Estee Lauder Cos (EL) Stock Storming The Castle Today

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 Estee Lauder Cos ( EL) 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 Estee Lauder Cos as such a stock due to the following factors:

  • EL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $232.2 million.
  • EL has traded 2.5 million shares today.
  • EL is trading at 2.55 times the normal volume for the stock at this time of day.
  • EL 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 EL with the Ticky from Trade-Ideas. See the FREE profile for EL NOW at Trade-Ideas

More details on EL:

The Estee Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. The stock currently has a dividend yield of 1.1%. EL has a PE ratio of 27.5. Currently there are 11 analysts that rate Estee Lauder Cos a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for Estee Lauder Cos has been 2.5 million shares per day over the past 30 days. Estee Lauder Cos has a market cap of $16.0 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 0.98 and a short float of 1.9% with 1.33 days to cover. Shares are down 10.7% 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 Estee Lauder Cos 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, expanding profit margins 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:
  • The revenue growth came in higher than the industry average of 9.9%. Since the same quarter one year prior, revenues slightly increased by 2.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, EL has a quick ratio of 1.59, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for LAUDER (ESTEE) COS INC is currently very high, coming in at 83.95%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.32% is above that of the industry average.
  • LAUDER (ESTEE) COS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LAUDER (ESTEE) COS INC increased its bottom line by earning $2.58 versus $2.16 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $2.58).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the 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.

null

More from Markets

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

CBS-Viacom Battle Comes to a Head; FDA Approves Novartis Migraine Drug --ICMYI

CBS-Viacom Battle Comes to a Head; FDA Approves Novartis Migraine Drug --ICMYI

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing