ConAgra Foods (CAG) Highlighted As Storm The Castle 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 ConAgra Foods ( CAG) 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 ConAgra Foods as such a stock due to the following factors:

  • CAG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $75.1 million.
  • CAG has traded 451,002 shares today.
  • CAG is trading at 1.56 times the normal volume for the stock at this time of day.
  • CAG 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 CAG:

ConAgra Foods, Inc. operates as a food company primarily in North America. The company operates through four segments: Consumer Foods, Commercial Foods, Ralcorp Food Group, and Ralcorp Frozen Bakery Products. The stock currently has a dividend yield of 3%. CAG has a PE ratio of 21.0. Currently there are 5 analysts that rate ConAgra Foods a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for ConAgra Foods has been 3.0 million shares per day over the past 30 days. ConAgra has a market cap of $14.1 billion and is part of the consumer goods sector and food & beverage industry. The stock has a beta of 0.52 and a short float of 1.6% with 3.01 days to cover. Shares are up 0.5% year-to-date as of the close of trading on Tuesday.

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 ConAgra Foods as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, increase in net income, growth in earnings per share and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.1%. Since the same quarter one year prior, revenues rose by 26.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income increased by 17.5% when compared to the same quarter one year prior, going from $211.60 million to $248.70 million.
  • Net operating cash flow has significantly increased by 151.84% to $389.60 million when compared to the same quarter last year. In addition, CONAGRA FOODS INC has also vastly surpassed the industry average cash flow growth rate of 11.09%.
  • CONAGRA FOODS INC'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 year. We feel that this trend should continue. During the past fiscal year, CONAGRA FOODS INC increased its bottom line by earning $1.87 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $1.87).
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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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