Trade-Ideas: PVH (PVH) Is Today's Momo Momentum Stock

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 PVH ( PVH) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified PVH as such a stock due to the following factors:

  • PVH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $167.9 million.
  • PVH is currently in the upper 30% of its 1-year range.
  • PVH is in the upper 25% of its 20-day range.
  • PVH is in the upper 35% of its 5-day range.
  • PVH is currently trading above yesterday's high.
  • PVH has experienced a gap between today's open and yesterday's close of 0.1%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on PVH:

PVH Corp. operates as an apparel company in the United States and internationally. Currently there are 7 analysts that rate PVH a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for PVH has been 912,600 shares per day over the past 30 days. PVH has a market cap of $10.7 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.05 and a short float of 2% with 1.31 days to cover.

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 PVH as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.7%. Since the same quarter one year prior, revenues rose by 37.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PVH CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PVH CORP increased its bottom line by earning $5.87 versus $4.36 in the prior year. This year, the market expects an improvement in earnings ($7.05 versus $5.87).
  • The gross profit margin for PVH CORP is rather high; currently it is at 54.53%. Regardless of PVH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.72% trails the industry average.
  • PVH's debt-to-equity ratio of 0.99 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.12 is sturdy.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry average. The net income increased by 17.3% when compared to the same quarter one year prior, going from $167.70 million to $196.71 million.

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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