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 Timken Company ( TKR) 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 Timken Company as such a stock due to the following factors:
- TKR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.8 million.
- TKR has traded 108,664 shares today.
- TKR is trading at 10.62 times the normal volume for the stock at this time of day.
- TKR 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. EXCLUSIVE OFFER: Get the inside scoop on opportunities in TKR with the Ticky from Trade-Ideas. See the FREE profile for TKR NOW at Trade-Ideas More details on TKR: The Timken Company engineers, manufactures, and markets mechanical components and high-performance steel products worldwide. It operates through four segments: Mobile Industries, Process Industries, Aerospace and Defense, and Steel. The stock currently has a dividend yield of 1.7%. TKR has a PE ratio of 18.4. Currently there are 6 analysts that rate Timken Company a buy, no analysts rate it a sell, and 1 rates it a hold. The average volume for Timken Company has been 755,500 shares per day over the past 30 days. Timken has a market cap of $5.3 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.77 and a short float of 1.5% with 1.23 days to cover. Shares are down 1% year-to-date as of the close of trading on Wednesday. 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 Timken Company as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- TKR's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
- Despite the weak revenue results, TKR has outperformed against the industry average of 19.3%. Since the same quarter one year prior, revenues slightly dropped by 7.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, TKR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- TIMKEN CO's earnings per share declined by 34.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TIMKEN CO increased its bottom line by earning $5.05 versus $4.58 in the prior year. For the next year, the market is expecting a contraction of 39.9% in earnings ($3.04 versus $5.05).
- You can view the full Timken Company Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.