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 or Stephanie Link.

Trade-Ideas LLC identified

Safeway

(

SWY

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

  • SWY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $64.4 million.
  • SWY has traded 924,972 shares today.
  • SWY is trading at 6.60 times the normal volume for the stock at this time of day.
  • SWY 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 SWY with the Ticky from Trade-Ideas. See the FREE profile for SWY NOW at Trade-Ideas

More details on SWY:

Safeway Inc. operates as a food and drug retailer in the United States. The stock currently has a dividend yield of 2.7%. SWY has a PE ratio of 78.5. Currently there are no analysts that rate Safeway a buy, no analysts rate it a sell, and 10 rate it a hold.

The average volume for Safeway has been 1.4 million shares per day over the past 30 days. Safeway has a market cap of $7.9 billion and is part of the services sector and retail industry. The stock has a beta of 1.07 and a short float of 4.8% with 5.97 days to cover. Shares are up 4.8% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Safeway as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, solid stock price performance, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • SWY's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food & Staples Retailing industry. The net income increased by 1009.3% when compared to the same quarter one year prior, rising from $8.60 million to $95.40 million.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • SAFEWAY INC has improved earnings per share by 30.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SAFEWAY INC reported lower earnings of $0.97 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($1.08 versus $0.97).
  • SWY's debt-to-equity ratio of 0.68 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.87 is weak.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null