Trade-Ideas: Alliant Techsystems (ATK) Is Today's

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 Alliant Techsystems ( ATK) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Alliant Techsystems as such a stock due to the following factors:

  • ATK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $44.4 million.
  • ATK has traded 282,837 shares today.
  • ATK traded in a range 223% of the normal price range with a price range of $6.35.
  • ATK traded below its daily resistance level (quality: 4 days, meaning that the stock is crossing a resistance level set by the last 4 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ATK:

Alliant Techsystems Inc. engages in the provision of aerospace, defense, and commercial products to the U.S. government, allied nations, and prime contractors. The company also supplies ammunition and related accessories to law enforcement agencies and commercial customers. The stock currently has a dividend yield of 0.8%. ATK has a PE ratio of 14.6. Currently there are 4 analysts that rate Alliant Techsystems a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Alliant Techsystems has been 274,400 shares per day over the past 30 days. Alliant Techsystems has a market cap of $4.3 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 0.74 and a short float of 3.8% with 2.90 days to cover. Shares are up 9.5% 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 Alliant Techsystems as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 43.00% and other important driving factors, this stock has surged by 92.75% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ATK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ALLIANT TECHSYSTEMS INC has improved earnings per share by 43.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, ALLIANT TECHSYSTEMS INC increased its bottom line by earning $8.32 versus $7.93 in the prior year. This year, the market expects an improvement in earnings ($9.34 versus $8.32).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Aerospace & Defense industry. The net income increased by 42.3% when compared to the same quarter one year prior, rising from $65.06 million to $92.59 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 6.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.70, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.39, which illustrates the ability to avoid short-term cash problems.

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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