Trade-Ideas LLC identified

CVS Health

(

CVS

) 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 CVS Health as such a stock due to the following factors:

  • CVS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $566.1 million.
  • CVS has traded 2.8 million shares today.
  • CVS is trading at 1.63 times the normal volume for the stock at this time of day.
  • CVS 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 CVS:

TheStreet Recommends

CVS Health Corporation, together with its subsidiaries, provides integrated pharmacy health care services in the United States. The company operates through Pharmacy Services and Retail Pharmacy segments. The stock currently has a dividend yield of 1.4%. CVS has a PE ratio of 24. Currently there are 15 analysts that rate CVS Health a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for CVS Health has been 4.4 million shares per day over the past 30 days. CVS Health has a market cap of $111.7 billion and is part of the health care sector and health services industry. The stock has a beta of 1.19 and a short float of 1.1% with 2.29 days to cover. Shares are up 3.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates CVS Health as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations 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 came in higher than the industry average of 4.1%. Since the same quarter one year prior, revenues slightly increased by 7.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CVS HEALTH CORP has improved earnings per share by 5.7% 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, CVS HEALTH CORP increased its bottom line by earning $3.96 versus $3.75 in the prior year. This year, the market expects an improvement in earnings ($5.16 versus $3.96).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food & Staples Retailing industry average. The net income increased by 2.1% when compared to the same quarter one year prior, going from $1,246.00 million to $1,272.00 million.
  • Net operating cash flow has increased to $1,037.00 million or 15.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -9.61%.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.17% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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