Trade-Ideas LLC identified

Rite Aid

(

RAD

) 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 Rite Aid as such a stock due to the following factors:

  • RAD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $139.9 million.
  • RAD has traded 5.5 million shares today.
  • RAD is trading at 1.66 times the normal volume for the stock at this time of day.
  • RAD 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 RAD:

Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States. The company operates through two segments, Retail Pharmacy and Pharmacy Services. RAD has a PE ratio of 33. Currently there is 1 analyst that rates Rite Aid a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Rite Aid has been 11.5 million shares per day over the past 30 days. Rite Aid has a market cap of $8.0 billion and is part of the services sector and retail industry. The stock has a beta of 1.71 and a short float of 4.1% with 2.54 days to cover. Shares are down 2.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rite Aid as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues rose by 20.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 87.35% to $327.87 million when compared to the same quarter last year. In addition, RITE AID CORP has also vastly surpassed the industry average cash flow growth rate of 28.29%.
  • The gross profit margin for RITE AID CORP is currently lower than what is desirable, coming in at 26.32%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.79% trails that of the industry average.
  • The share price of RITE AID CORP is down 6.20% when compared to where it was trading one year earlier. This reflects both (a) the trend in the overall market as well as (b) the sharp decline in the company's earnings per share. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

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