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 McDermott International ( MDR) 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 McDermott International as such a stock due to the following factors:
- MDR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $76.3 million.
- MDR has traded 7.1 million shares today.
- MDR is trading at 1.82 times the normal volume for the stock at this time of day.
- MDR 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 MDR with the Ticky from Trade-Ideas. See the FREE profile for MDR NOW at Trade-Ideas More details on MDR: McDermott International, Inc. operates as an engineering, procurement, construction, and installation (EPCI) company worldwide. The company operates in three segments: Asia Pacific, Atlantic, and the Middle East. It focuses on designing and executing complex offshore oil and gas projects. Currently there are 2 analysts that rate McDermott International a buy, 2 analysts rate it a sell, and 7 rate it a hold. The average volume for McDermott International has been 4.7 million shares per day over the past 30 days. McDermott International has a market cap of $1.9 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.75 and a short float of 17.6% with 3.93 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 McDermott International as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 226.6% when compared to the same quarter one year ago, falling from $50.61 million to -$64.07 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, MCDERMOTT INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for MCDERMOTT INTL INC is currently extremely low, coming in at 3.09%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -9.32% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$71.63 million or 487.97% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.35%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 228.57% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full McDermott International 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.