursday.

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 KAR Auction Services as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, solid stock price performance, expanding profit margins and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • KAR's revenue growth has slightly outpaced the industry average of 2.8%. Since the same quarter one year prior, revenues rose by 12.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • KAR AUCTION SERVICES 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, KAR AUCTION SERVICES INC increased its bottom line by earning $1.19 versus $0.48 in the prior year. This year, the market expects an improvement in earnings ($1.70 versus $1.19).
  • Powered by its strong earnings growth of 369.23% and other important driving factors, this stock has surged by 25.61% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • 43.20% is the gross profit margin for KAR AUCTION SERVICES INC which we consider to be strong. Regardless of KAR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.30% trails the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Commercial Services & Supplies industry and the overall market, KAR AUCTION SERVICES INC's return on equity is below that of both the industry average and the S&P 500.

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.

null