Trade-Ideas LLC identified

Laboratory Corp of America Hldgs

(

LH

) 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 Laboratory Corp of America Hldgs as such a stock due to the following factors:

  • LH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $177.8 million.
  • LH has traded 1.0 million shares today.
  • LH is trading at 1.64 times the normal volume for the stock at this time of day.
  • LH 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 LH:

TST Recommends

Laboratory Corporation of America Holdings operates as an independent clinical laboratory company worldwide. LH has a PE ratio of 24. Currently there are 13 analysts that rate Laboratory Corp of America Hldgs a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Laboratory Corp of America Hldgs has been 1.1 million shares per day over the past 30 days. Laboratory Corp of America Hldgs has a market cap of $11.3 billion and is part of the health care sector and health services industry. The stock has a beta of 0.61 and a short float of 3.7% with 2.50 days to cover. Shares are up 3.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Laboratory Corp of America Hldgs as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 10.2%. Since the same quarter one year prior, revenues rose by 49.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Health Care Providers & Services industry average. The net income increased by 19.2% when compared to the same quarter one year prior, going from $141.30 million to $168.40 million.
  • Net operating cash flow has significantly increased by 91.27% to $396.70 million when compared to the same quarter last year. In addition, LABORATORY CP OF AMER HLDGS has also vastly surpassed the industry average cash flow growth rate of -5.17%.
  • 37.34% is the gross profit margin for LABORATORY CP OF AMER HLDGS which we consider to be strong. Regardless of LH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LH's net profit margin of 7.42% compares favorably to the industry average.
  • LABORATORY CP OF AMER HLDGS reported flat earnings per share in the most recent quarter. 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, LABORATORY CP OF AMER HLDGS reported lower earnings of $5.93 versus $6.24 in the prior year. This year, the market expects an improvement in earnings ($7.90 versus $5.93).

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