Tyco International (TYC) Flagged As A Storm The Castle Stock - TheStreet

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

Tyco International

(

TYC

) 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 Tyco International as such a stock due to the following factors:

  • TYC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $154.3 million.
  • TYC has traded 2.4 million shares today.
  • TYC is trading at 1.52 times the normal volume for the stock at this time of day.
  • TYC 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 TYC:

Tyco International Ltd. designs, sells, installs, and services security, fire detection, suppression, and life safety products worldwide. It operates in three segments: North America Installation & Services, Rest of World Installation & Services, and Global Products. The stock currently has a dividend yield of 1.7%. TYC has a PE ratio of 25.1. Currently there are 5 analysts that rate Tyco International a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Tyco International has been 3.5 million shares per day over the past 30 days. Tyco International has a market cap of $17.9 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.11 and a short float of 2.1% with 2.65 days to cover. Shares are up 3.6% year-to-date as of the close of trading on Monday.

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 Tyco International as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 3.6%. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Commercial Services & Supplies industry and the overall market, TYCO INTERNATIONAL PLC's return on equity exceeds that of both the industry average and the S&P 500.
  • The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.86 is somewhat weak and could be cause for future problems.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Services & Supplies industry. The net income has significantly decreased by 153.6% when compared to the same quarter one year ago, falling from $166.00 million to -$89.00 million.
  • Net operating cash flow has decreased to $292.00 million or 21.71% 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.

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

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