Trade-Ideas LLC identified

Treehouse Foods

(

THS

) 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 Treehouse Foods as such a stock due to the following factors:

  • THS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $189.5 million.
  • THS has traded 1.3 million shares today.
  • THS is trading at 1.70 times the normal volume for the stock at this time of day.
  • THS 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 THS:

TreeHouse Foods, Inc. operates as a food and beverage manufacturer in the United States and Canada. It operates through North American Retail Grocery, Food Away From Home, and Industrial and Export segments. THS has a PE ratio of 29. Currently there are 9 analysts that rate Treehouse Foods a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Treehouse Foods has been 813,600 shares per day over the past 30 days. Treehouse has a market cap of $3.3 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.79 and a short float of 9.7% with 1.69 days to cover. Shares are down 2.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Treehouse Foods as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth and compelling growth in net income. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.3%. Since the same quarter one year prior, revenues slightly increased by 0.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 417.02% to $20.39 million when compared to the same quarter last year. In addition, TREEHOUSE FOODS INC has also vastly surpassed the industry average cash flow growth rate of -16.93%.
  • TREEHOUSE FOODS INC has improved earnings per share by 38.3% 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, TREEHOUSE FOODS INC reported lower earnings of $2.20 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($3.15 versus $2.20).
  • The debt-to-equity ratio is somewhat low, currently at 0.73, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.74 is somewhat weak and could be cause for future problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Food Products industry and the overall market, TREEHOUSE FOODS 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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