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 Louisiana-Pacific ( LPX) 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 Louisiana-Pacific as such a stock due to the following factors:
- LPX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $53.0 million.
- LPX has traded 1.6 million shares today.
- LPX is trading at 4.12 times the normal volume for the stock at this time of day.
- LPX 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 LPX with the Ticky from Trade-Ideas. See the FREE profile for LPX NOW at Trade-Ideas More details on LPX: Louisiana-Pacific Corporation, together with its subsidiaries, engages in manufacturing and distributing building products for new home construction, repair and remodeling, manufactured housing, and light industrial and commercial construction. LPX has a PE ratio of 10.0. Currently there are 6 analysts that rate Louisiana-Pacific a buy, 1 analyst rates it a sell, and 1 rates it a hold. The average volume for Louisiana-Pacific has been 2.6 million shares per day over the past 30 days. Louisiana-Pacific has a market cap of $2.4 billion and is part of the services sector and wholesale industry. The stock has a beta of 1.64 and a short float of 6.4% with 2.57 days to cover. Shares are down 7.6% 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 Louisiana-Pacific as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- LPX's revenue growth has slightly outpaced the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 9.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.63, 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 this, the company maintains a quick ratio of 4.38, which clearly demonstrates the ability to cover short-term cash needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Paper & Forest Products industry and the overall market, LOUISIANA-PACIFIC CORP's return on equity exceeds that of both the industry average and the S&P 500.
- LOUISIANA-PACIFIC CORP has improved earnings per share by 18.2% 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 two years. We feel that this trend should continue. During the past fiscal year, LOUISIANA-PACIFIC CORP turned its bottom line around by earning $0.20 versus -$1.29 in the prior year. This year, the market expects an improvement in earnings ($0.97 versus $0.20).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Paper & Forest Products industry average, but is greater than that of the S&P 500. The net income increased by 21.7% when compared to the same quarter one year prior, going from $31.30 million to $38.10 million.
- You can view the full Louisiana-Pacific 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.