Trade-Ideas LLC identified

Weyerhaeuser

(

WY

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

  • WY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $216.4 million.
  • WY has traded 4.2 million shares today.
  • WY is trading at 1.71 times the normal volume for the stock at this time of day.
  • WY 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 WY:

Weyerhaeuser Co. is a real estate investment trust. It primarily invests in United States. The firm operates under four business segments, timberlands, wood products, cellulose fibers and real estate. It owns timberlands primarily in the U.S and has long-term licenses in Canada. The stock currently has a dividend yield of 4.6%. WY has a PE ratio of 29. Currently there are 5 analysts that rate Weyerhaeuser a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Weyerhaeuser has been 5.1 million shares per day over the past 30 days. Weyerhaeuser has a market cap of $20.0 billion and is part of the industrial goods sector and materials & construction industry. The stock has a beta of 1.40 and a short float of 1.9% with 2.11 days to cover. Shares are down 7% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Weyerhaeuser as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 6.3%. 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.
  • WEYERHAEUSER CO's earnings per share declined by 35.3% in the most recent quarter compared to the same quarter a year ago. 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, WEYERHAEUSER CO reported lower earnings of $0.89 versus $1.38 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.89).
  • The share price of WEYERHAEUSER CO has not done very well: it is down 8.64% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • The gross profit margin for WEYERHAEUSER CO is currently lower than what is desirable, coming in at 27.36%. Regardless of WY's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, WY's net profit margin of 4.41% is significantly lower than the industry average.

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