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 $69.0 million.
  • LLL has traded 529,116 shares today.
  • LLL is trading at 1.54 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.

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More details on LLL:

TST Recommends

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 2.4%. LLL has a PE ratio of 77. Currently there are 2 analysts that rate L-3 Communications Holdings a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for L-3 Communications Holdings has been 619,500 shares per day over the past 30 days. L-3 has a market cap of $8.6 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 1.27 and a short float of 2% with 2.26 days to cover. Shares are down 6.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates L-3 Communications Holdings as a

buy

. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • The debt-to-equity ratio is somewhat low, currently at 0.86, 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 1.09, which illustrates the ability to avoid short-term cash problems.
  • 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 4.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for L-3 COMMUNICATIONS HLDGS INC is currently extremely low, coming in at 14.34%. Regardless of LLL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, LLL's net profit margin of -10.61% significantly underperformed when compared to the industry average.
  • Net operating cash flow has decreased to $317.00 million or 18.71% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Aerospace & Defense industry and the overall market, L-3 COMMUNICATIONS HLDGS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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